UK industrial production for April will also be released

Market movers today

• Outside Scandinavia we have a relatively light calendar today. In the euro area both France and Italy will release industrial production (IP) for April, which will give us some idea of the performance of euro area IP due for release on Thursday. We expect IP to have rebounded in France and Italy on the back of a relatively weak March but IP in Germany disappointed in April, suggesting that there could be some downside risk to our forecast.

• In the UK industrial production for April will also be released but this usually gets little attention due to the minor importance of the industrial sector in the UK. We expect the pattern evident in the euro area with a rebound on the back of a weak March to be mirrored in the UK.

• We have a flood of speeches from a number of ECB members in the calendar: Liikanen (09:00 CET), Makuch (13:00 CET), Coeure (13:15 CET) and Mersch (16:00 CET). After ECB’s aggressive easing moves last week these speeches have admittedly lost some of their market-moving potential.

• In Denmark and Norway inflation figures for May are due for release.

Selected market news

In his speech, James Bullard, president of the Federal Reserve St. Louis, noted that ‘the macroeconomy is much closer to normal than it has been during the past five years’, and the Fed ‘is much closer to its goals’ as a result. He further argued that if the current developments in activity and the labour market continue into the fall the FOMC should change the conversation about monetary policy and there will be more sentiment towards an earlier rate hike.

In line with consensus expectations, China’s CPI-inflation jumped to 2.5% y/y in May from just 1.8% y/y in April, mainly on the back of higher food price inflation. That said, inflation remains subdued and is not a major constraint on monetary policy at the moment.

The People's Bank of China (PBOC) said late Monday that it would cut the reserve requirement ratio for banks that have sizable loans to the farming sector and smalland- medium-sized firms to support the economy. PBOC said the targeted 50bp reduction in the reserve requirement ratio (RRR), effective from 16 June, would also apply to financial firms that disburse consumer or auto loans.

There was little news on Monday as the week began with a quieter economic calendar. Nonetheless, US equities soared to fresh record-highs following last week’s ECB meeting and May US employment report. Core EUR fixed income markets continue to rally up to the 5Y sector and periphery yields are at record lows. The EUR fell yesterday, also helped by a declining Sentrix investor confidence survey.