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The fear of global recession is growing due to signs of weakness in Germany, the USA and China

Markets are changing the latest signs of the global economy Source: AP

LONDON. – European shares are falling today due to the shrinking of the German economy and because of the yield curve of

United States

has been reversed, which increases the fear of recession to global recession.

Investor confidence is weakened by weak growth figures in the case


and a slowdown in industrial production in China, counteracting the optimism of the previous day
Washington has postponed the entry into force of tariffs for some goods imported from China.

The difference between US bond yields for 2 and 10 years, the measure used as an indicator of possible recession, was negative and amounted to 0.45 basis point, a distance that has not been observed since June 2007. The last time he reversed the curve coinciding with the US mortgage crisis , which preceded the recession in 2008-2009.

Meanwhile, 30-year US Treasury bond yields fell to a record low of 2.068%.

"The disclosure is that there is a delayed effect: traditionally there is a delay of one to two years before the recession. They could see it next year, "said Neil Wilson, Chief Market Analyst at "This fact is a red warning light for the US economy," he added, referring to invested government bond performance.

Germany, Europe's largest economy, contracted by 0.1% in the second quarter, as the trade war and weak demand hit German producers, with increasing pressure on Angela Merkel's government to take incentive measures through tax reforms. Economy Minister Peter Altmaier said action should be taken to avoid a second contraction in a row that would drive the country into recession. "We can avoid it if we take the right measures," Bild told the newspaper.

The euro area as a whole said GDP rose by only 0.2% in the same three months.

The European stock exchange index STOXX 600 falls by over 1.8%. Markets in London, Frankfurt and Paris lose between 1.6% and 2%. Futures on Wall Street also indicated bearish opening.

German data, together with data that showed the slowest increase in industrial production in China in 17 years, fueled the fear of global recession.

"The trade war and dispute between the US and China have already had an impact, especially when more sensitive countries to world trade such as Germany and even Italy have been observed," said Christophe Barraud, chief economist and strategist at Market Securities in Paris.

In this context, the German economy – the largest in Europe and traditionally dependent on exports – was quite sensitive, among the signs that the rate at which it is developing is decreasing due to the protracted period of increased demand at the local level

"Today's GDP data definitely means the end of the golden decade for the German economy," said Carsten Brzeski, an analyst at ING. "Trade conflicts, global uncertainty and a restless automotive sector have finally brought her to her knees."



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