Market movers today
Today, the initial estimate of US GDP growth in Q4 is due out (the release has been postponed due to the shutdown). Our estimate is that US GDP grew by 2.1% q/q AR but there are downside risks after yesterday’s foreign trade report, so it may come out in the range 1.5-2.0%.
In Europe, we get regional HICP inflation data for February during the day.
In the Scandies, there is plenty of data due out today. In Sweden, Q4 GDP and retail sales for January are due. In Norway, the credit indicator (C2) is due out and Norges Bank Governor Olsen is due to speak at 11:00 CET. In Sweden, retail sales for January are also due.
Selected market news
Overnight, new key figures released for China and Japan painted a relatively downbeat picture of the economy. Chinese PMIs for both the manufacturing sector and non-manufacturing sector disappointed the consensus expectation, falling to 49.2 (from 49.5) and 54.3 (from 54.7), respectively. The Japanese economy also seems to be struggling. Industrial production dropped 3.7% m/m in January and retail fell 2.3% m/m. The disappointing key figures have sparked speculation about whether Japan’s economy is headed for a recession in early 2019.
The oil market recovered most of the lost ground from earlier this week yesterday. The comments from US President Donald Trump on Monday that OPEC should ‘relax’ were countered by hawkish comments from OPEC members, led by Saudi Arabia yesterday. The message from the oil cartel was that output cuts are needed to preserve oil price stability. Brent rose back above USD66/bbl yesterday.
Yesterday’s Brexit vote was not as dramatic as one could have expected. The Cooper amendment, which was changed so as to put PM Theresa May’s pledge down in writing, passed as expected and things now come down to three key votes in mid-March (vote on full deal on Tuesday 12 March, vote on support for no deal on Wednesday 13 March and vote for extension of Article 50 on Thursday 14 March). We think the most likely outcome is that the House of Commons will vote in favour of asking the EU27 for an extension of Article 50 by two to three months. While the risk of a ‘no deal’ Brexit has declined, it has not disappeared. We stick to our long-held view that the two most likely scenarios are either May’s deal (or something very similar) passing eventually or a second EU referendum.
Fed Chair Jerome Powell said during his second day of congressional testimony that the Fed is close to finalising its plan for the ongoing balance sheet run-off, also known as quantitative tightening.
