Today's most important release is the US CPI release at 14:30 CET

Sverre Holbek, CFA Danske Bank A/S

Market movers today

Today's most important release is the US CPI release at 14:30 CET. We estimate the core index rose 0.2% m/m in March, implying an increase in the CPI core inflation rate to 2.1% from 1.8% due to base effects (the CPI core index dropped 0.1% m/m in March 2017 due to, among other things, wireless telephone services).
Also, we get the FOMC minutes tonight at 20:00 CET. We will look for comments on a possible regime shift to price level targeting and comments on the increasing Libor/OIS spread.
In the UK, the NIESR GDP estimate for Q1 18 is due out at 13:00. Based on the PMIs, GDP growth likely fell to 0.3% q/q in Q1 18 from 0.4% q/q in Q4 17.
In Sweden, the Prospera's monthly money market inflation survey is released this morning, see page 2.

Selected market news

Yesterday, we saw a quite volatile trading session in the afternoon. While there were no data releases driving the market, comments from Austrian central bank governor Ewald Nowotny sent rates higher and EUR stronger. Nowotny commented in a Reuters interview that in his view the ECB could hike the deposit rate before moving the main interest rate . He also commented on a first rate hike being 20bp. Unprecedented, an ECB spokesperson stressed that the comments were Nowotny's own view. ECB spokespeople never comment on views shared by the individual governing council members, so that in itself was striking. Regarding the size and timing of the first hike, we have previously discussed what we expect goes into the ECB's decision making process, see ECB Research: 10bp, 20bp or ...? ECB in uncharted waters , 20 March 2018.

Following the escalation of the US-China trade dispute on Friday, we have seen multiple signs that support the picture that it is part of negotiations to reach a deal rather than Trump taking China into a trade war. We thus still expect the endgame to be a deal between the US and China and that the situation will be resolved without a trade war . Last night Trump tweeted: 'Very thankful for President Xi of China's kind words on tariffs and automobile barriers...also, his enlightenment on intellectual property and technology transfers. We will make great progress together!', which is a sign of consolidation, see Flash Comment: Encouraging signs in the US-China trade conflict , 10 April 2018.

The oil price reached a new year high yesterday on broad based support from the weaker USD, better risk sentiment in markets and bullish comments from Saudi Arabia targeting a higher oil price in the future.

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Sverre Holbek, CFA

Danske Bank A/S

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