Jan 7, 2020

Eurozone producer prices sink again

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Data: FactSet; Chart: Andrew Witherspoon/Axios

The continued decline in prices paid by manufacturers could be a major impediment to European policymakers' desire for higher inflation in the eurozone, and data released Monday shows things are not improving.

What happened: The producer price index for the eurozone fell for the fourth straight month in November.

  • The decline was less than economists expected, but still showed a more than 1% drop after a nearly 2% fall in October.

Why it matters: The European Central Bank has cited lagging inflation as a major risk to growth and stability in the region and inflation's inability to rise to the central bank's 2% target as a reason for increasing its bond-buying program and cutting interest rates late last year.

  • Headline inflation moderately improved to 1% in November and economists expect it rose further to 1.3% in December, but the consistent drag from producer prices may inhibit that.

What's next: Eurostat will release its preliminary PPI estimate for December today.

Go deeper:

Go deeper

ECB announces first policy review in 16 years, but little expected to change

Photo: Thomas Lohnes/Getty Images

European Central Bank governor Christine Lagarde said Thursday the central bank would begin its first strategic review in 16 years. However, Lagarde's praise for negative interest rates and the stimulus programs from her predecessor, Mario Draghi, has investors betting the ECB holds rates at the current level of -0.5% for at least 18 months.

Quick take: The ECB left policy unchanged at Thursday’s meeting, and Lagarde said interest rates would only be raised from negative territory when eurozone inflation "robustly" meets the central bank’s target of just under 2%.

Go deeper: European banks could continue to disappoint investors

Keep ReadingArrowJan 24, 2020

Asset managers say the 2020 election is now the market's top risk

2020 Democratic candidates in Columbia, S.C., on Jan 20. Photo: Sean Rayford/Getty Images

With the "phase one" trade deal signed, major asset managers have taken their eyes off the trade war a bit and begun to focus on the upcoming U.S. presidential election.

Why it matters: The outcome of November's election is now investors' top concern, according to the results of Bank of America Securities' latest global fund manager survey.

The market is expecting multiple rate cuts in 2020

Data: CME Group; Note: Chart does not include expectations below 5% for a rate hike in 2020; Chart: Andrew Witherspoon/Axios

Just four days into February, traders have thrown out the Fed's guidance that it will remain on the sidelines in 2020, and lined up bets for multiple U.S. interest-rate cuts.

What's happening: Fed fund futures prices show that as the coronavirus outbreak has worsened, expectations are rising that the Fed will take action, as policymakers did last year when the U.S.-China trade war began to ravage the manufacturing, trade and transportation industries.