Yesterday’s main event was the ECB meeting

Market movers today

• Today, we have a thin calendar in terms of global data releases.

• In the euro area today, the ECB is set to publish the Survey of Professional Forecasts, containing longer-term inflation expectations. Recently, the ECB has emphasised these fairly stable survey expectations at a time when market-based inflation expectations have been very weak. However, there is also some weakness in the survey expectations, with an increasing share of forecasters expecting inflation to remain below 2.0% in the longer term.

• The consumer confidence figure for October in the euro area is also released today. Together, with other economic survey indicators, consumer confidence has been resilient to the UK’s vote to leave the EU. It remains supported by solid employment growth and the still-low oil price but, looking ahead, lower real wage growth is likely to become a headwind.

• There are no major data releases due today in Scandinavia.

Selected market news

Yesterday’s main event was the ECB meeting (see ECB Review: No ECB QE tapering discussion - we expect QE extension, 20 October 2016). The ECB kept all policy rates unchanged, maintained its monthly QE purchases of EUR80bn and still intends to end its purchases in March 2017. Overall, we have not changed our view that the ECB will announce a six-month QE extension at the upcoming meeting in December, as the ECB provided little information at yesterday’s meeting. According to ECB President Mario Draghi, the decision in December will indicate what the ECB is going to do in coming months. This is because the ECB’s assessment in December will benefit from new ECB projections extending until 2019 and ‘from the work of the Euro system committees on the options to ensure the smooth implementation of our purchase programme’.

US initial jobless claims rose to 260,000 last week. This is the highest level since the beginning of September. However, the increase came after very low levels recently and historically it is still a low level.

The Philly Fed overall index fell from 12.8 to 9.7 in October. The details where quite good though (remember that the Philly Fed headline index is not a weighted sum of the underlying indices). Most noticeable new orders came out at 16.3 in October from 1.4 in September. The details correspond to an ISM manufacturing at 53, which is much better than the Empire manufacturing index from NY Fed that we got earlier this week.

Overnight, it has been a fairly calm session in global financial markets. Regarding risk sentiment, it has been quite mixed. In fixed income markets, the US 10Y government benchmark bond yield has dropped by 1bp since last night’s high (CET) and Japanese government bond yields have climbed slightly higher since yesterday (less than 1bp though). Changes in Asian stock markets have been quite subdued so far and Brent oil has dropped to USD51.25/bbl at the time of writing.

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