Greetings,
Eurozone: Faced with an unprecedented surge in prices, the ECB is changing direction. Christine Lagarde acknowledged that “inflation is likely to remain elevated for longer than previously expected …”
For months now, the central bank has been surprised by the strength of euro-area inflation reports.
![The Daily Shot Brief – February 4th, 2022](https://thedailyshot.com/wp-content/uploads/EZ-ECB-CPI-Forecast2202040431.png)
“Compared with our expectations in December, risks to the inflation outlook are tilted to the upside, particularly in the near term … The situation has indeed changed.”
These comments open the door for rate hikes later this year. The euro rose sharply in response.
![The Daily Shot Brief – February 4th, 2022](https://thedailyshot.com/wp-content/uploads/EZ-EUR2202040431.png)
United States: With the BoE raising rates and the ECB snapping out of its dovish mode, traders are betting that the Fed will be aggressive in fighting inflation. The market is now pricing one-in-four odds of a 50 bps rate hike in March rather than 25 bps.
![The Daily Shot Brief – February 4th, 2022](https://thedailyshot.com/wp-content/uploads/US-1-in-4-chance-of-a-50bps-hike-rather-than-25-bps2202040431.png)
Emerging Markets: Turkey’s core CPI is nearing 40%. Let’s cut rates some more and see what happens.
![The Daily Shot Brief – February 4th, 2022](https://thedailyshot.com/wp-content/uploads/EM-TU-Core-CPI-nearing-40pc-lets-cut-rates-some-more-and-see-what-happens2202040431.png)
Equities: The options market continues to show caution, with the put/call ratio grinding higher.
![The Daily Shot Brief – February 4th, 2022](https://thedailyshot.com/wp-content/uploads/EQ-Put-Call2202040431.png)
Global Developments: This chart shows the distribution of global fixed income markets.
![The Daily Shot Brief – February 4th, 2022](https://thedailyshot.com/wp-content/uploads/GL-FI-Outstanding2202040431.png)
Food for Thought: Reported vs. estimated COVID deaths:
![The Daily Shot Brief – February 4th, 2022](https://thedailyshot.com/wp-content/uploads/VTH-Reported-v-estimated-COVID-deaths2202040431.png)
Edited by Daniel Moskovits
Contact the Daily Shot Editor: Editor@DailyShotLetter.com