What are yield curves telling us in the euro-zone?

The steepness of the yield curve in Germany has historically been a poor leading indicator of recessions. But that is cold comfort given the contraction in the economy in Q2 and the further weakness of the business surveys in July. With the economic data continuing to undershoot expectations, and recent dovish comments from Olli Rehn, the chance of the ECB announcing a major stimulus package in September has risen.