German government bonds are trading higher midday Wednesday having reversed earlier weakness following release of weaker than expected European PMI manufacturing data and unexpected rise in German unemployment. June Bund futures opened lower as players returned back from May Day/Labour day holiday, but reversed direction after weaker than expected PMI manufacturing data releases from Spain, Italy, France and Germany. Subsequently, the eurozone manufacturing PMI number also came in weaker than expected at 45.9 in April versus flash 46.0 and March data at 47.7. In addition, Italian unemployment rate also rose to 9.8% in March versus upwardly revised 9.6% and the number of jobseekers in Germany rose by 19k more than reversing March’s decline, bringing the total number of unemployed to 2.875 million. Risk-aversion bid continued to dominate with German 5-year Bobl yield hitting fresh record low at 0.586% and the 10-year Bund just hovering above 1.631%. In supply, Portugal sold a combined total E1.5bln 6-/12-month T-bills, with yields on both maturities higher and demand lower compared to previous sales.
EasyForexNews Research Team