Market movers today
The ECB minutes from the December meeting are the highlight in the euro area this week. The meeting carried new staff projections and no batch of measures such as those at the October meeting. Hence, we intend to look primarily for nuances in the assessment of the new staff project ions (including 2020), in particular on inflation. Following the decisions taken at the October meeing, the ECB has had no need to change its position just yet . We expect the next change in guidance to come only towards the summer.
German GDP growth for the year 2017 is due to be released and expected at 2.3%. It would be the highest German growth since 2011.
Other data due today includes euro industrial product ion, US jobless claims and US PPI.
In Scandies, Sweden will release average house prices (SCB).
Selected market news
Overnight , China’s St at e Administration of Foreign Exchange (SAFE) dismissed the story that China may cut back on US Treasury buying, saying that it may have been due to wrong sources or ‘fake’ news. Also out of China, Premier Listated that the economy grew 6.9% in 2017.
Anonymous Canadian government officials indicated yesterday that they see a rising possibility that US President Trump will withdraw the US from the North American Free Trade Agreement (NAFTA). CAD and MXN sold off temporarily on the news. A White House official later said t hat not hing has changed in US P resident Trump’s stance on NAFT A. The next round of negotiat ions on NAFTA is set to start on 23 January.
The St . Louis Fed President James Bullard yesterday expressed sympathy for the idea of the Fed adopting price level targeting. In general terms, he advocates a policy that allows inflation to be above 2% for a period and further said that it would be appropriate for the Fed to focus on a single mandate of inflation. Dallas Fed Robert Kaplan supports a policy of three interest rate hikes this year, while also alerting that the Fed will not move so far as to invert the yield curve.
The weekly EIA inventory report posted a 5mb drop in US crude stocks – about half that seen in API data on Tuesday. In addition, the report showed that US crude product ion fell 290kb/d last week. Freezing US winter weather is likely to be an important reason for both the draw on stocks and the drop in output . On a separate note, speculation has started that OPEC may actively cap further price increases with the price on Brent nearing the USD70/bbl mark.
