The German 10-year bond yields fell for the first time in almost a year on Tuesday as the biggest fall in the country's factory orders in 6-months suggested a global slowdown was leaving its mark on Europe's powerhouse economy. The benchmark 10-year bonds yields, which is inversely propositional to bond price fell to 26.56 pct to 0.093 pct and 3-year bonds yield dipped 3.47 pct to -0.488 pct at 9:55 GMT.
The Germany February factory orders tumbled 1.2%, lower than the consensus of 0.3%, from previous 0.5% (revised up from -0.1%).
“There are worries about the global economy, and bunds are still a safe haven and are climbing higher”, said Christian Reicherter, an analyst at DZ Bank AG in Frankfurt.
A fall in oil prices for the third straight session was also weighing on inflation, pushing down yields already under pressure from the data that showed weaker foreign demand for German goods.
“The data signals weaker export growth, softer demand both within the euro zone and (further) abroad and thus suggesting that the ECB's challenge as regards boosting inflation and inflation expectations is and will remain very much an uphill battle,” said Matt Cairns Rabobank strategist.
Lastly, analysing the on-going economic trend we foresee that Bund yields could break new lows and turn negative.
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