German bunds suffer after August producer prices, factory orders beat market expectations

The German bunds suffered during late European session Friday after the country’s producer price index (PPI) and factory orders for the month of August beat market expectations, thus weighing on debt prices.

The German 10-year bond yields, which move inversely to its price, jumped 2 basis points to 0.556 percent, the yield on 30-year note surged 2-1/2 basis points to 1.159 percent and the yield on short-term 2-year traded 1/2 basis point higher at -0.532 percent by 09:50GMT.

Ahead of the coming week’s euro area industrial production figures, this morning brought further insight into the performance of Germany’s manufacturing sector in Q3 with the latest factory orders figures. And these beat expectations with total orders up 2 percent m/m in August.

With domestic orders having slipped back, the increase was more than fully accounted for by a near-6 percent m/m rise in overseas orders on the back of an 11 percent increase in new orders from countries outside the euro area (orders from elsewhere in the euro area were, however, down 2.2 percent m/m).

When excluding major orders, they were up more than 3 percent, having been down 2.0 percent m/m on that basis in July. Indeed, there were notable declines in orders in each of the previous two months. And on average in the first two months of Q3, total orders were 1.8 percent lower than the average in Q2 indicating another weak showing from Germany’s manufacturers last quarter and a continued tepid outlook for the sector too, Daiwa Capital Markets reported.

Meanwhile, the German DAX fell 0.73 percent to 12,154.80 by 09:55GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained slightly bearish at -93.28 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex