Inflation: Higher Hopes vs Worse Data

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Crude oil prices have fallen on geopolitical hopes, but markets face risks from upcoming Eurozone and US inflation data which are expected to show core inflation rebounds.

Key Takeaways

  • 1.Crude oil prices have retraced due to easing geopolitical tensions in the Middle East, specifically hopes for a US-Iran agreement.
  • 2.Upcoming inflation data for both the Eurozone and the US is expected to show upward pressure, with Eurozone core inflation forecast to rise to 2.6%.
  • 3.Market strategy remains cautious on directional trades, preferring relative value trades such as long 5YF5Y HICPx vs 5YF5Y FRCPIx.

Table of Contents

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Authors

Jean-François PerrinAlex LiGuillaume Martin

Securities

Brent Crude OilHICPx (Euro Inflation Forward)10Y OATeiBTP 2.20% 02/28

Themes

Core Inflation Pass-throughGeopolitical Impact on Energy

Regions

EuropeNorth AmericaMiddle EastUnited StatesFranceGermany