This translation has been automatically generated and has not been verified for accuracy.Fears of a major downturn in euro zone powerhouse Germany grew this week following “scary” industrial output figures for June and reports due over the coming week that will hold those concerns up to the light.
Already, alarm bells are ringing: U.S. 30-year yields are flirting with record lows, and the premium on three-month Treasury bill rates over 10-year Treasury yields - a closely watched U.S. recession indicator - jumped to its highest since March 2007. Some analysts now see a more than 50% chance the longest-ever U.S. economic expansion could slip into a recession within 12 months. PIMCO, one of the world’s biggest bond investors, talked of the possibility of negative Treasury yields.
A quarter-point cut at the Fed’s next meeting on Sept. 18 is now almost fully priced. Markets see one chance in four of a larger 50-basis-point rate cut next month.What seemed like a minor lurch in China’s currency has become a big deal for financial markets. Many fear it may be the beginning of a Chinese competitive devaluation in response to U.S. tariff threats, which in turn could trigger a currency war that may force other regional central banks to slash interest rates.
As investors piled into safe-haven assets, Germany’s 30-year bond yield hit a record low, Ireland’s 10-year bond yield turned negative, and the Netherlands became the latest to join that growing club of countries with entire yield curves drowning in sub-zero territory.