German bond yields fell yesterday morning, and then moved sideways for most of the day. The 10-year yield ended the day lower by around 2bp. Also US yields descended, the 10-year one by 1.5bp.
Intra-Euro-area spreads widened, and the move likely has some more to run in the near term. Core bond yields, in turn, are set to creep somewhat higher today.
Equity markets ended yesterday mostly with limited moves. European indices closed slightly higher, while in the US S&P 500 retreated by 0.16%. Asian markets are trading mixed this morning, while Europe is set to open slightly higher.
Terrible German order data
German manufacturing orders slumped by 5.7% m/m in August, more than double the expectation and the biggest monthly plunge since early 2009. Even though this followed a 4.9% m/m jump in July, the monthly data is hugely volatile and the numbers were affected by holidays, the level of orders was the weakest in more than a year and implies also the German economy is clearly feeling the heat. The weakening growth momentum has been illustrated also e.g. by the GDP contracting in Q2 and the manufacturing PMI falling below 50, and more weak data is likely to follow today in the form of August industrial production.
Industrial production data and central bank speeches
Today’s calendar does not look hugely interesting. German August industrial production data will be released at 8:00 CET and UK numbers at 10:30 CET. In the US, the Job Openings and Labour Turnover Survey will be out at 16:00 CET.
In addition, the ECB’s Knot will speak at 10:00 CET, Costa at 15:00 CET, the Fed’s Kocherlakota at 20:30 CET and Dudley at 21:00 CET.
Spain preparing a new linker – Austrian and US auctions also on the agenda
Spain mandated the leads for a new 5-year inflation-linker yesterday. The launch is likely to take place today. The new bond will mark the second inflation-linked bond from Spain after the country launched its initial linker last May.
This week’s EUR government bond auctions will start with the Austrian re-opening on RAGB 1.65% Oct 2024 for EUR 1.1bn. US auctions, in turn, will be set in motion by the USD 27bn 3-year note sale.
Nordea