Market movers today
Today, we have a hectic day ahead of us. Markets will continue to digest the potential ECB tiering system as well as the aftermath of yesterday’s Brexit votes. On the data from, we get preliminary German inflation data for March. We see scope for a small rise to 1.8% y/y (from 1.7%) on the back of the recent increasing oil prices.
In the US, we get February housing market numbers and 2018 Q4 private consumption print. Recently, the housing market has started to show a bit weakness especially home sales numbers, which we expect is driven by higher mortgage rates. However, housing market data are quite volatile. The day also brings a number of Fed speeches, but these are going to fade into the background for some time, as the Fed has clearly signalled it is on hold for the rest of the year, see FOMC review: Fed done hiking rates .
Overnight, Japanese industrial production and retail sales are released.
This morning we published our Nordic Outlook for March 2019 (see page 2).
Selected market news
In yesterday’s indicative votes, the House of Commons rejected all eight Brexit options. Readers of yesterday’s Danske Daily will know this was not a big surprise given the House of Commons had rejected most of the options in one way or another in previous votes. Next step is likely more indicative votes on Monday 1 April, where members of parliament may vote again but on fewer options. Within the Conservative Party more Brexiteers are now backing May’s deal after she promised to resign soon after Brexit has been delivered, but unfortunately for May, the supporting party DUP from Northern Ireland remains against. May’s deal will likely be dead on arrival if brought forward for a vote tomorrow. With just about two weeks to go, uncertainty is high. In our view, there seems to be four possible ways forward now: May’s deal, no deal, second EU referendum or May’s deal including a permanent customs union. Risk of snap election might have gone up, though.
Yesterday’s ECB watchers conference shook markets . The comments from Mario Draghi, Peter Praet and Luis de Guindos on attention to banks’ profitability fuelled with a Reuters ECB-sourced story sent yields lower. Their comments predominantly focused on the weak banking sector profitability and what ECB could do to mitigate this. However, it was not until the Reuters story around 14:00 CET that the significant market move took place. This morning, Praet said that ECB staff are looking into the possibility of a tiering system should a monetary policy reason warrant that. That also means that all options to mitigate the side effects from the negative deposit rate are on the table. However, we expect next step from ECB is announcing the TLTRO3 modalities, which could be made very favourable, should they find the need before a tiering system were to be announced.
