The Trade: European Reflation. Whats priced?
European reflation was a key theme for many investors in 2017. The idea that the continent was finally enjoying a self-sustaining cyclical upswing extended across asset classes and manifested itself in various trading expressions notably long EUR FX, long European equities, long financials in particular and/or short Fixed Income duration.
Global growth momentum appears to be waning but on Citi’s Economic Data Surprise Index it is Europe which is back in negative territory. Is the European reflation theme unwinding or is this a pause that refreshes? What are some of 2017’s consensus trades now discounting?
Quant Insight’s (Qi) algorithms have the ability to isolate and identify key macro drivers for different financial assets. In this instance, Qi analysis highlights the key drivers for European equity markets, valuations in European equity & rates markets and their sensitivity to certain macro scenarios, like a dovish or hawkish ECB, bounce in EU economic data.