Danske Research Team
Danske Bank A/S
Market Movers ahead
Nonfarm payrolls and PCE inflation – both monitored closely by the Fed – are due for release next week. Last month’s labour market report disappointed but we expect a strong September reading due to low jobless claims and high ISM employment indices. We expect core PCE to come out at 0.0% m/m and 1.4% y/y which is still below the 2% target.
We expect the US ISM manufacturing index to decline slightly from 59.0 to 58.5, which is still very high, indicating higher activity in the US.
The ECB meeting will deliver further details on the upcoming purchase programme of asset-backed securities (ABS).
We expect euro area HICP inflation to decline from 0.4% y/y to 0.3% y/y due to further decline in oil prices – a new cycle low.
The Danish FX reserves may attract some attention due to the strong krone.
Global macro and market themes
Weak euro surveys for September showed further weakness, adding to the downside risks to growth. The weak surveys combined with very low inflation are adding to the pressure on the ECB.
The Fed’s asset purchases programme comes to an end next month and, in this connection, we expect the Fed to adjust its forward guidance.
The manufacturing PMI in China suggests that the Chinese slowdown may not be as severe as previously feared.
Focus
- During the week, we have published our quarterly Nordic Outlook including our new forecasts on the Nordic economies, 25 September. We have revised down our forecasts on Denmark and Sweden mainly due to the European stagnation. In Norway, domestic demand is keeping activity on track despite lower oil investments. The Russian recession and austerity measures are weighing on the Finnish economy.
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