German bunds slide after September employment data cheers market investors, jobless rate steady

The German bunds slid during European trading session Monday after the country’s employment data for the month of September cheered market investors, while the unemployment rate held steady at 5.0 percent, slightly above the record-low of 4.9 percent reached earlier this year.

The German 10-year bond yield, which move inversely to its price, surged nearly 1-1/2 basis points to -0.563 percent, the yield on 30-year note jumped 3-1/2 basis points to -0.085 percent while the yield on short-term 2-year traded nearly flat at -0.762 percent by 10:15GMT.

According to data released by the Federal Labour Office, the number of people out of work fell by 10,000 to 2.276 million in seasonally adjusted terms, compared with the Reuters consensus forecast for a rise of 5,000. The office further revised down the joblessness figures for August to a rise of 2,000 from a previously reported increase of 4,000.

Labour Office head Detlef Scheele said the economic downturn was partly reflected in the joblessness data. “But all in all, the labour market is still in a robust shape”, Reuters reported.

In politics, this evening will bring a key meeting of Italy’s new Cabinet to discuss its draft budget for 2020. The Cabinet will seek to be compliant with EU rules while avoiding the automatic increase in VAT that is built into current legislation, Daiwa Capital Markets reported.

Perhaps unsurprisingly, new Finance Minister Gualtieri suggested on the weekend that the authorities will target a slightly higher deficit than the 2.1 percent of GDP currently agreed with the European Commission, the report added.

"Given Italy’s protracted economic weakness, and the more constructive approach of the new Government compared to its predecessor with respect to the country’s membership of the single currency, we would expect the EU to be relatively forgiving of the looser fiscal stance," Daiwa further commented in the report.

Meanwhile, the German DAX traded flat at 12,389.06 by 10:20GMT.