LONDON: German bond prices rose to a three-week high on Thursday after French business activity data fell short of expectations and pointed to a recession in the euro zone's second biggest economy.
Above-forecast German data stemmed the rise in demand for low-risk assets, but the discrepancy will flag concerns that the euro zone's recovery is vulnerable if only Germany can generate growth. Those concerns were supported by Spanish figures showing another record high unemployment rate.
The Bund future rose 25 ticks to 143.84, reversing an early fall and smashing through the upper limit of a range that had survived several tests since early January.
"It was only the French data that was weaker but we triggered some stops on the way up and that's exaggerated the move a bit," a trader said, citing automated buying around recent highs of 143.64/67.
Technical analysts said a break out of this range could propel the Bund higher if sustained into the close, with UBS analyst Richard Adcock highlighting a move to 144.38 - the 62 percent retracement of the December to January sell-off.
The market's initial positioning for data showing an improvement in the euro zone had also meant the focus on the French weakness was greater, analysts said.
Comments
Comments are closed for this article.