US CPI figures yesterday rose at the fastest pace during the past year

Danske Research Team Danske Bank A/S

Market movers today

In terms of global data releases, today is quite boring. We get the ECB minutes from the March meeting but we doubt it will provide new insight about the timing of the next step in the normalisation process.
In Sweden, we get CPIF inflation data today, see page 2 for details.

Selected market news

Risk sentiment turned sour yesterday driven by geopolitics. Potential US action in Syria in Russian supported areas adds tensions to an already tough dilemma following last week's sanctions on Russia. Oil surged yesterday and now stands at USD66.7 per barrel.

As expected, there was no major news in the FOMC minutes released last night. There are a few things worth highlighting: (1) The Fed says trade policy poses a downside risk to the US economy, (2) the Fed thinks the expansionary policy will boost growth over the next years but thinks it is difficult to estimate the magnitude, as the output gap is already nearly closed, (3) 'several' Fed members think it is likely necessary to increase the Fed funds rate above the natural/neutral rate over the next couple of years to avoid overheating the economy and (4) the Fed will continue to shrink its balance sheet despite the USD liquidity situation. We still expect two more hikes this year with risk skewed towards three more hikes. The next hike will most likely come at the June meeting.

US CPI figures yesterday rose at the fastest pace during the past year, in line with expectations.

Overnight, sentiment from a joint PBoC/IMF conference suggested that China will 'unquestionably' retaliate if the US introduces more measures in the trade war. China also said that it already has a detailed plan if needed.

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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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