With German manufacturing now shrinking and the country’s growth
faltering, the hoped-for engine of recovery is stuttering.
Germany’s slowdown coincides with slower growth in most other
major economies, including China, and euro-zone policy makers
are coming under more pressure to ease both fiscal and monetary
policy. Even hawks such as Bundesbank President Jens Weidmann
are talking about an interest rate cut and President of the
European Commission Jose Manuel Barroso is discussing the need
for reduced austerity.      In the meantime, bond yields in
debtor nations continue to fall, but this might have more to do
with high global liquidity levels and the general hunt for yield
than any greater appetite for euro zone assets at this stage.