Market movers today
Emmanuel Macron is still leading comfortably in the opinion polls ahead of the second round of the French election and the market looks priced for his victory. Nevertheless, the market will continue to monitor whether Marine Le Pen can manage a last minute run.
Markets will keep a close watch should more details surface about a potential upcoming plan on US infrastructure spending and tax reform today.
The OPEC meeting is now only about three weeks away and the cartel is said to aim for consensus about a strategy on crude production before the meeting. The oil market in particular will monitor potential comments from OPEC today.
Final euro area PMI manufacturing indices and UK, Norway and Sweden PMI manufacturing indices are due for publication this morning.
In Denmark, currency reserves data is due for publication today. The krone strengthened against the euro at the beginning of April but not to the same extent as in February and March, when it triggered intervention by the central bank. Therefore, Danmarks Nationalbank probably stayed on the sidelines in April.
Selected market news
China’s Caixin manufacturing PMI fell to 50.3 in April from 51.3 – the lowest level since September 2016. Along with US ISM manufacturing, which fell to 54.8 in April from 57.2 in March, it supports our view that the industrial cycle in the US has peaked. While the news out of China has weighed a bit on the price of LME copper overnight , it is not enough to mitigate the positive impulse of the news from yesterday (cf. below) that a plan on infrastructure spending in the US may be on its way.
In an interview yesterday, former Fed chairman Ben Bernanke said that the Fed is probably aiming for a balance sheet of USD2.3-2.8trn from the current level of around USD4.5trn. We expect the Fed to announce further details on its plan to reduce its balance sheet at the June meeting.
There were two important pieces of news from the White House yesterday. Reince Priebus (White House Chief of Staff) said in a CBS interview that he expects a health bill to pass the House of Representatives this week. He added, ‘I think we’ll have tax reform by the end of the year’. President Trump said in an interview with CBS that an infrastructure plan is set to be released in two to three weeks’ time. However, it is likely to be even more difficult for Trump to pass his infrastructure plan than his tax reform.
