Market movers ahead
- There have been several important central bank meetings this month but we still have one to go. We expect the Riksbank to prolong the current QE programme by six months (SEK30bn) and cut the repo rate by an additional 10bp to -0.60%. While the prolongation of QE is relatively widely accepted, the view on an additional rate cut is more non-consensual.
- In the first week of January, we are due to get the minutes from both the FOMC and ECB meetings in December, which could be interesting as both central bankers surprised markets.
- On Friday 6 January, the US jobs report for December is due. We estimate jobs growth was around 170,000 in line with the recent trend.
- At the beginning of January, euro area HICP inflation data for December are due. While we expect headline inflation to be pushed up by higher commodity prices and base effects, core inflation is not set to follow suit.
- In China, look out for PMI manufacturing for December and house prices for November.
Global macro and market themes
- The reflation theme is getting further support from data.
- We look for further upside in equity markets and bond yields in 2017.
- We expect more USD strength short term but a reversal in 2017.
- Keep an eye on China – financial tension is increasing
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