Market movers today
Today we have a number of important events, starting with the euro area inflation print, where we expect a decent rebound in both headline and core inflation to 1.8% y/y and 1.2% y/y, respectively, from last month’s low levels driven by seasonal effects from the timing of Easter.
In the US, the jobs report is due out later in the day. Overall, the labour market remains strong, but we think it is important to keep an eye on whether employment growth starts to decelerate. We expect average hourly earnings to have risen +0.25% m/m in April, unchanged at 3.2% y/y. We expect nonfarm payrolls to have risen 190k.
Markets will digest the outcome of the UK local elections and whether it means something for May’s premiership.
We have a lot of Fed speeches today, where we will look for any differences in views after this week’s FOMC meeting.
In Scandinavia , we get Norwegian and Danish unemployment data for April (page 2)
Selected market news
In the UK, not all results in the local elections were declared yet but so far the trend is that voters are punishing the Conservative Party and Labour, with LibDems and independents gaining seats. EUR/GBP has moved a bit lower this morning. Turnout was low. Neither Farage’s Brexit Party nor the remain party, The Independent Group/Change the UK, stood in the elections but they will in the European elections later this month, where polls suggest the Conservatives will suffer an even heavier defeat.
In line with expectations, the Bank of England (BoE) announced yesterday that the Bank Rate will remain at 0.75% and that it would still be appropriate to tighten monetary policy over the coming years. Our base case remains that the BoE is on hold for the next 12 months.
There is no stress in the oil market over the end to Iran sanction waivers. Yesterday, the Brent oil price fell below USD71/bbl, weighed down by a stronger USD and weak equity market sentiment. The US started drawing on SPR already last week, as yesterday’s inventory figures showed a draw of 550kb last week. That has helped push oil prices lower. Copper is on course for its biggest weekly drop since August.
US President Trump tweeted yesterday that Stephen Moore had pulled his Fed candidacy despite Moore saying earlier that he was still “all in”. The reason was his remarks about women. We believe it is positive that both of Trump’s candidates have now pulled their candidacies. Economic research indicates that monetary policy is most efficient when it is independent from short-term political views and the risk was that they would not be so.
The EU’s Juncker has called the Bundesbank’s Weidmann a “suitable” candidate for succeeding Mario Draghi as ECB president.
