CITIC Securities pointed out that as the year-on-year reading of the HICP (Harmonized Consumer Price Index) in the euro zone has entered the double-digit range for two consecutive months, the persistence and controllability of high inflation in the euro zone in the future has become the focus of the market. We believe that the year-on-year HICP readings in the Eurozone have peaked and will further confirm the inflection point in December this year.
The recent wave of wage increases in the euro zone is expected to last at least until the first quarter of next year, which will become a resistance to inflation in the future, but it is unlikely that it will lead to a “wage-price” spiral.
In the fourth quarter of this year, the dislocation of the inflation cycle between the euro zone and the United States will maximize the expected interest rate spread between Europe and the United States. The downward turning point of the US dollar index will be established, and the depreciation of the euro against the US dollar will come to an end.
