In the UK we expect the increase in consumer prices to have eased further to 1.4% y/y

Market movers today

• In the euro area there will be attention on industrial production for August after a sharp drop in the German figure has created fears of a more severe slowdown in Europe. We expect industrial production in the euro area to have declined 1.1% m/m in August driven by the 4.0% m/m drop in Germany. A more resilient euro figure should underscore that calendar distortions in connection with the summer holiday was probably the main explanation for the weak German figure. However, we also expect the German ZEW indicator to decline further in October, emphasising that the economy continues to lose momentum but not as severely as suggested by industrial production.

• EU finance ministers will convene in connection with the ecofin meeting. EU recommendations on member states’ fiscal and economic policy will remain the main topic. The European court of justice will also today start its hearing of the legality of ECB’s OMT programme. There will not be a ruling today, but when the ruling is ready it is expected to be scrutinised closely by the German Constitutional Court.

• In the UK we expect the increase in consumer prices to have eased further to 1.4% y/y in September from 1.5% y/y in August. This is the lowest level of inflation since September 2009 and underscores that downward pressure on inflation at the moment is a global phenomenon driven not least by lower gasoline prices.

• In the US the only notable data release is NFIB small business confidence for September and focus will mainly be on Q3 earning reports.

Selected market news

This morning global growth worries continue. Nikkei has fallen to a two-month low, but euro stocks were stable yesterday as no new data releases increased recession fears.

Euro area finance ministers yesterday warned France that it cannot expect special treatment if its budget for 2015 misses the EU target. Disregarding the rules could result in a loss of credibility, but reducing the deficit will have a negative impact on the recovery, which losses momentum, while it would also increase the risk of deflation. France’s Finance Minister Sapin has said he won’t change the budget but will give a calendar of planned structural reforms very soon.

There appears to be some softening of Berlin’s rhetoric on stimuli. According to WSJ France and Germany’s economy ministers have sought advice from economists to identify initiatives for both countries to be implemented by 2017 in order to boost growth in Europe and to modernise and strengthen the two economies.

The Fed’s Evans reiterated that he is concerned inflation will only slowly rise to 2% and that the Fed must wait to raise rates until the economy is strong enough. Evans is considered dovish and most of his comments were as expected; nevertheless his view is interesting as he will be a voter in the FOMC in 2015.