German bunds jump after October manufacturing PMI misses expectations; ECB’s policy decision in focus

The German bunds jumped during European session Wednesday after the country’s manufacturing PMI for the month of October missed market expectations, and eurozone’s manufacturing counterpart also fell short of market estimates. Investors will now eye the European Central Bank’s (ECB) monetary policy decision, scheduled to be unveiled on October 25 by 17:15GMT for further direction in the debt market.

The German 10-year bond yields, which move inversely to its price, fell 1 basis point to 0.407 percent, the yield on 30-year note remained tad lower at 1.032 percent and the yield on short-term 3-year too remained nearly 1/2 basis point lower at 1.032 percent by 09:00GMT.

The IHS Markit Flash Germany Manufacturing PMI sank to a 29-month of 52.3 in October, from 53.7 in September. As well as output, new orders and employment, the survey’s measures of stocks of purchases – which showed a renewed decline in inventories – and supplier delivery times also had a downward effect on the headline index in October.

Further, October saw the IHS Markit Flash Germany Composite Output Index slip from 55.0 in September to 52.7, its lowest reading since May 2015. The drop in the index, to a level below its long-run average (53.4), reflected weaker increases in both services business activity and manufacturing output. In the case of the former, growth eased to a five-month low (although was still solid overall), while goods production expanded at a marginal rate that was the weakest in almost four years.

The IHS Markit Eurozone Composite PMI fell to 52.7 in October, down from 54.1 in September and reaching its lowest since September 2016, according to the flash reading (which is based on approximately 85 percent of usual monthly replies).

Meanwhile, the German DAX rose 0.26 percent to 11,303.15 by 09:10GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained highly bearish at -102.66 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex