German bunds jump after June industrial production disappoints investors; trade balance eyed

The German bunds jumped during European trading session Wednesday after the country’s industrial production for the month of June disappointed market investors ahead of the trade balance data for the similar period, scheduled to be released on August 9 by 06:00GMT for further direction in the debt market.

The German 10-year bond yields, which move inversely to its price, slumped 5 basis points to -0.589 percent, the yield on 30-year note plunged 8-1/2 basis points to -0.126 percent and the yield on short-term 2-year traded nearly 1-1/2 basis points down at -0.831 percent by 10:30GMT.

Contrasting with yesterday’s somewhat stronger than expected factory orders data, this morning’s German industrial production report for June surprised on the downside, with a decline in total output (including construction) of 1.5 percent m/m. That left it down 5.2 percent y/y, the steepest annual reverse since 2009, Daiwa Capital Markets reported.

Within the detail, manufacturing and mining production fell 1.8 percent m/m, with output in all key sub-sectors – capital, intermediate and consumer goods – down by more than 1.0 percent m/m. Energy production fell for the fifth successive month, down 1.6 percent m/m. And although it had declined in each of the prior three months, construction output could only muster a rise of 0.3 percent m/m, the report added.

Meanwhile, the German DAX surged 1.35 percent to 11,729.02 by 10:45GMT.