Our chart expert, Jordan Kotick, Global Head of Technical Strategy at Barclays weekly Q&A session.
Q - Through Q3 and Q4 last year, you were aggressively pointing out that the markets were suggesting growing problems in the Eurozone but now, you think the charts are changing again?
A - What is starting to diverge is inflation expectations in Europe. For much of last year, inflation expectations, as seen through the Breakeven charts, were aligned in the UK, US and Europe. Now, while generally speaking, US and UK breakevens are still trending higher, breakevens in Europe, such as the Italian 10 year breakeven, are rolling to the downside. This suggests that the market is potentially pricing in a different trajectory of inflation expectations in Europe vs the US and UK.