Hi everybody and welcome to this week’s 5 Things We Watch. This week we’ll cover Euro-flation on the back of the Ifo numbers dropping this week. Then we’ll have a look at the inflation outlook in the US using the same metrics as applied to Europe. We’ll move on to talk about OPEC keeping their production cuts intact and then continue to talk about energy through the lens of shipping. Finally we’ll cover the boom in bitcoin.  

1) Ifo pointing towards lower core inflation

This week we got the latest figures from the monthly Ifo survey out of Germany. Among the interesting numbers in the survey, the price expectations in services ex. real estate caught our eye. The respondents dropped their price expectations by almost 10 percentage points compared to the Jan survey. 

A sign of the coming disinflationary impulses which we are forecasting in the Euro Area. Hence we like to receive in the EZ fixed income space albeit the dark horse is the ECB’s reluctance to cut before the Fed, seemingly disregarding any economic data coming out of Europe.    

Chart 1: Huuuge drop in Ifo price expectations