Economic euphoria propels Merkel towards fourth term

German two-year bond yields at six-week low

BERLIN, July 27, (RTRS): German consumer morale hit a 16-year high, data showed on Thursday, the latest piece of positive economic news to boost prospects for Chancellor Angela Merkel as she prepares to seek re-election in September elections.

Market research group GfK’s consumer sentiment indicator rose 0.2 percentage points to 10.8, its highest level since October 2001. It echoed similarly positive business morale trends.

With Germany going to the polls on Sept. 24, the economic picture augurs well for Merkel, who is seeking a fourth term in office, burnishing the conservative’s 13-point poll lead over her Social Democrat rivals.

“The German economy is now firing on all cylinders,” Rolf Buerkl, a researcher for Nuremberg-based GfK, said in a statement, with consumers expecting further improvements over the remainder of the year.

Germany’s manufacturing economy is also in rude health, anticipating a surge in already robust exports.

With unemployment hitting new lows each month, Merkel’s Social Democrat challenger Martin Schulz has struggled to gain traction with a message focussing on the ills of inequality. He is refocussing his campaign on the risk of a rekindled refugee crisis.

Schulz, who heads to Italy for a meeting with Prime Minister Paolo Gentiloni and to visot a Sicilian refugee camp visit on Thursday, has warned that Germany is heading for a repeat of the 2015 flood of almost a million Syrian war refugees arriving in Germany, the toughest moment in Merkel’s 12-year premiership.

LONDON:

Also:

German short-dated government bond yields hit a six-week low on Thursday as investors detected a softening in the Federal Reserve’s inflation view that could keep interest rates lower for longer.

The U.S. central bank left rates unchanged on Wednesday and said it expected to start winding down its massive holdings of bonds “relatively soon”.

It noted that both overall inflation and a measure of underlying price gains had declined - trends which have worried some policymakers - but said it expected the economy to continue strengthening.

Investors seized on the comments as a sign that the Fed is unlikely to rush into another rate rise too soon, snapping up bonds and stocks and pushing the dollar down.

A Reuters poll showed most primary dealers still see the Fed’s next rate rise in December. But rate futures price in less than a 50 percent chance of a hike by then, compared to a little more than 50 percent before the Fed’s meeting. The construction site (foreground), for the West Kowloon terminus of the high-speed rail link connecting Hong Kong to the southern Chinese city of Guangzhou is seen in Hong Kong on July 27. Controversy over a

new cross-border rail link which will see mainland laws enforced in a Hong Kong train station escalated on July 27 after the justice chief likened China to the city’s ‘landlord’. (AFP)