Markets
Global markets remain indecisive. European yields are changing 1-2 bps across the curve. The (absence of) movement came as ECB president Lagarde testified at a hearing before the Committee of Economic and Monetary affairs of the European Parliament. Lagarde assessed that inflation has fallen markedly and is fluctuating in a narrow range near 2%. Headline inflation in January even dropped to 1.7%. The ECB chair remains relatively optimistic on growth. Wage growth remains elevated but has eased gradually and is expected to continue to moderate to around 3% in the medium term. Interestingly, Lagarde elaborated on the gap between actual inflation data and inflation as perceived by consumers. Citizens still perceive prices to be rising faster than the official data suggest. This gap, while not unusual by historic standards, ‘has implications for economic decisions and for trust in institutions – trust that helps anchor inflation expectations’. In this respect, ECB consumer CPI inflation expectations will be published (January) tomorrow. Even as the ECB projects CPI inflation to hold close to 2% over the policy horizon, consumers in the December survey saw 1-y inflation expectations at 2.8% and 3-y expectations at 2.6%. The ECB chair at this stage elaborating on the topic at least does not suggest that the central bank is inclined to swiftly react to a (temporary) undershoot of headline inflation. US yields initially also traded unchanged, but finally some further easing continued (2-3 bps across the curve). Weekly jobless claims rose slightly from 208k to 212k. However, data might be distorted due to the Presidents Day Holiday. Even so, the level at least also suggest nothing worrisome happening on the US labour market. Similar hesitancy on equity markets as investors stay cautious in their assessment on solid Nvidia results published yesterday in the US after the close. Still, the EuroStoxx 50 touched a new all-time record intraday (currently little changed). US indices open mixed (Dow +0.45%; Nasdaq + -0.5%). On FX, EUR/USD is going nowhere near the 1.18 big figure. The yen this morning tried a cautions rebound as (hawkish) BOJ member Takata reiterated his view that Japan almost reached price stability, paving the way for further normalization. However, both the rise in Japanese yields and the yen was limited and/or temporary (yen). Markets apparently aren’t convinced that Takata’s assessment has enough weight to counterbalance PM Takaichi ‘hope’ for monetary policy to continue supporting her reflationist approach. USD/JPY hovers near 156.
News & Views
Belgian inflation in February quickened to 1.45% from 1.1% with a 0.54% monthly pace picking up too from last month’s 0.44%. Core inflation, which does not take into account energy products and unprocessed food, stood at 2.83% in February, compared to 2.54% in January. Inflation for services has gone from 4.32% to 4.75% while rents inflation decreased from 3.55% last month to 3.48% this month. Food inflation stands at 0.66% this month, up from 0.44%. Plane tickets (25.1%), electricity (3.9%) and natural gas (4.5%) showed some of the biggest increases. Clothing (-3.3%) and confectionery (-2.9%) weighed down on the index. The first inflation estimate according to the European harmonised index of consumer prices (HICP) amounts to 1.4% in February 2026.
Former Italian PM Enrico Letta in an Op-ed for Politico doubled down on his long-standing call for the completion of the European single market. He considers it as the strongest response Europe can offer in “a world reshaped by Trump and by the accelerating logic of geopolitical competition”. Letta said we currently have the sum of 27 national markets, calling it a political and strategical weakness that we pay for in higher costs, weaker investments, slower innovation and reduced capacity to act in the world. He proposes the One Market Act in which a small number of game-changing priorities are outlined so that things remain realistic yet ambitious. Three of them are sectoral with Letta calling for a true savings and investments union to unlock private capital, a complete energy union to reduce (external) exposedness and a united telecom that allows for technological sovereignty. Letta additionally stresses the importance of free flow of knowledge, data, research and skills while advocating for a European legal framework (the 28th regime) alongside national ones so that companies can scale across borders with simplicity. Finally, Letta said a stronger market must go hand in hand with cohesion, essential services, SMEs and a robust social dimension as not to undermine support for the European project.
 movement came as ECB president Lagarde testified at a hearing before the Committee of Economic and Monetary affairs of the European Parliament. Lagarde assessed that inflation has fallen markedly and is fluctuating in a narrow range near 2%. Headline inflation in January even dropped to 1.7%.){kind=link}