This week has seen a switch towards a more hawkish Central bank outlook but with some doubts about outlook of inflation.Today German Inflation beat expectations which provided more evidence that ECB QE could be winding down.In the USA we have yet to see a steady and consistent rebound in Inflation but that hasn’t stopped the 5y5y inflation swap from following Europe higher.This “swap” is what inflation in 5 years will be like 5 years from that point.Confusing isn’t it. Regardless both the fed and ECB use this to monitor Inflation expectations.
The Top graph EU lower USA.The upswing in Inflation expectations actually started right around the 21st and then got a boost From Draghi speech.This is metric will drive Central bank intentions more so then Job gains
