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Jens Peter Sørensen
Danske Bank A/S
Market movers today
Euro area September consumer confidence is due for release. We expect an aboveconsensus improvement.
Tonight Fed's George and Kocherlakota speak. Both are non-voters but we will listen for comments that could cast more light on the reasoning behind the FOMC nonmove on QE tapering.
With a fairly thin calendar today focus will mainly be on how to position for the German federal elections on Sunday. The outcome is unclear. It is not certain that FDP will get above the 5% threshold and even if it does the current coalition may not get a majority. Lengthy negotiations resulting in a CDU/CSU – SPD grand coalition then seems to be the most likely outcome. An uncertain outcome may result in a slightly negative market sentiment but keep in mind that no matter what coalition eventually will be formed, Germany will remain pro-euro.
Riksbank governor Ingves and deputy Skingsley take questions in an open hearing on monetary policy at the Riksdag Committee on Finance. For more on Scandi markets see page 2.
Selected market news
US equities fell after yesterday’s rally on the back of the Federal Reserve’s decision to refrain from cutting stimulus (tapering). There is a lot of uncertainty about the Federal Reserve’s reaction function and how to interpret that the Fed is now more ‘data dependent’ than before: how strong should economic data be before the Fed starts tapering? US rates rose yesterday and reversed some of the gains from Wednesday on the back of stronger data for the housing market.
Asian stock markets rose as a weaker yen boosted Japanese shares. The economic recovery in the US is likely to strengthen the dollar versus the yen and this is seen as positive for Japanese stocks. USD/JPY is moving towards the 100-level again after a weakening of USD after the FOMC meeting on Wednesday.
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