German bunds plunge after May manufacturing PMI beats market expectations

The German bunds plunged during European session on the last trading day of the week Friday after the country’s manufacturing PMI for the month of May beat market expectations, thus weighing on the debt market.

The German 10-year bond yields, which move inversely to its price, jumped nearly 4 basis points to 0.38 percent, the yield on 30-year note surged 3-1/2 basis points to 1.07 percent and the yield on short-term 2-year traded 3 basis points higher at -0.65 percent by 08:40GMT.

The headline IHS Markit/BME Germany Manufacturing PMI – a single-figure snapshot of the performance of the manufacturing economy – registered 56.9 in May, down from 58.1 in April. Although still well above the 50.0 no-change threshold, and therefore indicative of a robust overall rate of expansion, the latest reading was the lowest seen for 15 months and well below last December’s recent peak (63.3).

The final IHS Markit Eurozone Manufacturing PMI posted a 15-month low of 55.5 in May, down from 56.2 in April and unchanged from the earlier flash estimate. The rate of increase has eased in each of month since hitting a record high in December. The PMI has signaled expansion for 59 months in a row and remained above its long-run average (51.9).

Meanwhile, the German DAX rose 0.87 percent to 12,714.74 by 08:45GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 72.33 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

Lastly, FxWirePro launches Absolute Return Managed Program. For more details, visit http://www.fxwirepro.com/invest