Inflation and confidence data releases are important for the eurozone economic outlook, but are not the main drivers of rates at the moment. Second-round inflation effects take time to show up in the data. Meanwhile, the ECB sees higher long-term rates as a growth headwind and remains committed to a 'measured response' From the eurozone, we will watch the first country-level CPI releases and confidence data, though neither is likely to distract from the broader global crosswinds. Markets will watch for signs of second-round inflation effects, but these are unlikely to appear in this week’s data. In particular, the pass-through into wages takes time to materialise as energy prices stay elevated longer.
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