The private research group German Macroeconomic Policy Institute (IMK) warned in a Thursday-published report that there was an “almost 60% chance” that the Eurozone’s largest economy could descend into recession.
Heightened Risk
The monthly index assessing the German economic health set the risk of a recession at 59.4%. The odds were raised from 43% last month. This comes as the biggest recession risk warning since after the end of the last decade’s global financial crisis.
ECB Stimulus Expectations
With a recession on the horizon, the European Central Bank is most likely to cut interest rates during its Thursday policy meeting by at least 10 basis points further into the negative territory and launch a stimulus program that may include asset purchases as the bank’s charismatic and towering President ‘Super’ Mario Draghi prepares to depart.
Trump Wants Subzero
US President Donald Trump on Wednesday once again argued for low interest rates and the extraordinary step of pushing them below zero for that matter as markets worldwide await next week’s Federal Reserve meeting.
“The USA should always be paying the lowest rate. No Inflation! It is only the naïveté of Jay Powell and the Federal Reserve that doesn’t allow us to do what other countries are already doing. A once in a lifetime opportunity that we are missing because of “Boneheads,” Trump tweeted.
Another ‘Goodwill’ Gesture in the War
On the Sino-US trade negotiations, Trump welcomed China’s decision to exempt some US goods from tariffs. In reply to the gesture, Trump announced of a short delay from October 1 to October 15 to scheduled tariff rises on billions worth of Chinese goods worth of $250 billion.
OPEC Cuts Demand Growth, EIA Report and Trump’s Iran Moves
The Organization of the Petroleum Exporting Countries (OPEC) on Wednesday slashed its forecast global oil demand next year due to economic slowdown, US-China trade war and the Brexit. In a monthly report, OPEC said oil demand would grow by 1.08 million barrels per day (bpd), that is 60,000 bpd less than the previous estimates.
US Energy Information Administration reported a fourth week of falls in inventories as they dropped by 6.9 million barrels to 416.1 million barrels in the week to September 6.
Reports emerged that US President Trump was mulling easing sanctions on Iran after the resignation of his hawkish national security advisor John Bolton. Any reconciliatory move by Trump towards Tehran could potentially boost global crude supply with the re-participation of Iran in the market.
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