In focus today
The most important US data release of the week will be the March flash CPI this afternoon. We expect headline inflation to pick up to +0.9% m/m SA and 3.3% y/y (Feb: +0.3% m/m SA & 2.4% y/y) due to higher energy prices. We expect core inflation to remain much more steady at just +0.2% m/m SA and 2.6% y/y (Feb: +0.2% m/m SA & 2.5% y/y), anchored especially by the still low housing contribution.
In Norway, March inflation figures are released today. We expect that food prices will fall somewhat more than last year, because Easter sales have started earlier. On the other hand, prices of imported goods, other than food, fell more than usual last year, so we believe that annual growth here will pick up, despite the somewhat stronger exchange rate. We also believe that annual growth in service prices will pick up, because of base effects. Hence, we expect that core inflation will increase to 3.1% y/y in March
On Sunday, the election in Hungary will be pivotal for political developments in the European Union in the coming years. Prime Minister Viktor Orbán risks losing to Péter Magyar, whose Tisza party is polling at 48% compared with Orbán’s Fidesz at 39%. Over the years, Orbán has become a contentious figure in Brussels, criticised for weakening the rule of law at home and for impeding EU efforts to sanction Russia after its invasion of Ukraine. He has also threatened to block the EU’s next seven-year budget for 2028-2035, which affects the EU’s funding outlook. Péter Magyar, a former Orbán ally, is campaigning on rebuilding trust with the EU and NATO, restoring the rule of law and joining the euro area by 2030. However, he does not signal a clear break from Orbán’s approach, shares several core positions and is neither seeking an abrupt cut in ties with Russia nor advocating the provision of military aid to Ukraine.
In Denmark, we expect inflation to have risen to 1.3% in March from 0.7%, primarily due to energy prices. A significant driver is that a sharp drop in electricity prices from March 2025 is no longer part of the inflation measure, although electricity market prices fell again in March 2026. Additionally, we will be watching closely to see if the downward trend in food inflation has persisted.
Economic and market news
What happened overnight
In China, March inflation data presents a mixed picture. PPI surprised to the topside and rose 0.5% y/y (cons: +0.4), driven by rising costs in energy-intensive industries. This is the first rise in factory-gate prices since September 2022. Conversely, CPI slowed to 1% y/y and fell 0.7% m/m, making China the only Asian economy with a m/m CPI decline in March. The figures spark worries that imported inflation could pressure corporate margins and complicate Beijing’s growth and policy outlook, especially as external demand remains fragile. Furthermore, it underscores the challenge of balancing inflation risks with efforts to stabilise domestic demand.
What happened yesterday
In the Middle East, ship traffic through the Strait of Hormuz remains paralysed at less than 10% of normal levels, despite a US-Iran ceasefire. Iran is directing vessels to transit near Larak Island, citing mine risks, and reports suggest it may impose cryptocurrency transit tolls, an idea strongly opposed by Western leaders and the International Maritime Organization. Brent crude futures are priced at USD 96/bbl at the time of writing. On Thursday, President Trump criticised Iran for “doing a very poor job” of allowing oil shipments through the strait, stating this was not the agreement they had reached. Peace talks between the US and Iran, mediated by the Pakistani prime minister, are scheduled to begin on Saturday, but tensions remain high due to disagreements over the agenda. Iran insists on its ten-point plan, which White House Press Secretary Karoline Leavitt claims President Trump “literally threw in the garbage.” Further complicating the situation are disputes over whether the ceasefire terms should extend to Lebanon, after Israel’s deadly attacks there on Wednesday.
From the US, February PCE inflation picked up as expected, with the headline index rising 0.4% m/m and 2.8% y/y. Core PCE inflation, which excludes food and energy, increased 0.4% m/m and 3.0% y/y. The data reflects persistent inflation pressures, which are likely to intensify in March due to the war-driven surge in energy and food prices. Meanwhile, consumer spending rose 0.5% m/m, supported by tax refunds, though elevated gasoline prices may weigh on broader consumption ahead.
In Poland, The Bank of Poland (NBP) kept the key rate unchanged at 3.75% at yesterday’s meeting, in line with consensus expectations. Governor Glapiński emphasised that interest rates are unlikely to change in the near future, with developments in the Middle East remaining a key factor for the bank’s decisions.
Equities: Equities continued higher yesterday, led by the US, and the week is increasingly shaping up as a full reversal on the equity side. We have seen pronounced cyclical outperformance, while low-vol/defensive equities have been aggressively unwound.
With VIX now back below 20, this should serve as a yet another reminder of how markets behave in periods characterised by elevated geopolitical noise, a still-solid macro backdrop, and late-cycle exuberance. In such environments, the behavioural component becomes critical highlighting the risk of ‘running after the market’ when breaking news hits the screen continuously.
Despite the strong focus on Iran, an equally important theme is unfolding beneath the surface, both for equities and for broader asset allocation, including private equity and private credit. Namely, that ‘tech is no longer just tech’. Software continues to lag meaningfully and yesterday was another clear example: software was the worst-performing segment, while semiconductors outperformed sharply, by ~4pp in the US and ~7pp in Europe on the day alone.
Zooming out, this is a continuation of a trend we highlighted months ago in our “When tech disrupts tech” editorial. Over the past nine months, hardware has been the best-performing industry in the US, while software has been the worst, leaving hardware outperforming software by ~125 percentage point (!) over the period.
This morning, Asian equities are trading higher, European futures are pointing up, while US futures are broadly flat.
FI and FX: Markets whipsawed yesterday as initial pessimism around the US-Iran ceasefire and upcoming peace talks reversed in the afternoon, as Israel opened up for talks with Lebanon. President Trump has said that he is “optimistic” about a deal with Iran but has also warned Iran against charging fees for passage through the Strait of Hormuz. The oil price (Brent) almost touched 100 USD/barrel yesterday before dropping sharply to below USD 95 on the Israel-Lebanon news. Subsequently, the price has however moved higher again to around 96-97 USD/barrel. Fixed income markets have largely followed the movements in oil, and looking at US yields, they are now basically unchanged compared to levels from yesterday morning. EUR/USD peaked just above 1.1720 yesterday but now trades just below 1.17. NOK FX was the clear outperformer in G10 space yesterday amid rising scepticism around the Iran ceasefire deal sending energy prices higher while risk appetite stayed decent.
 due to higher energy prices. We expect core inflation to remain much more steady at just +0.2% m/m SA and 2.6% y/y (Feb: +0.2% m/m SA & 2.5% y/y), anchored especially by the still low housing contribution.){kind=link}