Market movers today
In Sweden, we are due to get inflation numbers. We expect around 0.1 percentage point higher inflation for August than the Riksbank's new forecasts, both for headline CPIF and core CPIF excluding energy. See more in Scandi section overleaf.
In Russia, the central bank decision will be announced. We currently expect the CBR to keep the key rate unchanged but we are paying close attention to the external environment. Real rates remain extremely high in Russia. A hike by the CBR would weigh on economic growth in 2019.
In Denmark, Finance Denmark's housing market statistics for Q2 are due. We already know from Statistics Denmark how prices have moved nationwide but it will be interesting to see what has been happening at a local level.
Finally, today it is 10 years since Lehman Brothers filed for bankruptcy, which should imply a lot of media focus on the causes and consequences of the financial crisis.
Selected market news
The Bank of England (BoE), central bank of Turkey (TCMB) and ECB delivered broadly as expected yesterday. First, the BoE announcement was a dull affair, with no new forecasts or policy signals. We still expect the BoE to hike around once a year and our base case is that the next hike will arrive in May 2019, after the UK formally leaves the EU (see also Bank of England Review , 13 September). Then more action was seen in Turkey: while Turkey's president Recep Erdogan was out rattling TRY markets ahead of the TCMB decision, the central bank managed to surprise markets by delivering a significant rate hike of 625bp for its one-week repo rate, sending it to 24.00%. The accompanying statement further stroked a hawkish tone promising more monetary tightening 'if needed'. The decision fuelled a risk-on move across emerging market currencies and sent the TRY up more than 4% up against the USD from yesterday's open levels. Finally, the ECB did not deliver new policy signals in a meeting that on the face of it was rather uneventful. However, Mario Draghi notably highlighted risks 'gaining more prominence' - albeit still seen as balanced for growth - and importantly the ECB's confidence in the inflation outlook prevailed. Rates markets were trading broadly sideways through the press conference but EUR/USD jumped towards 1.17 lifted also by a weak US CPI. While the asset-purchase programme will end by New Year, we still do not see a first rate hike from the ECB until December 2019. See more details in ECB Review , 13 September.
Markets have been reasonably calm overnight , despite a tweet from US President Donald Trump in relation to the trade talks that his Treasury Secretary Steven Mnuchin has reportedly been initiating, stressing that the US feels 'no pressure to make a deal' with China. Nevertheless, equities kept the upbeat tone in both the US and Asian session. US Treasury yields fell slightly after US CPI data came out on the weak side yesterday. Hurricane Florence has now reached the US East Coast (North Carolina) and its associated storm surge is projected to create severe damage.
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