Brent: Price rebound pushes inflation expectations higher – Deutsche Bank

With 1‑year Euro inflation swaps climbing to 3.02%, a 1.2% rebound in Brent Oil prices pushed inflation expectations higher, according to Jim Reid’s team at Deutsche Bank. The recovery followed two days of declines, despite the absence of an obvious headline catalyst. However, the bank notes that Brent subsequently slipped about a percent overnight, returning prices to roughly the previous morning’s level.

Euro inflation expectations rise as oil recovers

"Turning to the Middle East, oil prices were back up again yesterday, albeit with no obvious headline driving the moves. So after two days of consecutive declines, Brent crude rose +1.2% after being higher earlier in the session. And in turn, we saw the impact on inflation pricing, with 1yr Euro inflation swaps (+9.3bps) rising to +3.02%."

"However, overnight Brent has fallen around a percent taking it back to roughly where it was this time yesterday. So a big round trip. That’s helped 10yr US yields reopen half a basis point lower this morning after the holiday."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)