"A positive reaction to the central banks' aid measures failed to materialize, and economic assessments are falling across the board," explained Sentix Managing Director Patrick Hussy. For Germany, the economic index fell from -12.8 to -19.4 points, the lowest level since July 2009. The economic index for the euro zone fell from -11.1 to -16.8 points, the lowest level since March 2013.
Order intake by German industry in August was weaker than expected. According to the German Federal Statistical Office (Destatis), it fell by -0.6% compared to the previous month. Thus, the downward trend of recent months continued contrary to expectations. The economists surveyed by Dow Jones Newswires had forecast an increase of +0.2%.
ECB supervisors have recently resumed the biennial stress test with over 100 credit institutions in the euro area. The aim is to find out how many days banks can "continue to operate on the basis of available means of payment and collateral without access to refinancing markets" in the event of a shock. If customers were to withdraw large sums of money in a short period of time, the liquidity situation at most banks would look "comfortable" overall, the ECB supervisor said yesterday. According to this, about half of the financial institutions would hold out for more than six months without having to rely on outside capital. In the case of extreme distortions, it would be more than four months. This would give institutions more time to react to financial turmoil than before the severe financial crisis in 2008, which prompted supervisors to tighten regulations in general.
At the height of the euro crisis in 2012, the yield on ten-year Portuguese government bonds was still 15 percentage points higher than that of their German counterparts. In the meantime, the risk premium has fallen to 0.7 percentage points. In addition to robust economic growth, a reduction in the budget deficit from eleven to 0.5% of GDP contributed to this. Most recently, the credit rating upgrade by the rating agency DBRS from "BBB" to "BBB (high) with stable outlook" and the outcome of last Sunday's parliamentary elections also boosted investor confidence. With 37% of the vote, Prime Minister António Costa's Socialist Party emerged stronger from the elections and can continue its minority government. As a result, the yield on ten-year securities fell yesterday to an all-time low of around 0.11%.
|03:45||CN||Caixin Services PMI||52.29|
|08:00||DE||Industrial Production (y/y)||-4.27%|
|14:30||US||Producer Prices (y/y)||1.80%|
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Source: LGT Bank (Switzerland) Ltd.
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