Ifo economist: German economy facing uncomfortable times

  • Uncertainty among companies have increased significantly
  • Recession is knocking at our door
  • It cannot be ruled out if situation continues developing as it is currently

This is not a surprising development by any means if you have been following how things are going in Europe. The only people oblivious to the risks as always, have been central bankers. Or more like the fact that they are just stuck in their own little world.

German Ifo business survey on the agenda in Europe today

Don’t expect too much action in markets over the next few days as the focus will reside on the FOMC meeting on Wednesday. All eyes will be on the Fed and it seems likely that policymakers will stick with a 75 bps rate hike this week. But there will be questions about their views on the US economy and where they might see rates moving towards in the battle against inflation.

It will be interesting to see if there will be any questions about rate cuts next year in lieu of recession risks and to see the Fed response on that.

But if there’s anything else to watch this week, watch the bond market. 10-year Treasury yields are threatening a firm break below its 100-day moving average for the first time since the end of last year and is nearing recent lows around 2.70% to 2.72%:


If we are to see a meaningful retreat in yields as a result of the Fed or anything of that sorts, the levels above are ones to pay attention to. In turn, expect that to also impact yen pairs more significantly.

Looking ahead today, there won’t be much but the German Ifo business survey for July is almost certainly going to show a further deterioration in economic sentiment as Europe’s biggest economy starts to crack under the pressure of rising prices and the energy crisis.

0800 GMT – Germany July Ifo business climate index
0800 GMT – SNB total sight deposits w.e. 22 July
1000 GMT – UK July CBI trends total orders

That’s all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.

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