The Fed’s Evans, Kaplan and Bullard are scheduled to speak today

Danske Research Team Danske Bank A/S

Market movers today

After some quiet days in terms of data releases, we have a busier day today. The most important release, which we look very much forward to, is the release of Swedish CPI inflation data for December at 09:30 CET. We estimate CPIF inflation rose to 1.9% y/y in December, very close to the 2% target. We believe December inflation was hit by some exceptional events briefly pushing inflation higher, which should reverse at the beginning of 2017.
The Riksbank minutes are also due. Three board members voted against the QE extension and the minutes will reveal how they reasoned.
German GDP growth (non-seasonally adjusted) for 2016 will give the first indirect information about how strong GDP growth was in Q4 16, where both survey indicators and hard data have pointed to strong economic activity.
Focus on the account of the ECB meeting will be on the discussion related to the changes to the parameters of the asset purchasing programme – especially regarding the change that allows the ECB to purchase bonds that yield below the -0.4% deposit rate, as it remains uncertain how ‘aggressive’ the ECB will be in terms of buying below the deposit rate.
Speaker of the House, Paul Ryan, tweeted yesterday we ‘can learn more about Republican priorities for 2017’ and is due to discuss more in an interview on CNN today at 15:30 CET.
The Fed’s Evans, Kaplan and Bullard are scheduled to speak today. There has been some confusion about when Janet Yellen is due to speak – it should be just after midnight at 01:00 CET.

Selected market news

President-elect Donald Trump provided us with little new information on the future economic policy at his first press conference (including a Q&A session with journalists) since his victory speech. Thus, we are back to monitoring his Twitter account for any tweets on economic policy ahead of the inauguration. Otherwise, we will (hopefully) get more information at his inauguration speech (or perhaps in an updated plan for the first 100 days). See Flash Comment US: No major economics news from President-elect Trump - back to monitoring Twitter, 11 January. As mentioned above, the Speaker of the House, Paul Ryan, will talk more about Republican priorities for 2017 in an interview on CNN today at 15:30 CET.

The risk-off reaction after Trump’s press conference continued overnight, as markets were left disappointed as they had hoped for more clarification on Trump’s economic policy but instead got more of the same. USD has weakened further and EUR/USD is trading above 1.06 again. US 10Y Treasury yields have declined to 2.33% versus 2.39% before the press conference, the lowest since early December. Gold is trading 1.4% higher than before the press conference. Futures on S&P500 are down 0.3%. Markets are likely to still have the Trump theme in mind over the next one and a half weeks until inauguration day, as we do not know how he will act as President and what his actual policies will look like.

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Danske Research Team

Danske Bank A/S

Research is part of Danske Bank Markets and operate as Danske Bank's research department. The department monitors financial markets and economic trends of relevance to Danske Bank Markets and its clients.

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