Market movers today
Today, markets will continue to focus on the trade negotiations ahead of the beginning of the US-China talks tomorrow. After the US markets closed deep in the red yesterday, the sour risk sentiment on the back of increased trade uncertainty will also be in focus.
In terms of economic data releases, there is not much on the agenda today. In Norway, production data for March is due out and in Sweden we get budget data for April. See more details on page 2. Otherwise we are looking forward to the Norges Bank meeting on Thursday.
In Germany, industrial production data is due out this morning, which markets will scrutinise given the weakness in German manufacturing production in recent months. Given yesterday’s downward revision in the EU Commission’s growth forecast and soft factory orders, another set of weak data would send bond yields down further.
The ECB’s Draghi speaks in Frankfurt this afternoon, but it is not expected to be a market mover.
Selected market news
Yesterday, Italy came under renewed pressure partly due to the risk-off sentiment, given the sell-off in the equity market, but also on the back of the downward revision of growth in 2019 from 0.2% to 0.1% and a deficit in 2020 above 3%. The 10Y spread to Germany widened some 8bp, while the other peripheral markets was also struggling to follow the move in the 10Y German government bond yield.
The US equity markets ended the day with losses across the different categories. Given the negative sentiment in the US equity market, we saw another decent rally in US Treasuries.
The Asian equity markets followed the negative sentiment from the US equity markets this morning on the back of the uncertainty over a trade agreement between the US and China. The New Zealand central bank (RBNZ) became the first central bank in the developed world to cut rates, lowering by 25bp to an historical low, and signalled that one more cut could come given the downward risk for the economic outlook. A rate cut was to some extent priced in and the market is pricing in the possibility of another cut from RBNZ.
