Something for your Espresso: Duration bets back in fashion as we watch the NOK and SEK
Good morning from Europe.
May inflation looks soft in Spain and Belgium, and we expect German numbers to follow suit today. Given that some of the worst increases in MoM inflation in Europe occurred through the month of June in 2022, we find inflation with a 2 or 3 handle more likely than not in coming months in many countries in Europe. The first evidence from North Rhine Westphalia looks soft this morning as well.
The forward-looking evidence from various price surveys in the Euro area also keep suggesting that the price pressures are fading fast. The European Commission survey on price expectations among companies printed at 6.6, which is consistent with <2% inflation in Europe in 6 months from now.
Chart 1: Spain and Belgium points to downside for German inflation