USA

Inflation Expectations in Europe Rise to Highest in Over a Year

European inflation expectations are rising as investors anticipate ongoing easy monetary policy and a global economic rebound boosted by U.S. fiscal spending.

The closely watched 5-year 5-year forward inflation swap rate for the euro area rose above 1.35% Tuesday, the highest in over a year. It continued to hover near that level Wednesday. The metric shows an average expectation for price increases over five years.

“This is quite a remarkable move, it has surprised us,” said Jorge Garayo, a rates and inflation strategist at Société Générale .

Forecasts for higher prices are playing out in the bond market. Germany’s 10-year break-even rate, or the difference in yield between its benchmark bond and a price level-linked bond, climbed above 1% for the first time since February. Italy’s equivalent rate hit a more-than two-year high. Essentially, a higher break-even rate suggests investors expect prices to rise faster.

“With the onset of vaccines, people are upgrading their growth outlooks,” said UBS rates strategist Rohan Khanna.

Related posts

Purdue Pharma Pleads Guilty to Felonies Over OxyContin Sales

honynews12

Consumer Brands Bet Working From Home Is Here to Stay

honynews12

Stocks Surge in Crazy Year for Financial Markets

honynews12

Leave a Comment

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More