Earlier this month, when we previewed the September ECB meeting and subsequent Draghi presser, we noted that the “the deflationary boogeyman still lurks” in Europe and as Richard Breslow wrote that morning, “the five year/five year inflation gauge that Draghi has said the ECB watches very carefully remains at very depressed levels [with] no sign from the swaps market that inflation is expected to hit target as far as the eye can see.”

Breslow continued, “say what you will about the market being wrong, but the market has had a better track record on predictions than many central bankers.”

Well, sure enough, on Wednesday we learned that less than a week after the Krugman “success” story that is Japan stumbled back into deflation…

 

…inflation has officially turned negative (again) in Europe where consensus hopes for an unchanged print were once again disappointed when the September CPI print came in negative on the back of a drop in commodity prices, confirming the latest inflationary impulse from the March launch of QE is officially over.

 

 

 

The message being sent here is fairly straightforward, but for what it’s worth, here’s a bit of color from Bloomberg:

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