Allan von Mehren
Danske Bank A/S
Market Movers ahead
Focus will shift to the ECB next week after the US central bank stole the limelight in the past week. No change in interest rates is on the cards, but the central bank is expected to shed further light on European bank lending, which plays a major role in economic developments.
Industrial production figures are due for many countries during the week, including Germany and the Nordic nations. Hence, we will gain greater insight into the state of the manufacturing industry in northern Europe right now.
ISM for the service sector is the most important US data release in the coming week – we expect to see a small increase.
Global macro and market themes
Equities and other riskier assets have lost value over the past week despite stronger economic data from the US and China in particular. Nevertheless, we still expect equities to deliver sensible returns over 6-12 months.
The US central bank changed its tone on the risks currently faced by the US economy in its latest post-meeting press release. Given this, we expect that the first rate hike will come as early as next April. If our forecast holds, this will be somewhat speedier than what the market currently expects.
It will be interesting to see the reaction of long yields as rate hikes move closer in the US. Market liquidity is more than ample, which may tend to keep long yields down, as we saw in 2004-05 – the so-called bond yield conundrum.
Focus
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.
Recommended Content
Editors’ Picks
AUD/USD remained bid above 0.6500
AUD/USD extended further its bullish performance, advancing for the fourth session in a row on Thursday, although a sustainable breakout of the key 200-day SMA at 0.6526 still remain elusive.
EUR/USD faces a minor resistance near at 1.0750
EUR/USD quickly left behind Wednesday’s small downtick and resumed its uptrend north of 1.0700 the figure, always on the back of the persistent sell-off in the US Dollar ahead of key PCE data on Friday.
Gold holds around $2,330 after dismal US data
Gold fell below $2,320 in the early American session as US yields shot higher after the data showed a significant increase in the US GDP price deflator in Q1. With safe-haven flows dominating the markets, however, XAU/USD reversed its direction and rose above $2,340.
Bitcoin price continues to get rejected from $65K resistance as SEC delays decision on spot BTC ETF options
Bitcoin (BTC) price has markets in disarray, provoking a broader market crash as it slumped to the $62,000 range on Thursday. Meanwhile, reverberations from spot BTC exchange-traded funds (ETFs) continue to influence the market.
US economy: slower growth with stronger inflation
The dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.