HomeContributorsFundamental AnalysisWeekly Focus: Bond Yields to Stall as Reflation Fuel Fades

Weekly Focus: Bond Yields to Stall as Reflation Fuel Fades

Mar 17 17, 13:54 GMT

Market movers ahead

Euro Flash PMI to remain strong in March as exports and investments are seeing a tailwind at the moment. Euro wage growth for Q4 will also be released. We expect another soft print just above 1% leaving underlying inflation pressure very subdued.
We look for US durable goods orders to rise further as investment growth picks up. Markit PMI manufacturing for March is expected to be broadly flat.
In the UK the main movers are CPI and retail sales. We do not expect them to change the fact that Bank of England is on hold for a long time.
Main news in Scandi will be the Labour Force Survey in Norway. We expect the unemployment rate to stay around 4.5%.

Global macro and market themes

A peak in ISM manufacturing and lower inflation removes the main reflation fuel for the bond bear market.
Lower policy uncertainty and a soft Fed hike gave more support to the stock market.
We are still long-term bulls on equities but very upbeat sentiment provides the risk of a short-term correction.

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