Eurozone and Japan: Focus on inflation reports - BBH

In view of analysts at BBH, the immediate focus is on inflation reports after Spain and German states have reported a mixed bag ahead of tomorrow's preliminary regional estimate.  

Key Quotes

“Spain's harmonized measure rose 0.6% in September, which is a touch less than expected, and due to the base effect, the year-over-year pace ticked down to 1.9% from 2.0%.  Five German states reported inflation figures today.  The year-over-year rates increased in two states, fell in one state, and was unchanged in the remaining two.  The German composite will be reported shortly and is expected to tick up to 1.9% from 1.8%.”  

“The eurozone preliminary September CPI is expected to have increased to 1.6% from 1.5%, mostly due to energy costs.  The core rate is expected to be unchanged at 1.2%, for the third month.  It is most unlikely to change Draghi's assessment that continued substantial monetary accommodation is necessary.”  

Japan will report August inflation figures tomorrow.  The headline rate is expected to rise to 0.6% from 0.4%.  It would be the highest in two years.  The core rate, which excludes fresh food is expected to accelerate to 0.7% from 0.5%.  This would also be the highest reading in two years.  The measure that excludes fresh food and energy belies the challenge.  It is expected to edge higher from 0.1% in July.  It would match the fastest pace reported this year (January).