The positive trend in US data is also seen in initial jobless claims

Market movers today

• German IFO expectations are due for release and we expect a decline for a third consecutive month although the level is set to remain high. The current assessment component is likely to continue to increase and our forecast is above consensus.

• ECB’s President Draghi speaks today and it will be interesting to hear whether he draws attention to the better European growth outlook after the composite PMI increased to the highest level in almost three years. Recently ECB members including Draghi have been very dovish and highlighted the risks of a too prolonged period of low inflation which the ECB is ready to use unconventional instruments to cope with.

• US data have generally been stronger than expected and we forecast another aboveconsensus print when durable goods orders are released today. The orders declined relatively sharply due to the cold winter but started to rebound in February.

• The positive trend in US data is also seen in initial jobless claims, which have declined to the lowest level since 2007 considering a four-week moving average. Today consensus is for a rise to 315K from 304K last week.

• Focus will be on Q1 earnings with 65 companies in the S&P 500 index reporting.

Selected market news

The S&P 500 ended lower yesterday after having gained in six consecutive days. Likewise the Euro Stoxx declined following a three-day winning streak. The recent development is mainly driven by earnings, where estimates have continued to show a downtrend more than 18 months into the recovery. Ahead of the Q1 reporting season we took a somewhat sceptical view at least with regard to European and Nordic companies. So far the Q1 results have proven us right, with reports being weaker than expected in Europe and the Nordics but somewhat stronger than expected for US companies. Having said this, it is still early days with only around 20-25% of the companies having reported.

Nowotny downplayed expectations about more stimulus in May as he said that the ECB will only be able to really judge in June whether the trend of low inflation is strengthening. Some ECB members have hinted at this before but the increase in euro PMIs yesterday implies we see a lower likelihood of more easing in May. In our view inflation has to surprise on the downside and stay very low in April for the ECB to ease in May.

Yesterday Portugal held its first regular government bond auction since applying for international help in 2011. The auction of the 10Y bond resulted in a better-thanexpected yield of 3.57% and it looks like Portugal will make a clean exit from the Troika programme during the summer.

The Reserve Bank of New Zealand raised cash rate target another 25bp to 3.00% after it as the first major central bank post 2011 hiked in March. RBNZ’s Governor Wheeler said that ‘inflationary pressures are becoming apparent’ and RBNZ seems determined to hike in order to fight inflationary pressures.