GRAPHIC-Take Five: The devil's in the data

1/ READY FOR A SCARY EUROZONE GDP SHOW? Fears of a major downturn in eurozone powerhouse Germany have grown following "scary" industrial output figures for June and reports due this week that will hold those concerns up to the light.

On Wednesday, quarterly flash gross domestic product data for both Germany and the wider eurozone are released. The consensus forecast from Reuters' poll is that eurozone GDP grew 0.2% in the second quarter but in Germany - the bloc's largest economy - it's expected to have shrunk 0.1%. Bond markets certainly fear the worst. Ten-year bunds yield a record low of almost -0.60%. The entire German government yield curve out to 30 years is now below zero. Investors are raising red flags about a eurozone recession and a resumption of European Central Bank bond-buying as the escalating U.S.-China trade war hits the exporters.

Markets are on high alert for signs Germany and other governments will use such cheap borrowing rates to support the reflation policies of their central banks. A report this week that Germany might issue new debt to finance climate protection caused a brief spike higher in bund yields and the euro. - "Scary" German output figures propel recession fears - EXCLUSIVE-Germany eyes fiscal U-turn to finance climate protection plan -official

2/ U.S. ECONOMY READOUT After an escalation of the U.S.-China trade row sparked one of the most volatile weeks of the year for U.S. stock and bond markets, investors are focusing on the U.S. economy's ability to absorb a tariff war with some critical health checks.

Already, alarm bells are ringing: U.S. 30-year yields are flirting with record lows and the premium on three-month Treasury bill rates over 10-year Treasury yields - a closely watched U.S. recession indicator - jumped to its highest since March 2007. Some analysts now see a more than 50% chance the longest-ever U.S. economic expansion could slip into a recession within 12 months. PIMCO, one of the world's biggest bond investors, talked of the possibility of negative Treasury yields. U.S. July consumer price inflation, due Tuesday, has been tame in recent years and consistently below the Federal Reserve's 2% target. Fed chair Jerome Powell said the strong tie between unemployment and inflation was broken 20 years ago and the relationship "has become weaker and weaker and weaker."

But market watchers are in for a deluge of data on Thursday: July retail sales, industrial production, the August Philadelphia Fed index and NAHB housing market indicator are coming. So are weekly jobless numbers and the June TIC data update on the breakdown of Treasury holdings A quarter-point cut at the Fed's next meeting on Sept. 18 is now almost fully priced. Markets see one chance in four of a larger 50-basis-point rate cut next month. - COLUMN-Fed may be forced to reassure stressed global markets: Kemp - WRAPUP 8-U.S. designates China a currency manipulator, escalating trade war

3/ SMALL MOVE, BIG DEAL What seemed like a minor lurch in China's currency has become a big deal for financial markets. Many fear it may be the beginning of a Chinese competitive devaluation in response to U.S. tariff threats, which in turn could trigger a currency war that may force other regional central banks to slash interest rates. The move also sparked fresh doubts a deal in the U.S.-Sino trade war will ever get done.

That 2%-plus slide in the heavily managed yuan has pushed it to 2008 lows and to the weaker side of 7 per dollar. Beijing is saying it's merely letting market forces drive the yuan, not weaponising the currency, and has done its best through open market operations to contain the move. Chinese trade data showed that, with falling imports and exports, Beijing needs a weaker currency to support its economy. Yet the yuan's drop has set in motion scarier prospects: more geopolitical and business ruptures and threats between the world's two biggest economies. That is being borne out in plunging stocks and bond yields, tumbling emerging-market currencies and a flight to the safety of dollars, gold, bitcoin and yen.

Markets are watching the back and forth between Washington and Beijing, accusations of currency manipulation, plus the mounting pressure on the Fed to cut rates again. In addition, there is the question of how Beijing will manage expectations around its currency so it doesn't spark a flight of domestic and foreign capital. - China state banks seen supporting yuan to steady declines - sources - UPDATE 1-Trump says China is 'killing us with unfair trade deals' 4/ IT'S GETTING FROTHY DOWN THE LONG END

The markets rout after an escalation in the U.S.-China trade war marked new milestones for many assets, and government bonds were no exception. As investors piled into safe-haven assets, Germany's 30-year bond yield hit a record low, Ireland's 10-year bond yield turned negative, and the Netherlands became the latest to join that growing club of countries with entire yield curves drowning in the sub-zero territory.

The evaporation of global yield is pushing investors further out the maturity spectrum. Austria's 100-year bond is up to some 63% year-to-date, with a vertical price chart harking back to similar surges in cryptocurrencies and tech stocks. Austria's century bond only highlights a broader trend: the yield on the Bloomberg Barclays Multiverse index for global bonds with maturities of seven to 10 years hit a record low of 1.44% this week.

Going "long" U.S. Treasuries has featured as what fund managers think is the "most crowded trade" for two months straight in a Bank of America Merrill Lynch survey. That could prove a bad omen - assets named "most crowded" usually sink soon afterwards. Time for a bubble to pop? - GRAPHIC-Soaring prices in super-long euro bonds ape crypto, tech surges - GRAPHIC-Jolted markets mark new 2019 milestones For an interactive version of the below chart, click here https://tmsnrt.rs/2MIhG37

5/ THE VOTE'S OUT ON MACRI-NOMICS Argentine voters soundly rejected President Mauricio Macri's austere economic policies in primary elections on Sunday, raising serious questions about his chances of re-election in late October.

A coalition backing opposition candidate Alberto Fernandez - whose running mate is former president Cristina Fernandez de Kirchner - led by a wider-than-expected 14 percentage points with 47.1% of votes, with fourth-fifths of ballots counted. Fernandez had tapped into the public's anger at the economic pain austerity has inflicted. That's fine of course, but markets will now be worried he could start blowing the budget again if he wins in October and endanger the main thing keeping the country afloat - IMF support.

That means it's likely to be bumpy start in Buenos Aires later. The stock market rallied 7% on Friday, hoping that the primary vote would be tight and international investors were still overweight Argentine bonds. - Argentina opposition scores the big primary win, hurting Macri's re-election bid - EMERGING MARKETS-Latam FX, stocks down; Argentine stocks surge ahead of the primary vote - EXPLAINER-Argentina heads to the polls. What's up for grabs? - Argentina's economic activity breaks a year-long losing streak in boost for Macri