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    Germany’s IFO expectations index matched forecasts at 90.5 in February, signalling a steady business outlook

    by VT Markets
    /
    Feb 23, 2026
    Germany’s Ifo expectations index came in at 90.5 in February, which matched forecasts. This reading shows no change versus expectations for the month. No other figures were included.

    Neutral Signal Reinforces Stagnation

    The Ifo expectations index meeting the 90.5 forecast is a neutral result. It supports our view that Germany’s economy is stagnant. It avoids a negative shock, but it does not offer a reason to turn optimistic. In other words, the most likely outcome is that current trends continue. This also fits the weak backdrop we have tracked since the poor industrial production data for the final quarter of 2025. This ongoing softness increases pressure on the European Central Bank to act sooner. With Eurozone headline inflation recently down to 2.8%, markets are more likely to price in a rate cut in the second quarter. For that reason, we see long positions in German Bund futures as attractive, as yields could fall further. For equity traders, the lack of an upside surprise limits the potential for a strong move higher in the DAX. This is a good setup for selling volatility. We are looking at selling call options on the index, or on industrial stocks that are highly sensitive to the economic cycle. In 2025, similar range-bound periods favored this type of strategy over outright directional trades. The data also supports a bearish view on the euro versus the US dollar. A weak German economy points to a more dovish ECB than the US Federal Reserve. That would widen the interest-rate gap that already favors the dollar. We will consider EUR/USD put options, as the pair could retest the lows seen in late 2025.

    Implications For Rates Equities And Fx

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