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The German economy needs new sources of growth. Investors shouldn’t count on fiscal stimulus to be one of them, even if the government loosens the purse strings a bit.
On Monday, the Bundesbank said that Germany’s economy could shrink between July and September for the second quarter in a row, officially plunging Europe’s powerhouse into a recession. Expectations that the European Central Bank will need to slash interest rates further have driven yields on 10-year German government bonds down to around minus 0.7%.