Market movers today
We start the week in a quiet fashion on the data front . The main events will be the minutes of the latest Fed meeting on Wednesday, including the Fed governor’s view on inflation and impending fiscal expansion, as well as the ECB minutes on Thursday. Another highlight this week will be PMI and IFO releases in the euro area and Germany on Wednesday and Thursday, respectively, which will give signs of the continued momentum in the euro area economy.
The Eurogroup will convene today and recommend one candidate to replace Vítor Constâncio as the ECB’s Vice President in June. It is a race between the favourite, Spain’s Economy Minister Luis de Guindos and the Irish Central Bank Governor Phillip Lane. As the Eurogroup decides on the next Vice President , attention turns to Mario Draghi’s successor as President with a recent Bloomberg survey of economists showing Germany’s Jens Weidmann (über hawk) as the clear favourite. See the poll here.
In Sweden, we get data on residential permits, starts and completions
Selected market news
Japanese shares rose this morning, leading Asian stocks higher, while Brent oil advanced above USD65/bbl. Robert Mueller, the Russia probe special counsel, indicted 13 Russian individuals and three Russian entities for allegedly interfering in the 2016 US presidential election through an elaborate social media campaign to help Donald Trump. The indictment means that Trump can no longer credibly cast doubt on alleged Russian election meddling, although he continues to deny the allegations. On Friday, the S&P 500 erased a gain that reached 0.9% following the news, while 10-year Treasury yields fell below 2.9%. Nevertheless, US equity index futures climbed this morning, although sett ement will be delayed due to the Presidents’ Day holiday .
The US Commerce department recommended the Trump administration to impose steep tariffs of 24% on steel and 7.7% on aluminium imports on national security grounds. China has already threatened retaliation to such measures, risking further escalation of trade tension between the world’s top two economies.
On Friday, the Japanese government officially reappointed Bank of Japan governor Haruhiko Kuroda for another five-year term and chose an advocate of bolder monetary easing as one of his deputies in a strong signal to investors that policy makers are in no rush to end the stimulus programme. A vote in parliament on the appointments could happen before the end of the month. On the news, USD/JPY broke below 106, triggering a linguistic tweak by Finance Minister Taro Aso, who said the government will act when needed, a day after stating there is no need for intervention.
Supported by tax cuts and a strong jobs market , US consumer confidence rose further in January to the second highest level since 2004. This supports our view that private consumption will remain the main growth driver in the US, although long-term inflation expectations remained unchanged at 2.5%.
