Market movers today
It’s time for the long-awaited ECB meeting today. While no changes to interest rates are expected, the growth outlook and new staff projections alongside the discussion about a new liquidity facility will take centre stage. Yesterday, sources close to the ECB revealed that growth and inflation projections would see an extensive downward revision. However, the ECB is still looking for a recovery during the year in line with our expectations and we do not expect new signals at the meeting, or an announcement on a liquidity facility (contrary to market consensus). Watch out for a potential volatile and sharp intraday market reaction, as market expectations for the meeting are more dovish than ours.
US initial jobless claims will give another signal on the status of the business cycle and labour market in the US. Jobless claims have been hovering around 225k for a while, which is still in line with a robust labour market and decent growth.
In Scandi, Norway is set to release data on manufacturing production and Sweden will publish house price statistics.
Selected market news
Swedish apartment and house prices were unchanged in February, according to the Swedish Maklarstatistik. In the Greater Stockholm area, house prices rose 1%, while apartment prices were unchanged.
Yesterday, a Bloomberg story suggested that the ECB staff projections published later today would justify an announcement of a new liquidity operation. The same story suggested growth projections would point to close to potential growth by the end of the year (thereby implying no major change in the growth narrative). While we do not expect a liquidity operation to be announced later today (see above also), the discussion that takes place will be very important for a potential monetary policy case – and as such, point to confidence about a temporary (or potential) structural growth slowdown in the euro area. The ECB published an opinion with no objection to Philip Lane replacing Peter Praet as ECB chief economist. With the EP and ECB’s positive opinion on Philip Lane, the European Council would be the last formal body to give approval before Lane could start at the ECB on 1 June 2019.
US crude oil stocks rose more than 7mb last week, according to EIA data published yesterday. While crude oil inventories can be volatile, the large build does raise some concerns about weak demand in the oil market at a time when key figures for global economic growth have been weak.
