German bunds trade flat after July manufacturing PMI tumbles; investors shy Fed’s rate cut

The German bunds remained flat higher during European session Thursday after the country’s manufacturing PMI for the month of July tumbled, further into contraction, while investors turned a deaf ear to the Federal Reserve rate cut in nearly a decade, thus forcing debt market to trade sideways.  

The German 10-year bond yields, which move inversely to its price, hovered around 0.433 percent, the yield on 30-year note remained flat at 0.126 percent while the yield on short-term 2-year traded 1-1/2 basis points up at -0.767 percent by 10:45GMT.

The headline IHS Markit/BME Germany Manufacturing PMI – a single-figure snapshot of the performance of the manufacturing economy derived from indicators for new orders, output, employment, suppliers' delivery times and stocks of purchases – sank deeper into contraction territory in July. At 43.2, down from 45.0 in June, the latest reading signalled the steepest decline in overall manufacturing conditions since mid-2012.

Further, the eurozone’s IHS Markit Manufacturing PMI also posted below the 50.0 no-change mark that separates growth from contraction for a sixth successive month and, at 46.5, pointed to the sharpest deterioration in operating conditions since December 2012. The index was down from 47.6 in June, though slightly higher than the earlier July flash reading of 46.4.

Meanwhile, the German DAX traded tad 0.32 percent higher at 12,227.74 by 10:50GMT.