Preliminary HICP data for Germany in March are due at 14:00 CET

Market Movers

• The release of the ADP employment data for March should give us an early indication of what to expect from the official job report for March due on Friday although, admittedly, the ADP report is not always the best indicator for official job growth. We look for another solid US employment report on Friday with total payrolls above 200,000, see also our US Labour Market Monitor: Powering on from yesterday.

• We will also keep an eye on the release of the euro area confidence data for March as the survey indicators for consumers, manufacturing and services have all been declining in recent months, possibly partly due to the negative spill-over from the financial turmoil to economic sentiment.

• Preliminary HICP data for Germany in March are due at 14:00 CET.

• Fed’s Evans (dovish, voter) is speaking tonight. He is a known dove and will likely express a similar view to Yellen’s.

• Today at 9:00 CET we publish our quarterly Nordic Outlook including our new economic forecasts for the Nordic countries. Also Norwegian LFS unemployment data are due.
  

Selected Market News

Yesterday, Fed chair Yellen’s speech attracted a lot of attention in the markets. Although her overall message in our view was more or less a repetition of the concerned message from the last FOMC meeting in mid-March, her comments weakened the USD and sent US yields lower. The reason is that Yellen showed the markets ‘who is the boss’ by indirectly denouncing some of the more hawkish FOMC members who in recent weeks have expressed that they have not yet ruled out a hike in April – comments that came only shortly after the March meeting where the Fed was more dovish than expected. Yellen’s speech confirmed that she is still in the dovish camp together with the majority of the voting FOMC members. In her speech, Yellen expressed her concerns about the global economic and financial market developments and their potential spill-over effects on the US economy, about whether the pick-up in core inflation will ‘prove durable’ and about the lower inflation expectations, which she thinks are worrisome. Yellen definitely put more weight on the downside risks than on the upside risks through the speech. She seems to support that Fed could raise the target rate once or twice this year (in line with most of the ‘dots’ from the March projections) assuming Fed’s baseline scenario materialises. Markets have priced in slightly below one.

US consumer confidence rose to 96.2 in March from 94.0 in February (revised up from 92.2) suggesting that US consumers are still quite upbeat despite the turmoil in Q1. Recent spending data show that private consumption has been weak in Q1 and thus there is potential for higher consumption growth in the coming quarter as optimism is relatively high, employment continues to increase and real wages are growing.

Japanese industrial production fell 6.2% m/m in February, the largest decline since 2011 and one of the biggest since 1978 when the data series begun, adding to the pressure on Bank of Japan for more stimuli.

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