Market movers today

Today's key data release is the University of Michigan Consumer Survey where the main focus is on inflation expectations. Given the market is dead set on Fed 'only' hiking 50bp next week, a positive surprise today may lead to a change of mind, a rise in short-term US interest rates and another dent in EUR/USD. US PPI is also released today.

In euro area, our focus will be on the TLTRO early repayment option. Given the large uncertainty, we judge that our expectation of EUR300bn is broadly in line with the Bloomberg survey which was released yesterday (at EUR333bn). This will come on top of the EUR52bn as part of the maturity of the TLTRO operation.

The morning kicks off with inflation data out of Norway. Despite early signs of weaker demand having an effect on businesses' pricing power, we expect inflationary pressures to remain considerable with core inflation climbing further to 5.9% y/y in November.

The 60 second overview

ECB preview: At next week's meeting, we expect the ECB to deliver a 50bp rate hike with a hawkish twist. Specifically, we expect the ECB to present key principles of the end to reinvestments under the APP process (in which reinvestments will almost come to a full stop) and an open-ended wording for more rate hikes to come. This will be a compromise, which we believe will be palatable to both hawks and doves. We currently expect ECB rate hikes into Q1 next year, with the deposit rate peaking at 2.75%, but with risks skewed for more hikes. Read more on Research Euro area: ECB preview - A hawkish 50bp, 8 December.

Fed preview: A 50bp hike seems like the clear base case for next week's Fed meeting. That said, we expect Fed to deliver a hawkish message on the 2023 policy stance, as the recent data releases and easing in financial conditions suggest that the pressure to keep tightening will persist into 2023. We adjust our Fed call for the 50bp hike next week, but still expect Fed to reach a terminal rate of 5.00-5.25% by March. Read more on Research US: Fed preview - Tightening pressure to persist into 2023, 8 December.

FI: European rates grinded higher through the day and ended 3bp higher in core jurisdictions. Intra-euro area spreads widened by 2-4b amid parts of European out on holiday (Italy, Spain, Portugal). There was generally little market moving news yesterday.

FX: Another calm day for global FX markets, which seems to be in a wait-and-see mode before a busy week next week. EUR/USD edged higher again and above 1.0550 and USD/JPY held steady around 137. SEK and NOK were largely unchanged vis-à-vis EUR.

Credit: Credit market activity was once again fairly muted on Thursday, although still with a slight bearish tilt on index level. iTraxx main widened 0.5bp to close at 92.2bp, while iTraxx Xover widened 2.9bp to close at 469.9bp. Primary market activity cooled down somewhat compared to earlier in the week. 

Nordic macro

In Sweden, Riksbank vice governor Per Jansson gives his annual December speech (08:30 CET). The title is "Monetary policy when inflation is too high - conditions and challenges". Mr Jansson has since he joined the Board started a tradition to end the year with guiding speeches on how to conduct monetary policy in a changing world, addressing issues such as leaning against the wind, negative interest rates and the interaction between fiscal and monetary policy. His speeches have laid the ground for how the Riksbank has implemented monetary policy. Hence, worth a close read.

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.

Feed news Join Telegram

Recommended Content


Recommended Content

Editors’ Picks

BOE and ECB policy announcements to rock the markets – LIVE

BOE and ECB policy announcements to rock the markets – LIVE

The Bank of England (BoE) and the European Central Bank (ECB) will be announcing policy decisions on Thursday. BOE Governor Bailey and ECB President Lagarde's comments on the policy outlook will ramp up market volatility following Fed's dovish surprise.

FOLLOW US LIVE

EUR/USD retreats below 1.1000, as ECB decision looms

EUR/USD retreats below 1.1000, as ECB decision looms

EUR/USD is trading in a narrow channel below 1.1000, as buyers stay on the sidelines ahead of the ECB policy decision. The pair is sitting close to the highest level in 10 months, as the US Dollar licks the dovish Fed decision-inflicted wounds. 

EUR/USD News

Gold holds steady near $1,950 as US yields stay calm

Gold holds steady near $1,950 as US yields stay calm

Gold price consolidates Wednesday's impressive gains and moves up and down in a relatively narrow channel slightly above $1,950. Following the post-Fed decline, the 10-year US Treasury bond yield holds steady slightly above 3.4%, limiting XAU/USD's upside.

Gold News

Altcoin ascension: MAGIC, Optimism and Stargate Finance rally 20% after Powell's comments

Altcoin ascension: MAGIC, Optimism and Stargate Finance rally 20% after Powell's comments

MAGIC, Optimism and Stargate Finance have rallied beyond 20% after the US Fed’s policy meeting on Wednesday. The rallies are facing crucial hurdles and could trigger a correction.

Read more

Meta Platforms (META) Stock Earnings and Forecast: Facebook parent rockets 20% afterhours

Meta Platforms (META) Stock Earnings and Forecast: Facebook parent rockets 20% afterhours

Well, well, well. It appears that Facebook and Instagram parent Meta Platforms (META) has duly mended its frayed relationship with Wall Street.

Read more

Majors

Cryptocurrencies

Signatures