April 30, 2021
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EA: HICP boosted by Spanish energy

  • Flash EA HICP inflation increased by 0.3pp to 1.6% in Apr-21, in line with the consensus. It was 0.1pp above our forecast, though, as energy and food strengthened by more. Services and non-energy industrial goods were in line, so the core was too.
  • Most of the upside news came with Spain’s flash release yesterday. We have enhanced our model for Spain with daily retail energy prices to avoid future surprise here. Overall, our EA forecast stays about a tenth higher, averaging almost 1.8% in 2021.

April 29, 2021
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Reflationary decoupling

  • Surging US inflation arguably risks spilling over to Europe amid a high degree of co-movement between them, but the relationship can break up like it did in 2005-06.
  • The spillover of US reflation is likely to be incomplete, especially to the euro area, so relative price level hikes can be sustained for inflation-linked instruments, in our view.

April 27, 2021
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Sweden: Riksbank cautiously optimistic

  • The economy is recovering faster than assumed in February, but the Riksbank deems the risks from tightening policy too soon as greater than keeping them looser for longer.
  • The key risks to their base case relate to how the pandemic plays out from here, and any further rise in global bond yields.