The inversion in the German government bond yield curve reached its deepest since June 2008 on Wednesday after Purchasing Managers' Index (PMI) data showed demand was still falling across the euro zone in November.
The gap between 2-year and 10-year German yields reached its smallest since June 2008 at -17.5 basis points (bps).
A curve inversion suggests interest rates will be lower in the future. Market participants said it could be a precursor of a recession, or a signal that central banks will win their battle against inflation soon and be able to ease monetary policy, allowing the economy grow.
The downturn in euro zone business activity eased slightly in November. Still, overall demand continued to decline as consumers cut spending in the face of a cost-of-living crisis. (Reporting by Stefano Rebaudo, editing by Amanda Cooper) ;))