Stimulus Exhaustion & European Woes
Back to the virus story. A number of countries set new-case records this week including Germany on Thursday with 7313 cases. Granted that comes on many tests and hosptializations remain low but what is frightening governments into lockdowns is the pace of increase. A week earlier there were 4010 cases in Germany. The +80% w/w rise is terrifying and quick increases in the region have already led to partial shutdowns in Spain, France, the Netherlands and elsewhere.
This is all likely to lead to Q4 growth downgrades. The clearest signal Thursday came from the German bund market where yields fell for the fourth day and broke the April low of -0.59% to end a medium-term consolidation pattern.
With that the euro grows increasingly vulnerable, particularly against the Swiss franc and yen.
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