The data points are surprising more to the downside, and that does not bode well for the ECB
Citi's economic surprise index measures the data release relative to market expectations - and the recent slump in the Eurozone's data releases is clearly highlighted by the rapid decline in the index as we wrap up the first quarter of 2018.
This is no coincidence of course. Just look at the recent PMI figures and it tells you the story that I've been highlighting over the last month or so - that we may well have seen the peak of the Eurozone economy at the end of last year.
And yesterday's slew of misses on German import prices, Spanish inflation figures, Eurozone M3 money supply, and Eurozone confidence levels only adds to that.
If the trend persists, it will be an unwanted headache for the ECB as they seek to normalise policy by mid-next year. How exactly are they going to communicate such a move if the economy is showing signs of a slowdown?
That is going to be the next challenge for the ECB. And it will be quite a challenge indeed.
