Eurozone inflation for May climbed to 0.3 %, indicating that QE is having the desired effect.
Stubbornly low
eurozone inflation expectations — just 1.3 % annually over the next five years implied by bond markets — should push the ECB to extend its stimulus beyond March 2017.
This can happen one of three ways: through Greek nominal wage cuts (which the Greeks can't accept), through high
Eurozone inflation and stable Greek nominal wages (which the Germans won't accept), or through Greece getting control over its own currency, which will depreciate considerably relative to the Euro.
An improving growth backdrop should eventually lead to a sustainable move higher in
eurozone inflation, justifying a removal of monetary accommodation.
Economics: The very first reading through of
eurozone inflation in September will be printed at five a.m. ET.
European stocks slipped Thursday, after a surprise fall in
eurozone inflation, which will likely spur the European Central Bank to tread carefully in...
Eurozone inflation has suddenly dipped to its lowest level in more than a year, calling into question plans for the bloc's central bank to end its vast bond - buying programme.
After a surprisingly large dip in the previous month,
eurozone inflation rebounded in April, with the annual increase in core prices accelerating to its highest level since 2013.
With
eurozone inflation surprisingly weak, the ECB's patience risks being tested
By
Richard Barley
Richard Barley
The Wall Street Journal
Biography
@RichardBarley1
[email protected]
The Federal Reserve was finally able to say Wednesday that U.S. inflation had moved close to its 2 % target.
Our Eurozone Inflation swaps data includes seasonally adjusted fixing swaps — BGCMD is one of the few sources of this data.
Investors were cautious after a largely weak performance on Wall Street on Thursday as some disappointing earnings reports offset strong economic data, while bond yields slid after a surprising slowdown in
eurozone inflation.
Eurozone inflation grew at an annual pace of 1.2 % in April, Eurostat said, slightly lower from a reading of 1.3 % in the previous month.
Treasury yields fall after tepid
eurozone inflation data spark German bund rally European government bonds strengthened as inflation weakensTreasury yields retreat on Thursday by falling rates in European government bonds after
eurozone inflation data came in weaker than expected.
The weak performance on Wall Street weighed on investor sentiment, as well as the unexpected dip in
Eurozone inflation.
Rising oil prices caused a headline spike in
eurozone inflation at the beginning of this year, which has washed through the system.
Treasury yields retreat on Thursday by falling rates in European government bonds after
eurozone inflation data came in weaker than expected.
The Commission forecast that
eurozone inflation this year would remain unchanged at 1.5 percent, rising only to 1.6 percent next year.
Not exact matches
Note we do see
inflation moving sideways at low levels in the
eurozone, even as we expect
inflation to pick up in the U.S..
«The current bull market is not going to end simply because «stocks have gone up too much»... The buyside is fairly cautious, seeing downside stemming from: (i) deflationary pressures of the 40 % year - over-year oil decline, deceleration in China,
Eurozone weakness, and the fall in 5 - year
inflation breakevens; and (ii) Fed monetary tightening... Capital stock is again showing signs of pent - up demand, and as a consequence, companies and households will have to invest.
Still, we'd look for core
inflation in the
eurozone to continue rising up to the level we're seeing in Germany of 2.2 %.
World growth will remain low on average but negative in the UK and Europe; price
inflation will remain sufficiently subdued for a while longer so as to impose no constraint on monetary expansion; central banks will sustain a regime of negative real interest rates and rapid monetary expansion; the risk of a
eurozone collapse is off the table for now; finally, stock markets should continue to perform better than expected, even though the four - year old cyclical bull market is long by historical standards.
In December,
inflation in the 19 countries of the
eurozone fell below zero and raised the specter of deflation, a sustained decline in prices that can lead to higher unemployment and that is notoriously difficult to reverse.
If successful, quantitative easing would push down market interest rates in the
eurozone and make it easier for businesses and consumers to borrow money, helping to stimulate the economy and restore
inflation.
