German government bonds tad lower despite lower-than-expected Q2 GDP

The Eurozone periphery bonds traded tad lower Tuesday as investors have largely shrugged-off the lower-than-expected reading of the country’s second-quarter domestic product (GDP), released earlier today. Now, investors will remain focused on the eurozone’s Q2 GDP, scheduled to be released on August 16 by 09:00GMT.

The German 10-year bond yields, which moves inversely to its price, rose 1 basis point to 0.41 percent, the yield on 30-year note also climbed 1 basis point to 1.17 percent and the yield on short-term 2-year traded tad 1/2 basis point higher at -0.71 percent by 09:10GMT.

The first estimate of German GDP for Q2 released this morning came in slightly softer than expectations, with growth of 0.6 percent q/q down from the upwardly revised rate of 0.7 percent q/q in Q1, which itself was the strongest pace for nine quarters. So, with the economy having now expanded for twelve consecutive quarters, this left the year-on-year rate of growth at 2.1 percent, the firmest pace for more than three years.

While today’s release didn’t provide an expenditure breakdown, the statistical office suggested that the recovery last quarter was underpinned by domestic demand, with a substantial increase in both household and government consumption alike, while fixed investment and construction were also up. But with the increase in imports – boosted by stronger domestic demand – considerably higher than exports, this implied that net trade was a drag on growth for the third quarter out of the past four.  

Meanwhile, the German DAX rose 0.27 percent to 12,195.00 by 09:10 GMT, while at 09:00GMT, the FxWirePro's Hourly Euro Strength Index remained neutral at 63.01 (higher than +75 represents bullish trend). For more details, visit http://www.fxwirepro.com/currencyindex

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