German bunds gain after August industry orders disappoint; industrial production eyed

The German bunds gained during European trading session Monday following disappointment in the country’s industry orders for the month of August, while industrial production is still eyed for the similar period, due for release tomorrow for further direction in the debt market.

The German 10-year bond yield, which move inversely to its price, slipped 1-1/2 basis points to -0.600 percent, the yield on 30-year note also edged 1-1/2 basis point down to -0.119 percent and the yield on short-term 2-year remained nearly 1 basis point down at -0.763 percent by 10:20GMT.

This week brings several notable national data releases from within the euro area with the focus on August industrial sector data from the four largest member states. These kicked off this morning with Germany’s factory orders figures, which suggested that the adverse trend in the sector continues, Daiwa Capital Markets reported.

In particular, total orders declined 0.6 percent m/m in August following a revised drop of 2.1 percent m/m the prior month. That left them down a hefty 6.7 percent y/y and at the lowest level since September 2016, the report added.

In the latest month, the weakness was most acute in domestic orders, down 2.6 percent m/m, with falls in all categories including a particularly sharp retreat in orders of consumer goods (down 5.7 percent m/m).

In contrast, thanks to growth in the intermediate and consumer categories, foreign orders rose 0.9 percent m/m, with new bookings from the euro area up 1.5 percent m/m and those from other countries up 0.4 percent m/m to provide a welcome hint at a possible turning point for the better, Daiwa further noted in the report.

Meanwhile, the German DAX traded almost steady at 12,040.82 by 10:25GMT.