Market participants continue to turn more bearish on Eurozone inflation outlook
The key gauge of long-term Eurozone inflation expectations falls to its lowest level since October 2016
The EUR 5-year inflation swap forward continues to shape up like it's falling off a cliff since December last year. The gauge can often also be likened to the market's confidence about the ECB's ability to normalise monetary policy and it looks like any expectations of the central bank being able to do so is quickly fading into the abyss.
The gauge has now fallen to its lowest level since October 2016 and is moving further and further away from the ECB's target inflation of "close to but below 2%".
Compounding worries surrounding global growth isn't helping and China's weaker-than-expected inflation report earlier today certainly adds to that, alongside a weaker core inflation reading reported by Spain in January here.