Global update
- Doubts over the global recovery set in during the week leading to a correction in most markets. However, data continue to support the case for recovery as positive surprises still outnumber negative ones. We view the change in markets as a correction to a trend of higher equity prices and bond yields.
- While US industrial production for April disappointed, rising leading indicators and falling jobless claims suggest the end of the US recession is near. Housing starts show signs of bottoming.
- The World Bank revised up its growth forecast for China and Bank of Japan raised its expectations for the Japanese economy.
- The German ZEW index rose strongly again taking confidence to the highest level since 2006. Bank of England is becoming more positive – we look for a rate hike in Q2 10.
- Swedish industrial production has been set back 10 years and Sweden could very well be the last to leave the recession.
- Norges Bank cut rates but will hike in Q1 10.
Market movers ahead
- Focus next week will be on the FOMC meeting. Fed is likely to sound more positive, but at the same time stress that rates will be on hold for a long period.
- German Ifo and Flash PMI are on the agenda in Euroland. We look for further improvement as signalled by OECD’s leading indicator (see chart below).
- Swedish manufacturing confidence to follow PMI higher as production decline is starting to ease.
- OECD releases Economic Outlook with new growth forecasts.
