Nasdaq is still down 4.6% YTD

Market Movers

• In the US, preliminary consumer confidence figures from the University of Michigan are due to be released.

• In the euro area, data for euro area labour costs for Q4 15 is due to be released. This will be interesting, as the ECB is worried about the low wage growth, which is contributing to inflation being suppressed. Note in this regard that the labour costs data due to be released next week is from Eurostat, while the ECB is using its own official data as a measure for wage growth. In addition, ratings news from the Eurozone is due out as S&P has Finland, Portugal and Austria up for review.

• Norwegian unemployment data is due out. See Scandi markets, page 2.

Selected Market News

Yesterday was day one after the surprisingly dovish Fed meeting on Wednesday night. However, the awaited risk rally in global equity markets did not materialise from the opening in the European session. though sentiment improved over the session as especially commodity stocks recovered. Market participants were among other things concerned about the strengthening of the euro in the aftermath of the Fed and the impact of negative rates for a prolonged period of time on the European banking sector, not least whether a stronger euro would endanger a possible economic recovery.

Yesterday, we got some strong US numbers. The Philly Fed manufacturing survey rebounded to 12.4 from -2.8. Also, the details were strong with new orders jumping to 15.7 from -5.3. In ISM-adjusted terms, Philly suggested an ISM of 54.5. Remember that Empire also showed a significant rebound in March. Overall, it suggest that the US manufacturing cycle has turned. US initial jobless claims came in at 265,000 versus 258,000 the previous week. Thus, the labour market indicator continues to hover around the level before the January spike. Hence, the labour market seems to have been alright in early March.

The better US data coupled with the dovish Fed stance was a positive cocktail for US stocks indices, which all ended the day in positive territory. Especially those stocks benefiting from a weaker USD and higher commodity prices (Brent at USD41.5 a barrel) had a good run. Dow Jones is now marginally up YTD and S&P 500 is down only marginally. Nasdaq is still down 4.6% YTD.

The rally in the global fixed income market continued yesterday and overnight. Japan might be an indication of how much yields could potentially drop also in Europe. The 10Y JGB is again below the negative deposit rate at -0.10% and has been trading as low as -0.135%. The 30Y JGB is once again below 0.50% - down 17bp overnight. The move came after a new overnight drop in USD/JPY to 111.38. It is the strongest yen against the US dollar since 2014 when the Bank of Japan (BoJ) introduced a significant easing package among other things to weaken the yen. The yen move has strengthened calls for further BoJ easing or intervention in the FX market. If anyone thought that the global currency war was over after the ECB meeting last week they might have been far too optimistic.

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