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Illustration: Aïda Amer/Axios
The ECB is expected to push forward with deeper negative interest rates next month and the Fed looks to be considering implementing them in the U.S. should the current economic slowdown accelerate.
What they're saying: Recent research from the San Francisco Fed finds that after the Bank of Japan announced negative rates in 2016, "market expectations for inflation over the medium term fell immediately."
Research on Europe's experiment with negative yields has drawn similar conclusions.
Even so, incoming ECB president Christine Lagarde insists the eurozone would be "worse off" without negative rates, and the Fed looks to be headed toward an embrace of negative rates as well.
Watch this space: European bankers are increasingly worried about the harm negative rates are doing to the business of banking and are trying to pass the cost onto consumers.
More signs are pointing towards a recession in Germany, as the country's economy turns under the weight of its manufacturing collapse.
The latest: The number of people who are out of work increased by 4,000, touching 2.29 million in August.
The big picture: The German unemployment rate has increased in 3 of the past 4 months, including the largest spike in unemployment in May since the financial crisis.
In June I wrote about a truly bizarre phenomenon — wealthy people and corporations have so much money they literally don't know what to do with it. They're holding it in cash and socking it away in savings accounts.
What's new: Data shows that theme has accelerated recently, with the rich cutting back on buying everything from penthouses to high-end art.
What they're saying: "While the middle class and broader consumer sections continue to spend, economists say the sudden pullback among the wealthy could cascade down to the rest of the economy and create a further drag on growth," CNBC's Robert Frank writes.
Why it matters: With the rich pinching pennies, worry is growing about a "trickle-down recession that starts at the top," Frank writes.
The big picture: "The top 10% of earners account for nearly half of all consumer outlays," Mark Zandi, chief economist at Moody’s Analytics, tells Frank. "But their spending has fallen over the past two years, while spending for the middle class has accelerated."
Treasury Secretary Steve Mnuchin said yesterday the Trump administration is seriously considering issuing 50- or even 100-year bonds, an idea that has gained traction among some market participants.
Axios' Dan Primack and Courtenay Brown write: 13% of American companies with operations in China have moved or plan to move all or part of their business out of China. But only 3% plan to relocate those operations to the U.S., according to a survey of 220 members of the U.S.-China Business Council.
Why it matters: It undercuts White House arguments that the trade war with China is causing U.S. companies to return home. In fact, a larger percentage planned to relocate from China to the U.S. in 2015.
Caveat: The survey was done in June, before the recent tariff escalations.
China's bond and equity markets have been slowly opening up to foreigners. They're now beginning to see fairly significant inflows that are growing much more quickly than foreign direct investment.
What's happening: Over the past 8 years, foreign investment in China's stocks and bonds has grown 6-fold to nearly $1.3 trillion, per Wind Information data shared by Seafarer Funds.
What they're saying: Nicholas Borst, director of China research at Seafarer Funds, writes...
"A recent spate of reforms have led to a considerable opening of China’s capital account. Whether via the Stock Connect, the Bond Connect, the expansion of the Qualified Foreign Institutional Investor (QFII) program, or direct access to the interbank bond market, foreign investors have an unprecedented ability to buy and sell Chinese securities.
"Capital inflows into China have increased significantly, even amid the volatilities of its economy and stock markets."
Yes, but: The level of Chinese assets owned by American investors is still low compared to U.S.-based funds and even to other emerging markets, Borst tells Axios. The current level of investment represents less than 5% of total U.S. investor holdings.