US CPI data on Wednesday

Danske Research Team Danske Bank A/S

Market movers today

Today we get a number of tier two data releases. In the US, the release of import prices in January is likely to attract at least some attention given the focus on 'reflation' in the markets.
Also in the US, we get housing data for January as well as preliminary consumer confidence indicator from University of Michigan.
In the UK, retail sales in January are due out today. The markets sometimes move on the number, although it is a poor indicator for actual private consumption growth.
In Sweden, governor Ingves' has cancelled his speech due to influenza.

Selected market news

After the US CPI data on Wednesday, equity indices continued the risk-on sentiment yesterday, with Eurostoxx 50 up 0.6% and S&P 500 up 0.9%. 10Y treasury yields were slightly lower on the day at 2.89%, while European bond yields were marginally higher. Overnight, Japanese equities rose 1%, with many markets closed for the Chinese New Year. The ZAR traded around its strongest level in almost three years following the resignation of Zuma. More here

The awaited speech by Norway's central bank governor Olsen yesterday evening did not contain news and gave only the high-level/broad picture.

Oil prices have rebounded significantly in the past days with the price of Brent crude recovering to USD65/bbl level. The main culprit has been the steep drop-back in USD and positive turnaround in risk sentiment. The weekly EIA report on Wednesday did not offer much for the market to trade on. In the short-term, we look for oil prices to mirror development in risk sentiment and USD.

The confidence indicators released in the US yesterday showed a mixed picture. The Empire manufacturing declined to 13.1 from 17.7, while Philly rose to 25.8 from 22.2. The Empire details show that they are stronger than the headline (recall that the headline is an index in itself, not calculated as a weighted sum of other components). Employment rose to 10.9 from 3.8, inventories declined, new orders slightly up. Prices paid rose significantly from 36.2 to 48.6 (highest in nearly six year).

Yesterday, the European Parliament stated that they found 'The majority of the political groups considered Governor Lane's performance more convincing. Some groups expressed reservations for Minister De Guindos appointment', after an informal hearing by the candidates to replace ECB vice-president Constancio in June this year. Next important step in the process is on Monday when the Eurogroup will decide on which candidate to recommend.

Author

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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