In focus today

Today, we receive euro area consumer confidence figures for February. Consumer confidence is still at a low level which is likely the reason for the sluggish consumption ratio. Consumer confidence rebounded strongly during the first half of 2023 but has since stagnated. An increase in consumer confidence could be the trigger for higher private consumption in 2024 as real incomes improve.

Tonight, minutes from the FOMC's January meeting will be released. Markets will keep a close eye on any clues regarding the timing of the first rate cut, which we now expect to come in May. In addition, the Fed's Bostic and Bowman will be on the wires ahead of the release.

Overnight, Japanese PMI figures kick off the slew of PMI data that is due tomorrow.

Economic and market news

What happened overnight

Japanese export volumes declined 4.6% in January indicating a slow start to the year following the technical recession in 2023H2. That said, January PMIs were more uplifting but have not been a good GDP indicator recently.

What happened yesterday

Yesterday we got Q4 GDP figures for Denmark, which showed an impressive rebound with a growth rate of 2.0% q/q. Furthermore, Q3 growth was revised up to 0.4% from -0.7%. The development was largely driven by pharmaceuticals, where manufacturing GVA increased almost 8% q/q in Q4, which also drove exports higher. Consumption also ticked up with quarterly growth of 1.7%, indicating somewhat less cautious consumers. All in all, this means the economy grew 1.8% for the year 2023, which is substantially more than the Eurozone. However, when excluding pharmaceuticals, the numbers show a decline of 0.1%.

Euro Area negotiated wage growth declined to 4.46% in Q4 from 4.7% y/y in Q3. This was in line with other trackers from the ECB and suggests that wage growth peaked in Q3. The ECB has repeatedly told markets that they await more data on wage growth, so this should provide some comfort, though they will likely still be cautious as we have yet to get the full overview of wage growth in Q4, which we will get with the "compensation per employee" print, due for release on 8 March. The market reaction was muted, with pricing still suggesting the first rate cut in June.

Finally, we got somewhat dovish comments from Bank of England governor Andrew Bailey who said that it was "not necessary" to wait for inflation to come back to target before cutting rates, adding also that the Bank was particularly focused on whether services inflation and wage growth were on a sustained path towards headline inflation. The market reaction was muted.

Equities: Global equities were lower yesterday with DM underperforming EM. DM is driven by macro and inflation data while EM is driven by China and the next step of policy support for the property sector. Defensive value outperforming globally on the higher for longer narrative but also boosted by earnings reports and earnings expectations yesterday. Investors embracing the earnings from retailers while taking some chips of the table in tech space ahead of tonight's reporting from Nvidia. Yesterday in the US Dow -0.2%), S&P 500 -0.6%, Nasdaq -0.9% and Russell 2000 -1.4%. Asian markets are mixed as the tech sector is dragging down most indices. Chinese indices are mostly higher as property developers are rising on the back of the last batch of policy support. Futures in US and Europe are mixed this morning with the tech-heavy indices trailing the rest.

FI: There was a modest decline in global bond yields yesterday, where 10Y US Treasury yields declined 3-4bp relative to the opening level on Tuesday morning. 10Y German govt yield also declined 4-5bp. There was also a bullish steepener between 2Y and 10Y for both the US and European government bond yield curves.

FX: SEK gained for the second straight day versus the rest of the G10 closely followed by the EUR, NZD and AUD. CAD and USD lost some ground yesterday, with EUR/USD rising to a two-week high just below 1.0840.

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

Recommended Content

Editors’ Picks

EUR/USD clings to daily gains above 1.0650

EUR/USD clings to daily gains above 1.0650

EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.


GBP/USD recovers toward 1.2450 after UK Retail Sales data

GBP/USD recovers toward 1.2450 after UK Retail Sales data

GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.


Gold holds steady at around $2,380 following earlier spike

Gold holds steady at around $2,380 following earlier spike

Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.

Gold News

Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium

Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in

Bitcoin price shows no signs of directional bias while it holds above  $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research. 

Read more

Week ahead – US GDP and BoJ decision on top of next week’s agenda

Week ahead – US GDP and BoJ decision on top of next week’s agenda

US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.

Read more