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The Weekly Brief

Contributor Global Markets Insights Strategy Team

The latest industrial production (IP) data for the eurozone disappointed last week, with output across the bloc dragged down by Germany and France.

Rising concerns around the global growth outlook – further exacerbated by weak Chinese IP and retail sales figures – has prompted significant demand for government bonds. Longer-dated bond yields declined sharply last week, with the spread between US 2-year and 10-year government bond yields inverting on Wednesday for the first time since 2007. While the slowdown in global growth is now a fact rather than a forecast, we would not place great weight on the inverted yield curve as a recessionary signal given the impact of extraordinary monetary policy on the shape of the curve. Further escalation in the trade war would pose significant threats to this expansion, but our base case remains that a recession is not imminent with central bank policy acting to extend the cycle.

Industrial production under pressure

Eurozone industrial production ex-construction, % change year on year

Source: Eurostat, Refinitiv Datastream, J.P. Morgan Asset Management. Data as of 15 August 2019.

The Weekly Brief (19 August 2019)

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