What's going on?

Data released on Friday showed German factory orders in May were much lower than economists predicted, heaping further pressure on an already flailing eurozone economy.

What does this mean?

Orders to factories in the eurozone�s largest economy were almost 9% lower this May than they were last year � worse than the 6% drop economists had forecast, and the biggest fall since 2009. Factory-based manufacturing represents about a fifth of Germany�s economy, so such a slowdown will probably hit the country hard.


A major reason for the decline is likely the US-China trade war � weighing particularly on Germany�s all-important auto industry. Domestic orders actually increased in May compared to April � but it wasn�t enough to offset a continued drop in international orders. Germany�s woes are bad news for the entire eurozone, which is already von Trapped in near-recessionary doldrums.

Why should I care?

For markets: Bond returns are uber-safe but unter-whelming.�

Investors have been going crazy for German bonds recently: demand pushed their prices higher and yields to record lows on Thursday (remember, the two move inversely). Friday’s data probably won�t change their minds: a weaker economy encourages investors to seek uber-safe havens like bonds. This month, the European Central Bank may break with its American cousin and lower the region�s interest rates to prop up the economy. All else equal, that�d also make existing eurozone bonds more attractive to investors than new ones, vindicating their current buying spree.

The bigger picture: A potential car crash at BMW.

Last month, carmaker Daimler warned for the third time in a year that its annual profit would be lower than expected. And rather than possibly facing similar music, the CEO of rival BMW on Friday announced he would shortly use his ejector seat. Any replacement will have several challenges to reckon with: the industry�s focus shifting towards China and away from car ownership in developed markets; an expensive and competitive electric vehicle arms race; and potential fines related to a not-so-fresh emissions scandal.