Market Movers ahead
- Trade frictions between the US and China will be in focus over the coming week. An escalation could be on the cards.
- We expect euro area PMI to fall further in June, adding to the past five months of decline.
- In the UK, it is time for Bank of England meeting. It is one of the ‘small’ meetings and we look for unchanged policy rates.
- OPEC is due to meet on Friday and we expect a signal of unchanged production until end-year followed by an increase in production caps.
- In the Scandies, we look for another drop in Swedish manufacturing confidence while Norges Bank is set to continue to signal a rate hike ‘after summer 2018’, which most likely means September.
- On Wednesday, we are due to publish our Nordic Outlook, with fresh forecasts for the Nordic economies.
Global macro and market themes
- The US is leaving the euro area behind in terms of growth.
- A dovish ECB ends tapering, sending EUR and bund yields lower.
- A more confident Federal Reserve signals four hikes instead of three this year. We have changed our forecast to reflect this.
- Risks to global growth are skewed to the downside due to trade friction, Italy and emerging markets.
- Volatility is higher but we expect equities to outperform on a 12-month horizon.
- More downside risk to EUR/USD short term but we still see it being higher in 12 months.
