Anders Møller Lumholtz
Danske Bank A/S
Market movers today
- A fairly light global calendar. In the euro area we expect German industrial production to have decreased slightly. German Ifo has weakened a bit and also the factory orders released on Friday showed a decrease. German industrial production has shown solid readings during Q1 and we expect the near-term weakness to be a soft patch and growth to pick up during H2.
- The sentix investor confidence is the first July print that is being released. This indicator tends to have little market impact as the direction in general is more correlated with market sentiment than economic activity. We expect a minor decrease as euro-area data releases have been surprising on the downside lately. This is also reflected in the surprise index that has dropped to around a one-year low.
- At tonight’s Eurogroup meeting the euro-area Finance Ministers are set to approve a EUR1bn tranche for Greece.
- As the US was closed on Friday due to Independence Day, market attention in the US session is likely to remain on the implications of the strong non-farm payrolls. We expect trend job growth to rise gradually to 250k-300k in H2, as growth picks up further steam. As core inflation is also bottoming out and housing is expected to recover, this will likely lead to less dovish talk from Fed during the autumn and more risk/term premium in the US money market curve.
Selected market news
From a market perspective it has been a calm weekend reflecting that summer has arrived. Despite a small setback on Friday European stocks had a good week supported by the strong US job report and a ‘dovish’ Draghi on Thursday. The Euro Stoxx 50 ended the week up by 1.1 % despite the 0.6% decrease Friday. In Asia stock indices are trading slightly in red this morning and the EUR/USD has continued lower as we enter the week at 1.358.
Peripheral government bonds spreads versus Germany tightened further in Friday’s session extending Thursday gains that were fuelled by the dovish details on the TLTROs. Ireland was the top performer Friday with a 4bp drop in the 10Y yield. The performance was supported by the very strong growth figures that were released Thursday. The Irish recovery has accelerated this year and with the government set to beat the fiscal target for the fourth year in a row, Ireland is likely to be able to reap the reward in the form of more rating upgrades in H2.
Scandi markets today
- Denmark and Norway are releasing industrial production figures today. In Denmark industrial production has been trending upwards since autumn 2009, although it is still some way off pre-crisis levels. We expect a decrease of 0.5% m/m in May following a fall of 1.4% m/m in April as we expect firms to have plenty of goods in stock and can now afford to ease off on production. The main releases in Scandinavia this week are the June inflation figures on Thursday.
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
EUR/USD clings to gains above 1.0750 after US data
EUR/USD manages to hold in positive territory above 1.0750 despite retreating from the fresh multi-week high it set above 1.0800 earlier in the day. The US Dollar struggles to find demand following the weaker-than-expected NFP data.
GBP/USD declines below 1.2550 following NFP-inspired upsurge
GBP/USD struggles to preserve its bullish momentum and trades below 1.2550 in the American session. Earlier in the day, the disappointing April jobs report from the US triggered a USD selloff and allowed the pair to reach multi-week highs above 1.2600.
Gold struggles to hold above $2,300 despite falling US yields
Gold stays on the back foot below $2,300 in the American session on Friday. The benchmark 10-year US Treasury bond yield stays in negative territory below 4.6% after weak US data but the improving risk mood doesn't allow XAU/USD to gain traction.
Bitcoin Weekly Forecast: Should you buy BTC here? Premium
Bitcoin (BTC) price shows signs of a potential reversal but lacks confirmation, which has divided the investor community into two – those who are buying the dips and those who are expecting a further correction.
Week ahead – BoE and RBA decisions headline a calm week
Bank of England meets on Thursday, unlikely to signal rate cuts. Reserve Bank of Australia could maintain a higher-for-longer stance. Elsewhere, Bank of Japan releases summary of opinions.