OPEC will maintain production cuts through 2018

Market movers today

  • Swedish inflat ion will be in focus this morning. We predict Swedish inflat ion at 1.9% on CPIF (see more in the Scandi section).

  • In the afternoon, at tent ion will switch to inflat ion as well as retail sales in the US. On inflation, we look for a rise in core CPI of 0.2% m/m in December in line with consensus. It leaves t he annual core inflat ion unchanged at 1.7% y/y. Not e the Fed's preferred measure for inflation is the PCE deflator, which is due 29 January. Core PCE inflation was 1.5% y/y in November and thus at a slight ly lower level than core CPI inflat ion (due to different weights).

  • US retail sales have been on a robust path recently and the cont rol group that feeds into private consumption in GDP rose a brisk 0.8% m/m in December. It is expected to grow 0.4% m/m in December.


Selected market news

Overnight , Chinese December trade data was released. Exports grew 10.9% y/y down from the revised 11.5% y/y and slight ly below consensus. Import growth dropped to 4.5% y/y from 17.6% y/y missing consensus by a wide margin.

The New York Fed's Dudley yest erday argued that the recent ly agreed tax cuts add to the case of further interest rate increases. He further argued that this scenario is supported by above-t rend growth and easy financial conditions, which outweigh the run of below target inflation.

The Canadian government expressed a bit more opt imism about upcoming NAFTA negot iations as the foreign minister yesterday pledged to bring new ideas, according to unnamed officials.

The price on Brent crude briefly surpassed USD70/bbl yesterday. One of the dominating headlines in the oil market was a comment from the UAE oil minister who stated that OPEC will maintain production cuts through 2018 – an at tempt to quiet speculat ion that it will end cuts early following the recent rally in oil prices.

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