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Brexit, NFP And White Paper In Norway

Market movers today

Today, the US jobs report for March is due out. The US labour market looks strong on most parameters and the weak increase in nonfarm payrolls in February was most likely a fluke after the big increase in January. We expect nonfarm payrolls rose 190,000 in March and that average hourly earnings rose +0.25% m/m, implying a fall in the annual growth rate to 3.3% y/y from 3.4% y/y. If we are right, the jobs report should support markets, which have rallied this week based on renewed growth optimism, as the US is not about to fall into recession just yet.

Besides the US jobs report, we get industrial production in February from Denmark , Norway and Germany this morning.

In Norway , at 11.45 CEST, the government will publish a white paper on the investment universe of the Government Pension Fund Global, also known as the “oil fund”. Markets are likely to focus in particular on the decision over the bond portfolio, as the fund’s proposal in September 2017 included cutting the bond portfolio to three currencies; namely the EUR, USD and GBP. The original proposal also suggested removing all corporate bonds and linkers from the investment universe. The white paper could also include other changes to both the bond and the equity portfolio. As these changes could be far reaching, we expect any changes to be implemented only slowly.

Markets will look out for any breakthroughs in the Brexit negotiations between PM May and Labour leader Corbyn with only a week to Brexit day on 12 April.

This morning, we have published our ECB preview ahead of next week’s meeting. In short, we expect Draghi to repeat his ‘delayed, not derailed’ inflation message, thereby no new policy signals from the ECB. However, we expect Draghi to strike an overall cautious tone and the ECB to keep its downside risks assessment on growth.

Selected market news

Most Asian equity indices as well as the S&P500 futures are trading modestly in green this morning on the back of positive remarks on the ongoing trade negotiations in Washington between the US and China. Trump stated that “a lot of the most difficult points” had been tackled and that he expected a deal to be reached within four weeks. While Chinese President Xi is not present at the negotiations, Vice Premier Liu He has brought his message calling for an early conclusion to the negotiations. A date has yet to be set for the presidents to meet.

In the UK, four and a half hours of negotiations between PM May and Labour leader Corbyn yielded a set of statements that the negotiations had been “productive” and “technical” – yet still short of any concrete results. The negotiations will continue today.

There is talk that the EU may offer a long but flexible extension at next week’s extraordinary EU summit, which would include an option to leave earlier if the UK passes the withdrawal agreement. One precondition is for the UK to call for European elections next month. That said, not all EU leaders agree with this approach and while the probability of no deal Brexit is low in our view, it is still not negligible.

Danske Bank
Danske Bankhttp://www.danskebank.com/danskeresearch
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