In Greece the 2014 budget has been approved by parliament

Market movers today

• Banking union is expected to top the agenda at today's euro group finance minister meeting, where an agreement on a single resolution mechanism for failing banks remains the main stumbling block. It is the goal to have a final agreement before yearend but the finance ministers are not expected to be able to close a deal this week, so they will probably schedule an extraordinary euro group/ecofin meeting for next week. Greece’s and Cyprus’s bailout programmes should also to be discussed but disbursement of the delayed aid-tranche for Greece is not expected to be approved.

• In the data calendar the main releases are October industrial production in Germany and Sentix investor confidence for the euro area in December. German manufacturing surveys have been strong, so we expect industrial production to rebound in October on the back of a decline in September.

• Today will be the last chance for FOMC-members to express their opinion in public before the members tomorrow go into the blackout period ahead of the 17-18 December meeting, where we now expect Fed to start tapering. Lacker (non-voter, hawk) Bullard (voter, dove) and Fischer (non-voter, hawk) are scheduled to speak.

• We expect the Danish current account surplus to fall slightly, see more on page 2.

Selected market news

On Friday afternoon the US employment report surprised on the upside again and we now think odds are favouring Fed tapering already in December, see US job report paves way for Fed tapering and A quick checklist for Fed tapering – thingsare starting to fall into place. After the report was released Fed’s Evans said he is open for December tapering but prefers to wait. Evans is very dovish and his comment suggests the job report has brought the Fed closer to reducing its asset purchases. 10Y Treasuries were almost unchanged following the report and it seems the market is largely priced for tapering to start this or next month (see more on page 2).

Over the weekend ECB’s Weidmann commented in an interview and said negative deposit rates are one of ECB’s tools. Weidmann is considered the most hawkish member of the Governing Council and his comment indicates that rate cuts are the preferred tool at the ECB, even though he said that the use of a negative deposit rate could backfire. The Bundesbank expects German inflation to be below ECB’s 2% target in 2014-15, thus it is hard for them to argue against the need for accommodation. We see a strong case for more easing from the ECB, as we expect inflation to fall again.

Chinese data released over the weekend signalled that global activity is gaining ground. China’s exports to the US, Europe and Japan rose more than estimated in November and pushed the trade surplus to the highest level in more than four years. Import was up less than expected but mainly due to lower commodity prices. Chinese inflation fell in November due to lower food prices and it could ease further in December.

In Greece the 2014 budget has been approved by parliament. Greece still needs to resolve differences with the troika before another bailout aid can be unlocked.