Morning from Europe.

It’s a special feeling writing the morning note this morning as my wife gave birth to our second son overnight. Bear with us, if we are a bit slow to respond over the course of the day 🙂

It’s a big inflation week in Japan and Europe. The Japanese PPI within Services printed at 2.1%, which is typically a strong sign that consumer inflation ex fresh food is not trend any firmer than around 2% either.

The Nationwide CPI ex fresh food is projected to print at 1.9% overnight and we see risks marginally on the soft side of the consensus, solidified by the softening of the PPI pressures within services.

The stickiness seen in wages in the West is not seen in Japan yet.

Chart 1: PPI services a strong hint for Japanese CPI