The long - awaited program, known as quantitative easing, is meant to spur growth in the listless
eurozone economy and to raise
inflation to healthier levels.
Despite the bank's stimulus measures to date,
inflation in the 19 countries of the
eurozone has been stuck near or below zero for more than a year.
One of the
eurozone's enduring problems is a dangerously low
inflation rate.
HIGHLIGHT Annual
inflation in the
Eurozone unexpectedly slipped to just 1.2 % in April, as prices of services increased at a slower pace adding to doubts about the ECB's plan for a gradual withdrawal of monetary stimulus.
We expect modest upside in
eurozone prices but share the European Central Bank's (ECB's) outlook for
inflation stuck below target at least through 2019.
«We also like EU
inflation - linked securities, as they discount a very pessimistic
inflation scenario in the
Eurozone,» said Pioneer's Germano.
Europe's trading calendar this week looks set to be dominated by fresh PMI data for the core of the
Eurozone from IHS / Markit later in the week as well as U.K.
inflation (Tuesday) and retail sales (Thursday).
Or has the ECB waited too long and missed the opportunity to free the
eurozone from its near recessionary doldrums and lift
inflation closer to the target?
A future German
inflation rate above the
eurozone average could be part of a natural adjustment process as crisis - hit countries pulled themselves out of recession, the Bundesbank argued in evidence to German parliamentarians submitted on Wednesday.
Following his comments, with the prospect of a rise in
eurozone interest rates apparently pushed back to 2018 at the earliest, the euro — which had already dipped in the wake of the lower - than - expected
inflation figures — gave up more ground.
After rising for several months, annual
inflation in the
eurozone fell further than consensus expectations in March, easing back from 2.0 % to 1.5 % at the headline level, and from 0.9 % to 0.7 % at the core level.
Our newly launched BlackRock
Inflation GPS signals greater potential for U.S. and
eurozone monetary policy divergence than markets expect.
The Bundesbank, the most hawkish of central banks, has signalled it would accept higher
inflation in Germany as part of an economic rebalancing in the
eurozone that would boost the international competitiveness of countries worst - hit by the region's debt crisis.
Nevertheless, the ECB expects the
eurozone's recovery to «broaden» in the months ahead, as private - sector lending growth picks up and
inflation expectations move higher.
We see the
inflation outlook as negative for US Treasuries but potentially helping
eurozone government bonds.
We also like US
inflation - linked bonds relative to the richer pricing of medium - term
eurozone equivalents.
European Central Bank head Mario Draghi says the
eurozone economy still needs abundant stimulus to raise
inflation to more normal levels even in the midst of a strengthening recovery.
Will the Euro retain its stability or will it move in response to major events such as German retail sales, employment data in Germany,
Eurozone and
inflation.
Not only were the second - quarter GDP figures somewhat disappointing, but
inflation has remained quite low even though the
eurozone pulled its way out of a short period of deflation seen at the beginning of this year.
Low
inflation and uncertainties about the global economy also forced the ECB to revise its forecast for 2015
eurozone growth from 1.5 % to 1.4 %.
European Central Bank head Mario Draghi says the expanding
eurozone economy still faces «risks and uncertainties» — including a looming trade dispute with the United States — and has cautioned that
inflation needs to rise further before monetary stimulus is ended.
Inflation across the 19 - country
eurozone remains stubbornly low even though the economic recovery across the single currency bloc appears to be gaining more and more momentum.
The ECB is predicting a pick - up in
inflation over coming months as lower unemployment starts to work itself through the
eurozone.
Headline
inflation in the 19 - country
eurozone was just 0.2 % in the year to end - August, according to Eurostat, while core
inflation (excluding food and energy) was 1 %, well off the ECB's
inflation target of just below 2 %.
European CPI represents the
inflation in the
Eurozone and the European Central Bank depends on this
inflation when setting the monetary policy.
The
eurozone, despite growth that has exceeded expectations, has seen disappointing
inflation data of late.