Market movers today
- US President Joe Biden is set to release details of his USD3,000bn economic recovery package (including money for infrastructure) in a speech today in Pittsburgh.
- In the euro area, the inflation print for March is released. After the slightly higher German CPI headline inflation yesterday, there may be a slight upside to our and consensus forecast of 1.3%, while core should land at 1.1%.
The 60 second overview
US fiscal: US President Joe Biden is set to release details of his USD3,000bn economic recovery package (including money for infrastructure) in a speech today in Pittsburgh. The question is whether he will present a broader-range of investments (also in green energy, technology etc.) and how to pay for the package (i.e. tax hikes for large corporations and high-income earnings) or not. According to journalists, the plan will be USD2,000bn over eight years, so smaller than expected and paid for with a 28% corporate tax rate. The plan will include investments in transportation, electric cars, water supply, broadband, electricity and semiconductors.
Chinese PMIs: Chinese PMIs for March proved stronger than expected as the index for non-manufacturing rose from 51.4 to 56.3. However, Asian equity markets and FX cheered little. While this is clearly better than expected, we generally see the Chinese economy as slowing down, whereas the US is set to gain pace this year.
Equities: Equity markets ended mixed yesterday, as rising yields took the value-trade back in fashion. As a consequence, value intense regions like Europe advanced, while the US slid. S&P -0.3%, Nasdaq -0.1% and Dow -0.3%. The volatility in small caps continues with Russell 2000 rebounding 1.7%. Most sectors closed lower in the US, though financials, industrials and consumer discretionary (retailers and reopening candidates) gained. On the other end, defensives and tech were the worst off. Asian equities are under pressure this morning, while US futures point to an undramatic opening.
FI: US yields consolidated slightly yesterday in the late afternoon. However, with additional fiscal easing in the pipeline it appears there may still be further risk to the upside.
FX: We saw quiet FX markets yesterday before quarter-end and Easter. NOK and USD remain two of the recent top performing currencies with EUR/NOK trading close to the 10.00 level and EUR/USD now approaching the 1.17 level.
Credit: CDS indices outperformed cash bonds yesterday. iTraxx Xover tightened to 261bp (-2bp) and Main to 53½bp (-½bp). HY bonds closed marginally tighter and IG around 1bp wider.
Nordic macro and markets
There is no domestic data on the agenda today in Sweden. Instead, we look forward to NIER’s quarterly Swedish Economy Report where NIER will present their new forecasts for the Swedish economy. The current forecast (from December) indicates GDP growth of 3.2% and 3.5% in 2021 and 2022, respectively.
