Market movers today
This morning the markets will digest the outcome of the EU summit on Brexit in which the deadline was postponed to 31 October (see more below).
Swedish March CPI is set to clearly undershoot the Riksbank estimate, see page 2.
On the global data front it’s a very light day. US jobless claims is the only release of interest as they showed a sharp drop last week to a new cycle low underlining a still strong labour market. We expect to see a correction higher today. We also have some Fed speakers on tap today. Vice-Chairman Richard Clarida will be the most interesting one at 15.30CET.
Selected market news
Overnight, EU leaders decided to grant the UK a “medium” extension to 31 October (including taking stock in June). While a majority of the EU leaders wanted a long extension of 9-12 months, French President Macron played hard ball and argued for a much shorter extension. The extension is conditioned on no reopening of the withdrawal agreement, participating in European elections and “sincere cooperation”. The UK government has accepted the offer, meaning that the new Brexit day is 31 October and the agreement does not need approval in the House of Commons (EU law is above British law).
Today, we will monitor the British politicians ‘ reaction. While the Conservative party rules say there cannot be another no confidence vote in May’s party leadership until December, the leaders of the Conservative backbenchers (the so-called 1922 committee) decided yesterday they will try to persuade May to quit soon. It is difficult to predict what is going to happen but as it seems unlikely that the House of Commons will back Theresa May’s deal and a breakthrough in the cross-party talks does not seem imminent, it may end up being the case EU leaders will have to decide once again in October. After the EU summit Merkel sounded open to the possibility of a further extension.
A dovish message from the ECB yesterday gave a lift to equity markets while sending bond yields lower. For more on the ECB meeting see our Flash ECB Review – Little news but tiering system still part of a discussion , 10 April 2019.
Chinese inflation came out as expected overnight. CPI inflation increased from 1.5% to 2.3% on the back of higher food prices. It is still below the 3% target and will not affect the policy of People’s Bank of China. PPI inflation increased to 0.4% y/y from 0.1% y/y.
The UK RICS housing survey released overnight surprised to the upside rising to -24 from -27. It still points to falling house prices, though.
US core inflation fell to 2.1% y/y in March (consensus 2.2% y/y) from 2.2% in February. The numbers add to the picture of still muted inflation pressure despite low unemployment.
India began voting in the first of seven phases of the general election, which will last until 19 May with the result being announced on 23 May. Prime Minister Narendra Modi is ahead in the polls to lead India for another five years.
