Market movers today
We have published our Nordic Outlook with updated economic forecasts for the Nordic countries this morning. We expect Swedish growth to slow this year as it is no longer fuelled by housing, Norwegian growth to accelerate supported by oil investments, Danish growth to cruise along and Finland to slow down only a little after a very good run.
Market focus continues to be on the US-China trade spat. We have now entered what we would call a trade war as the t it -for-tat react ions are escalating, see US-China trade trade war becomes a reality as Trump pushes further, 19 June 2018. The next key dates to watch out for are 30 June (when Trump announces restrictions on Chinese investments into the US and export controls on US tech products to China) and 6 July (when Chinese tariffs on US begins, and Trump has said it will lead to further tariffs on Chinese products worth USD200bn).
It will be an interesting day at the ECB Sintra conference, with the key event being the panel at 15:30 CEST, which includes ECB President Mario Draghi, Fed Chairman Jerome Powell and Bank of Japan Governor Haruhiko Kuroda. See programme here.
Yesterday, we published an update on the political situation in Italy. See more here. Currently, no news on fiscal policy is good news for the Italian government bond market. However, we are st ill reluctant to go long BTPS and much prefer to be long Spain and Portugal.
Selected market news
There has been some stabilisation in the Asian equity markets despite the trade wars between US and China escalating. There were some small gains in the European government bond market yesterday on the back of the trade war between the US and China and more ECB comments from the conference in Sintra, Portugal.
There will be some more speeches from Sintra today, but we do not expect them to have much impact on markets. Furthermore, the focus on the inversion of the US yield curve continues to be strong. Next week, the US Treasury department is due to hold an auction in the 7Y segment , which could add to the pressure on the yield curve.
