At Any Rate Global Rates: Monthly Inflation Outlook
Sep 18, 2025
US and European rates strategists dive into August's inflation data and share their insights on future trends. They discuss the lack of movement in Euro area breakevens due to limited catalysts while underlining a supportive environment for US breakevens. Phoebe emphasizes the potential for US inflation to accelerate in Q4, influenced by recent dovish shifts from the Fed and various political factors. The conversation offers a detailed analysis of the inflation landscape, providing a compelling outlook for both regions.
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Euro-Area Breakevens Stuck Near 2.10%
- Euro-area five-year, five-year HICP swaps sit near 2.10% and have stayed rangebound recently.
- Services inflation remains the key risk to bringing core inflation down to the ECB's 2% target.
Services Momentum Keeps Core Elevated
- Services inflation in the euro area remains above 3% and has strong momentum despite moderating wage pressures.
- A stronger euro and moderating wages could push core goods and headline inflation lower over time.
French Politics Had Little Market Impact
- Recent French political events produced minimal reaction in the French linker market according to market moves in OATs and OATi's.
- Frida notes IOTAs reflect demand-supply dynamics more than idiosyncratic French politics.