Market movers today
German industrial production for February will likely increase amid strong momentum for the German manufacturing sector.
The US PPI inflation is likely to jump significantly to 3.8% in March mainly due to base effects and higher energy prices.
The 60 second overview
ECB minutes: ECB had a slightly optimistic tone on the economic outlook and came with some hawkish comments to the PEPP implementation. The market impact was insignificant in the short term, but we think it will take a significant worsening of the risk appetite for ECB to step up purchases. As such it is in our view, right now more likely that ECB will have to end PEPP rather than extend it.
Fed: Speaking at IMF and World Bank meetings yesterday, Fed chair Powel highlighted the risk of another COVID outbreak. FOMC member Bullard emphasised the Fed should not even discuss changes in monetary policy until it is clear that the pandemic is over.
Equities: Global equities up 0.5% yesterday with broad based gains across sector. The energy sector stood out dropping 1%. Growth stocks a clear outperformer yesterday, continuing the strong run since yields have started to flatline three weeks ago. In US some new record settling levels with Dow +0.2%, S&P 500 +0.4%, Nasdaq +1.0% and Russell 2000 +0.9%. Asian stocks are mostly lower this morning with Japan going against the trend. US and European futures in slim gains.
FI: It was yet again a trading day with European rates staying in a tight range, which has been the prevailing theme after Easter. Markets did not pay attention to the slightly upbeat ECB minutes.
FX: Yesterday's session in FX markets was generally characterised by PLN and SEK strength alongside NOK and USD weakness. EUR/SEK is now back below 10.20 while NOK/SEK temporarily moved below 1.01 - that despite large dividend payouts of Swedish names. EUR/USD has moved firmly above 1.19 while EUR/GBP is approaching 0.87.
Credit: Thursday was a good day for EUR credit - particularly CDS indices. iTraxx Xover tightened 4bp (ending in 245bp) and Main tightened 1bp and ended in 50½bp. HY bonds generally tightened around 1bp while IG closed around ½bp tighter.
Nordic macro and markets
Norway: Inflation has been coming down since the autumn. A stronger krone has pulled down imported inflation, and slower wage growth has put a damper on domestic inflation. Strong growth in retail sales, higher commodities prices and bottlenecks in parts of the value chain have nevertheless resulted in slightly higher inflation than expected last spring. We expect this balancing act to continue, with downward pressure on inflation supported by base effects, but pockets of supply-side pressures. Limited base effects in March nevertheless suggest that core inflation will be unchanged at 2.7% y/y.
Sweden: The DO releases the March borrowing requirement. In the most recent forecast it expected a SEK 22.1bn deficit. The February surplus was about SEK8bn worse than forecasted, however, entirely due to a technical failure to collect SEK21bn in tax revenues. Hence, this money will come back in March. Summing up the Jan-Mar period we expect the end result will underscore that the underlying trend with smaller borrowing requirement than expected has continued. Riksbank buys SEK500m each in 3112 (2026) and 3114 (2030) linkers.
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