Danske Research Team
Danske Bank A/S
Market movers ahead
We expect the Swedish Riksbank to cut the repo rate by an additional 10bp on Wednesday and expand the QE programme by SEK30bn to a total of SEK70bn.
The FOMC statement is likely to acknowledge that uncertainty on the economic outlook has increased but confirm that the Fed is on track to raise rates this year.
It is likely deflation in the euro area has ended in April and we expect inflation to trend higher over the coming months.
We do not expect new easing measures from the Bank of Japan despite recent weakness in data but macroeconomic forecasts are likely to be revised lower.
Q1 data in the US has disappointed and we forecast GDP growth of 0.8% q/q AR.
The weakness in US data is likely to prove temporary and we expect April data to confirm this, with increases in consumer confidence and the manufacturing ISM.
In Norway, we estimate AKU unemployment was unchanged in February but risks are on the upside. A significant increase would put a May rate cut at the agenda.
We estimate GDP growth in the UK cooled to 0.4% q/q in Q1, despite strong survey indicators.
Global macro and market themes
Euro surprises coming down, US surprises set to head higher.
This would underpin a lower EUR/USD and higher US yields and give less cyclical tailwind to euro stocks versus US stocks.
The Fed is still on track for a September hike.
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