Market movers today
While markets are digesting the Trump-Kim summit , we also have a lot of other stuff on the agenda today. In Norway, we will get the Regional Network Survey
In the US, we expect CPI core to rise 0.2% m/m (in line with consensus), implying an increase in the inflation rate to 2.2% y/y from 2.1% in April. The NFIB small business optimism index in May is also due out today.
In the UK, focus is on the House of Lords’ amendments to the EU withdrawal bill, which returns to the House of Commons today (two-day debate). Focus will be on whether Conservative rebels will go against PM Theresa May and vote for a softer Brexit. The jobs report for April is also due out at 10:30 CEST. It might be a volatile day for EUR/GBP.
In Germany, ZEW expectations for June are due out today.
Selected market news
There was no market moving news yesterday. Markets took a cautious stance ahead of the Donald Trump-Kim Jong-un meeting as well as the major central bank meetings this week.
Expectations ahead of the summit were relatively diffuse though, as only shortly ahead of the meeting it was announced that a one-to-one talk and working lunch was planned at the historic meeting today. Very little information has been shared at this stage, besides footage of Donald Trump and Kim Jong-un shaking hands. Trump said, ‘I think we’re going to have a great discussion’ while Kim Jong-un said, ‘many obstacles had been overcome to get this far.’ Trump is said to be holding a press conference today at noon CEST.
In the Scandies, yesterday’s inflation print in Norway marked yet another CPI disappointment with the core measure falling short (1.2% y/y) of both Norges Bank’s (1.6%) and markets’ expectations (1.4%). Meanwhile, the details were far more encouraging in terms of both rounding (1.24%) and t he fact that our ‘core-core’ measure continued to rise steadily. As a result, westick to the view that today’s Regional Network Survey will have to disappoint heavily before Norges Bank will postpone its timing for the first rate hike. In other words, Norges Bank is likely to reiterate the message next week of a September rate hike.
Italian government bonds bounced back on Monday on the back of the comments from the new finance minister. 2Y Italian government bonds rallied some 60bp yesterday and are now back trading at 1%. However, there is still much more to go if the new Italian government can convince the market about being fiscally responsible. Furthermore, the comments reduce the imminent risk of a downgrade from, e.g. Moody’s as we now have to wait and see on the actual fiscal policy.
