Danske Research Team
Danske Bank A/S
Market movers today
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A very quiet day on the data front . The US initial jobless claims and Philadelphia Fed survey are the only data of interest . It will be interest ing to see if the Philadelphia Fed mirrors the Empire index earlier this week and stays at solid levels.
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Geopolit ics cont inue to be in focus as US-China negotiations cont inue and some uncertainty has arisen over the meet ing between North Korean leader Kim Jong-un and US President Donald Trump.
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Norway is out for Constitution Day today.
Selected market news
Italy's 10Y government bond yields have been on the rise as markets see new polit ical risk is rising in the country and the probability of a populist government is increasing. A flight to quality boosted demand for bunds, causing the biggest int raday widening in 10Y bond spread in a year and weighing further on the EUR.
The sent iment has dented both European and US assets on news that EUR250bn of Italian debt could be writ ten off. However, the speculat ions were denied by one of the part ies, which is in process to establish a coalition. US Treasuries saw a sell-off as the 10Y yield climbed some 2bp.
North Korea threatened to cancel the upcoming summit between President Trump and Kim Jong-un planned for 12 June in Singapore. North Korea suspended talks with South Korea because of a joint military drill by South Korea and the US. Trump's reaction has been muted so far.
The EM FX two-day plunge stopped on the USD ret reat ing from its highest levels YTD. The USD/TRY retreated from its record high yesterday after the Turkish central bank announced it could take necessary steps. Markets started expect ing an emergency rate hike.
Scandi markets
In Sweden, Q1 housing starts and permits data are due to be published. We expect another negat ive quarter. Incorporated in our GDP est imate for Q1 (released on 30 May) is a 5% drop in resident ial investments between Q4 and Q1.
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