Market movers today
The Swedish government presents its 2021 SEK100bn ‘kick-start’ budget bill this morning.
In Denmark, we get wage-earner employment figures for July.
Key events this week include the Riksbank meeting tomorrow, the Norges Bank meeting on Thursday, a range of Fed speeches including Powell’s testimony tomorrow and flash PMIs for September on Wednesday.
The 60 second overview
ECB. Yesterday the Financial Times published a sources story (behind paywall) that the ECB will launch a review of its PEPP programme. The review will examine the length of the PEPP (currently set for June 2021) but also look at transferring its flexibility to other purchase programmes. It is difficult to gauge if this will be dovish or hawkish. If the PEPP would not be used in full (and not extended), it would be hawkish, but if the flexibility and discretion of the tool is carried into other programmes, it could well be dovish. We do not expect a clear market reaction in either direction this morning as the story simply lacks finer details.
US politics. Keep an eye on US politics this week. Will a phase-4 stimulus bill be passed -or finally kicked down the road? Will the passing of Supreme Court justice Ruth Bader Ginsburg lead to president Trump rushing to nominate her successor ahead of the November election?
Equities. After broad-based losses in the US session on Friday where S&P500 lost more than 1%, Asian trading has been more mixed to unchanged. Note though that Japan is closed for holiday today.
Fixed income. The rates session on Friday broadly ended as it started. US yields a tad higher across the curve with the 10Y Treasury rate closing just below 0.70%. Breakeven inflation (10Y) seems to have settled below 1.70% after the Fed meeting last week.
FX. FX markets have remained broadly unchanged since Friday, awaiting news on Brexit, PMIs and Fed communication in particular.
Credit. Credit markets were range-bound on Friday, with both iTraxx Xover and Main more or less unchanged.
Nordic macro and markets
This morning (08.00 CEST) the Swedish government presents its SEK100bn 2021 ‘kick-start’ budget bill targeted at welfare (SEK20bn), extended turnover support for business (SEK14bn), income tax cuts (SEK13.5bn) and reduced employers’ social wage fees for youth 19-23 years (SEK8bn).
