German factory output disappoints

Germany expects a record year in employmentGermany factory workers

European markets may react negatively this morning to the latest data released from Germany, which indicates that factory output declined in February by -0.9%, the second successive month in which the reading contracted. Forecasts had suggested that output would return to positive territory, and the latest figures will raise questions about a possible slowing of demand in external markets such as China and the U.S.

Eurostat data scheduled for later today are expected to show that retail sales in the currency bloc returned to negative territory in February having recorded gains in the previous four months.

On bond markets, it will be interesting to see if Spain can remain in the negative yield club in today’s trading. Spanish six-month Treasury bills were yesterday offering a yield of -0.02%, the first time Spanish yields have entered in to negative territory.

The driving down of bond yields is a by-product of the ECB’s QE programme, and data released yesterday revealed that the ECB purchased €5.4 billion worth of Spanish bonds in March, out of a total  €60 billion bought by the bank in the first month of the scheme.


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