Danske Research Team
Danske Bank A/S
Market movers today
-
There are no major global data releases today and focus remains on risk sentiment after the big drops in stock prices last week.
-
In Denmark, we forecast CPI inflation was unchanged at 1.0% y/y in January.
-
The most important event in Sweden this week is the Riksbank meeting on Wednesday.
Selected market news
US stock-index futures rose, while Asian equities are mostly higher this morning. Oil climbed above 63 USD/bbl along with gold and industrial metals, after a slump on Friday following another increase in the US oil rig count and deepening concerns about a new shale boom.
Japanese markets are closed for holiday today, delaying Treasury trading. On Friday the US 2y10y curve continued to steepen, while we saw significant underperformance of DKK callable bonds in particular driven by increasing interest rates and classic Danish investor behaviour. In the European rates market we now argue that the focal point on the curve will shift to the 10y segment . Like in the US, higher inflation expectations and volatility drives up the term premium in a situation where QE is coming to an end, while higher real rates will also particularly hurt the 10y segment.
North Korea’s leader Kim Jong Un has invited South Korean President Moon Jae-in for a meeting in Pyongyang. The invitation was verbally delivered by Kim’s sister, on the occasion of the current Winter Olympics in South Korea. A Moon-Kim summit would mark the first time leaders of two countries have met in 11 years. While a summit in Pyongyang would signal easing tensions on the Korean Peninsula, it also risks driving a wedge in the alliance between the US and South Korea. The question now is whether the partners can stay united in keeping up the pressure on North Korea just as sanctions limiting export revenue and curbing fuel imports start to bite. So far South Korea has reacted cautiously to the opportunity, saying any summit would need the “ right conditions”. The Korean won rallied on the news.
The Japanese government is set to reappoint current Bank of Japan Governor Kuroda according to Japanese media, which would be in line with our expectation. The nomination will need approval by both houses of parliament , but since Shinzo Abe's LDP party has a majority of seats in both houses we do not expect this to be a hurdle. USD/JPY was little changed on the news and still trades around the 108.80 level this morning.
On Friday Russia's central bank (CBR) cut its key rate by 25bp to 7.50%, as inflation has hit its post -Soviet low at 2.2% y/y. We think the recent slowdown in Russia s economic growth is likely to vanish, with stronger growth figures in H2 18. However, as the CBR sounded relat ively dovish in its statement , we now expect CPR to cut the key rate further to 6.50% by end-2018, in the absence of geopolitical ‘black swans’ or a crude price crush.
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.
Recommended Content
Editors’ Picks
Bank of Japan keeps interest rate steady, as expected
The Bank of Japan (BoJ) board members decided to hold the key interest rate steady at 0%, following its April monetary policy review meeting on Friday. The decision came in line with the market expectations.
AUD/USD consolidates gains above 0.6500 after Australian PPI data
AUD/USD is consolidating gains above 0.6500 in Asian trading on Friday. The pair capitalizes on an annual increase in Australian PPI data. Meanwhile, a softer US Dollar and improving market mood also underpin the Aussie ahead of the US PCE inflation data.
Gold price keeps its range around $2,330, awaits US PCE data
Gold price is consolidating Thursday's rebound early Friday. Gold price jumped after US GDP figures for the first quarter of 2024 missed estimates, increasing speculation that the Fed could lower borrowing costs. Focus shifts to US PCE inflation on Friday.
Stripe looks to bring back crypto payments as stablecoin market cap hits all-time high
Stripe announced on Thursday that it would add support for USDC stablecoin, as the stablecoin market exploded in March, according to reports by Cryptocompare.
US economy: Slower growth with stronger inflation
The US Dollar strengthened, and stocks fell after statistical data from the US. The focus was on the preliminary estimate of GDP for the first quarter. Annualised quarterly growth came in at just 1.6%, down from the 2.5% and 3.4% previously forecast.