German bunds rise modestly on weak PMIs; ECB’s policy decision in focus

The German bunds traded modestly firmer Monday after data showed that the country’s PMI came weaker than expected in August.

The yield on the benchmark 10-year bond, which moves inversely to its price, fell 1 basis point to -0.049 percent, the yield on long-term 30-year note also tumbled 1 basis point to 0.525 percent and the yield on short-term 2-year bond slid 1/2 basis point to -0.638 percent by 09:00 GMT.

Germany’s service PMI fell to 51.7 in August, lower than the consensus of 53.3, as compared to 53.3 in July. Additionally, composite PMI dipped to 53.3, against market expectations of 54.4, from 54.4 in the previous month.

Moreover, the Eurozone final Markit services PMI data for August that printed 52.8 vs an expected 53.1 and vs 52.9 in July. The final composite PMI reading also came in weaker at 52.9, vs an expected 53.3 and down from 53.2 in July.

Lastly, investors will remain keen to focus on the Thursday's ECB meeting, when there is a chance of another small deposit rate cut. The trading volumes are expected to be thin as the US and Canadian markets remain closed today on account of Labour Day.

Meanwhile, the German stock index DAX Index traded 0.28 percent higher at 10,713.90 by 09:00 GMT.