Market movers today
Markets will today scrutinise the Trump administration’s decision to raise tariffs to 25% on about USD200bn of goods. Moody’s has said that a full trade war could push the US economy into recession in 2020.
In Norway and Denmark, CPI inflation rates for April are due out this morning. In Norway, we expect base effects will pull inflation down. In Sweden, household consumption data is due out.
In the UK, monthly GDP data for March is due out and hence will provide a full overview of GDP growth in Q1. GDP growth was solid in January and February, so quarterly GDP growth was probably around 0.5% q/q. This is quite high, but growth was likely supported by companies making Brexit preparations. We expect GDP growth will slow again to around 0.2% q/q in the coming quarters.
In the US, we have CPI inflation for April. We expect CPI core rose +0.2% m/m in April, implying a small increase to 2.1% y/y from 2.0% y/y. The inflation data should not change the Fed being firmly on hold.
Selected market news
President Trump yesterday announced that tariffs would increase by 25% on more than USD200bn of goods from China. There was limited progress in the trade talks between the US and China. An article from Moody’s Analytics said that an all-out trade war between the US and China could put the US economy into recession already in 2020. Read more in China Notes – US hikes tariffs leaving high uncertainty in place, 10 May 2019.
Hence, the markets continue to be dominated by the lack of a trade deal between the US and China. The US equity markets fell yesterday, but sentiment in the Asian equity markets is more mixed this morning as most markets are down, while some have risen.
This morning we have published two reports. The first is on inflation in the Euro area, where we expect inflation to bounce back. See more here . The second is a chart pack on the global economy.
