Monday, April 23, 2012

German decoupling may have been wishful thinking

The concept of German decoupling from the Eurozone recession may have been wishful thinking. The latest German Manufacturing Purchasing Managers' Index (PMI) has converged with that of the Eurozone as a whole. Manufacturing PMI is a closely watched index and tends to be a leading indicator for the GDP.

German (white) vs. Eurozone (orange) Manufacturing PMI (Bloomberg)

In response, Spain's 5yr sovereign CDS hit a new record high of 511bp (previous high was 510 on 4/16).  The Eurozone is headed for a double dip.

Spain 5yr sovereign CDS (Bloomberg)


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