(ZEROHEDGE) – S&P futures tumbled, European stocks slumped to a three-week low, 10Y Treasury yields dropped near all time lows (where the 5Y already was at 0.2374%, the lowest yield on record), and the EUR slid from near a 22-month high after the market reassessed that Powell's message could have been even more dovish, and as German GDP crashed the most on record, alongside a surge in Covid-19 cases. Meanwhile, today's U.S. GDP report is expected to show shortly that the U.S. economy contracted by a record 34.5%. The dollar strengthened against most Group-of-10 peers, with Scandinavian currencies leading losses.
German GDP contracted by 10.1% Q/Q in the second quarter of 2020, the biggest drop on record and worse than the 9% expected drop. The good news: this print is consistent with a relatively fast rebound of both the industrial and services sectors through May and June. That said, the below-consensus performance of Germany points to downside risks to consensus expectations for the Euro area Q2 release published tomorrow. It also means that the narrative of a faster European recovery than the U.S. has just come to a screeching halt.