German bunds slump ahead of February ZEW economic sentiment index, manufacturing PMI

The German bunds slumped Monday ahead of the country’s ZEW economic sentiment index and the manufacturing PMI for the month of February, scheduled to be released on February 20 and 22 by 10:00GMT and 08:30GMT respectively.

The German 10-year bond yields, which move inversely to its price, jumped 3 basis points to 0.73 percent, the yield on 30-year note also surged nearly 3 basis points to 1.37 percent and the yield on short-term 2-year traded 1 basis point higher at -0.49 percent by 09:35GMT.

The most notable data due this week from the euro area will be the first economic surveys for February, including the preliminary PMIs due on Wednesday. With the euro area composite PMI having risen to the highest level since 2006 in January on the back of a surge in the services index and a still-elevated reading in manufacturing, these indices are expected to ease off a touch in February, which might give a sense that the economy has now reached top speed.

Other survey indicators, including the European Commission’s preliminary consumer confidence index (tomorrow), the German ZEW (the same day) and Ifo indices (Thursday), and the French INSEE readings (also Thursday), might give a similar impression.

The back end of the week brings several top-tier hard data, including the final euro area inflation figures for January, due on Friday. In line with the flash estimates, these should confirm a moderation in the headline rate of inflation to 1.3 percent and a slight increase in the core rate to 1.0 percent y/y in January.

Also at the back end of the week, the second estimate of Q4 GDP from Germany is also due and is expected to confirm a growth of 0.6 percent q/q. Ahead of all that, the week will start today with December releases of the euro area’s balance of payments and construction output figures. Expect to see another whopping current account surplus as well as ongoing net inflows into the euro area equity market, Daiwa Capital markets reported.

Meanwhile, the German DAX fell 0.02 percent to 12,448.50 by 09:50GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained highly bearish at -138.28 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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