Recession Stalks Germany as Breakeven Rates Drop: Euro Credit
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The falling cost of protecting against inflation in the German bond market portends a deeper slowdown in Europe’s largest economy, signalling the effects of the continent’s debt crisis are edging closer to the core.
The two-year breakeven rate, a gauge of inflation expectations, dropped to minus 0.44 percentage point for Germany from 1.04 percentage point a year ago, and has remained negative since the end of May. The rate reflects investors selling index-linked bonds in favor of regular securities because they reckon consumer prices will decline.