German bunds jump after July unemployment change misses market expectations; manufacturing PMI in focus

The German bunds jumped during European session Tuesday after the country’s unemployment change for the month of July missed market expectations, while the jobless rate remained unchanged at 5.2 percent.

The German 10-year bond yields, which move inversely to its price, slumped nearly 2 basis points to 0.43 percent, the yield on 30-year note plunged nearly 2-1/2 basis points to 1.08 percent and the yield on short-term 2-year slipped nearly 1 basis point to -0.59 percent by 09:20GMT.

With German GDP growth likely to have inched higher (data out in two weeks’ time), the euro area aggregate growth should remain at 0.4 percent q/q. Preliminary euro area inflation release for July is also out today. Expectations are that the headline rate will remain unchanged at 2.0 percent y/y, however, looking at the national releases from major member states, a slightly higher reading would not be a huge surprise.

Indeed, yesterday’s equivalent data from Germany and Spain, showed that the headline inflation remained unchanged at respectively 2.1 percent y/y and 2.3 percent y/y, but this morning’s French figures showed an upward surprise with its EU-harmonised CPI rate rising from 2.3 percent to 2.6 percent y/y, last seen in March 2012, Daiwa Capital Markets reported.

Meanwhile, the German DAX slipped 0.08 percent to 12,787.43 by 09:25GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained highly bullish at 117.33 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex