Fundamental Analysis

Weekly Focus: Calm Markets in a Volatile World

Typography

Market Movers ahead

  • We expect good news for the ECB in the form of higher inflation and money supply growth. However, inflation is likely to decline again in coming months.
  • Germany is due to hold a general election on Sunday and is likely to publish upbeat Ifo numbers on Monday.
  • In the US, the August reading of the Fed's preferred inflation measure, PCE, is due out as well as news on consumer sentiment.
  • The fourth round of Brexit negotiations is scheduled to begin on Monday, after Theresa May's speech today and the Labour Party conference on Sunday.
  • Chinese PMIs are due for a weakening after being sustained over the summer by high steel production before pollution curbs in the winter.
  • We expect the pace of decline in unemployment in Norway to have eased but if it has not, this will put pressure on Norges Bank.

Global macro and market themes

  • Risk premia across asset classes are currently at pre-Lehman lows.
  • High GDP growth relative to funding costs supports low risk premia.
  • As US interest rates rise towards the natural rate, financial volatility and risk premia should rise
  • We expect this to play out in Q4.

Full Report in PDF

Author: Danske BankWebsite: http://www.danskebank.com/danskeresearch
Danske Bank
This publication has been prepared by Danske Markets for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Markets´ research analysts are not permitted to invest in securities under coverage in their research sector. This publication is not intended for private customers in the UK or any person in the US. Danske Markets is a division of Danske Bank A/S, which is regulated by FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange. Copyright (©) Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.
More from the author