German bunds slump after Ifo business climate index beats expectations in November

The German bunds slumped Friday after the country’s business climate index released by Ifo hit a new record-high during the month of November, also surpassing what markets had initially anticipated.

The German 10-year bond yields, which move inversely to its price, jumped 2-1/2 basis points to at 0.37 percent, the yield on 30-year note surged 3 basis points to 1.20 percent and the yield on short-term 2-year traded flat at -0.69 percent by 09:10GMT.

The Ifo Business Climate Index rose from 115.3 points (seasonally adjusted) in September to a new record high of 116.7 points this month. Companies are very optimistic about the months ahead. They also upwardly revised their very favorable assessments of the current business situation. Germany’s economy is powering ahead.

In manufacturing, the index also hit a new record high. Manufacturers were markedly more satisfied with their ongoing business. Optimism about the business outlook also surged to its highest level to date in 2017. The main drivers behind these developments were capital goods producers and especially mechanical engineering firms. Capacity utilization in manufacturing rose by 0.4 percentage points to 87.1 percent. It is now significantly higher than its long-term average of 83.7 percent.

Meanwhile, the German DAX traded 0.08 percent up at 13,018.50 by 09:15 GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained highly bullish at 131.49 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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