Europe’s economy has been struggling to maintain decent economic growth, especially outside of Germany. The appearance of headline deflation stoked fears that the the European Central Bank’s bond-buying program wouldn’t be enough to breathe life into the Continent.
But then inflation rose to zero! That’s hardly the CPI reading of an economy on fire, but that and a few other data points were a nice signal that there’s a spark in there somewhere.
Previously, the consensus view on Europe was so cautious that investors were very nearly ready to swap US dollars for euros at par and pay Germany to hold their money for an entire decade (paywall). But then they saw the CPI reading and said “Never mind,” (paywall) driving the euro to its highest point against the dollar in weeks and selling so many 10-year bunds that the yield jumped to a whopping 37 basis points. Be careful out there, folks.