The German 2s10s curve has inverted to two-decade highs, surpassing the levels seen in March. Macro continues to slow and Morgan Stanley (MS) analysts lower their growth forecasts for Europe with the German IFO contracting, for the second consecutive month more than expected by both consensus and Morgan Stanley… and in line with last Friday’s disappointing European PMIs.
The bad data is again concentrated in the deterioration of the expectations part, as the contraction of the current conditions component has been more moderate. Following the data, MS has revised downwards its estimate for German GDP growth 2023 from -0.4%Y to -0.5%Y.
