German bunds flat despite wider-than-expected trade surplus; investors eye 5-year auction

The German bonds remained flat in European session Tuesday despite the country’s surplus growing wider than market anticipations. Also, investors are closely eyeing the 5-year auction, scheduled to be held on August 9 by 09:35GMT, which will provide further direction in the debt market.

The benchmark German 10-year bond yields, which moves inversely to its price hovered around 0.45 percent, the yield on long-term 30-year note remained flat at 1.20 percent and the yield on short-term 3-year traded nearly 1 basis point higher at -0.67 percent by 09:00GMT.

German imports dropped sharply in June over the previous month, outpacing a drop in exports and widening the country's trade surplus. The Federal Statistical Office said Tuesday exports fell 2.8 percent in June over May, while exports dropped 4.5 percent. The trade surplus widened to EUR21.2 billion (USD25 billion) from May's EUR20.3 billion.

In unadjusted terms, exports rose 0.7 percent in June 2017 compared with June 2016, while imports rose 3.6 percent. Exports to EU countries increased 2.4 percent, while dropping 1.7 percent to non-EU countries. Imports from EU countries rose 1.7 percent, and increased 7.5 percent from non-EU countries.

Meanwhile, the German DAX remained flat at 12,257.00 by 09:10 GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at -5.19 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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