# German bond yields at new highs after stronger-than-expected PMIs
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-08-23
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: German bond yields rise on positive PMI data from Eurozone
Meta Description: Get the latest on the rise in German bond yields to multi-week highs after the latest data reports on euro zone business activity and more.
URL: https://financedigest.com/german-bond-yields-at-new-highs-after-stronger-than-expected-pmishtml

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By Yoruk Bahceli

(Reuters) – German bond yields rose on Tuesday to new multi-week highs after data showed euro zone business activity slowed less than expected in August

Yields had already risen after S&P Global’s flash composite Purchasing Managers’ Index reading for Germany, tracking both manufacturing and services activity, while falling further in August, was slightly higher than analyst expectations.

Though remaining in contraction territory, the manufacturing index also rose, instead of the [fall analysts had expected](https://www.financedigest.com/uk-manufacturers-expect-output-to-fall-3-2-in-2023.html "UK manufacturers expect output to fall 3.2% in 2023").

Euro zone data that followed similarly showed a [contraction in activity](https://www.financedigest.com/asias-factory-activity-contracts-despite-chinas-covid-reopening.html "Asia’s factory activity contracts despite China’s COVID reopening"), though the reading was also slightly higher than analysts expected.

Germany’s 10-year [Bund yield](https://www.financedigest.com/euro-zone-bond-yields-rise-after-u-s-jobs-data.html) rose as much as 7 basis points (bps) to its highest since July 21 at 1.38%, before easing slightly. The two-year [bond yield](https://www.financedigest.com/stocks-up-bond-yields-fall-as-markets-mull-a-fed-policy-pause.html "Stocks up, bond yields fall as markets mull a Fed policy pause") touched a new peak of 0.941%, its highest since end-June, before falling back in late trading.

I don’t think the PMI numbers in any way are a game changer, they are slightly still sub-50, so pointing to stagnant growth at best,” said Richard McGuire, [head of rates](https://www.financedigest.com/wall-st-heads-higher-as-fed-rate-hopes-dent-dollar.html "Wall St heads higher as Fed rate hopes dent dollar") strategy at Rabobank.

A reading below 50 indicates that [activity is contracting](https://www.financedigest.com/dollar-slides-on-contraction-in-private-sector-activity.html "Dollar slides on contraction in private sector activity").

“There’s not much news today, it’s just a continuation of the bearish tone. The PMIs simply do nothing to stand in the way of the recent bearish momentum,” McGuire added.

After sharp falls earlier in the summer on recession fears, [bond yields](https://www.financedigest.com/global-equities-gain-as-rising-bond-yields-pressure-gold.html "Global equities gain, as rising bond yields pressure gold") rose sharply last week, driven by a strong increase in inflation in Britain, gas supply fears in the euro zone and hawkish commentary from European Central Bank policymakers.

A key market gauge of long-term euro zone inflation [expectations tracked by the ECB](https://www.financedigest.com/hawkish-ecb-comments-push-up-rate-hike-expectations.html "Hawkish ECB comments push up rate-hike expectations") rose to 2.2399%, the highest since early June, continuing a sharp rise since the start of last week, when it was at 2.06%.

In Italy, 10-year yields rose to as high as 3.72%, the firmest since July 21. The closely watched [spread to German](https://www.financedigest.com/german-yields-steady-spreads-tighten-after-recent-repricing.html "German yields steady, spreads tighten after recent repricing") peers was earlier at 233 bps, the highest since July 29.

In other markets, German stocks rose to outperform the pan-European STOXX 600 index, while the euro pared its losses after the data, having [hit a fresh](https://www.financedigest.com/londons-ftse-100-hits-fresh-record-high-as-telecoms-surge.html "London’s FTSE 100 hits fresh record high as telecoms surge") 20-year low earlier, at $0.99005.

In debt issuance, Finland was [raising 3 billion euros](https://www.financedigest.com/delivery-hero-ramps-up-interest-payments-to-raise-1-billion-euro-convertible-bond.html "Delivery Hero ramps up interest payments to raise 1 billion euro convertible bond") by syndication, according to a lead manager memo seen by Reuters.

It is the first [euro zone](https://www.financedigest.com/euro-zone-inflation-seen-just-above-ecbs-target-in-2025-poll-shows.html "Euro zone inflation seen just above ECB’s target in 2025, poll shows") syndicated government bond sale, in which issuers hire investment banks to sell the debt directly to end-investors, since May.

(Reporting by Yoruk Bahceli; Additional reporting by Lucy Raitano, Tommy Reggiori Wilkes and Dhara Ranasinghe; Editing by Jan Harvey and Bernadette Baum)


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