Market movers ahead
- We are set to get some information on the solid Q1 euro area GDP-growth. We expect to see durable domestic demand. March industrial production also ticks in along with the May ZEW index. We will be looking to see whether recent rising expectations have rubbed off on current conditions.
- In China, focus will continue to be on the trade talks. However, we will also look out for the April industrial production, retail sales and fixed asset investments.
- In Sweden, inflation will take centre stage. Our forecast for CPIF excluding energy is in line with the Riksbank’s at 1.6% y/y.
- We are due to receive GDP figures out of Norway and Denmark. We expect the Norwegian figures to disappoint, with growth at 0.4% at the most. In Denmark, 0.4% growth is still solid and this is exactly what we expect for q1.
Weekly wrap-up
- The overriding theme this week was the U-turn in the US-China trade talks. We see a clear risk things will get worse before they get better but our baseline scenario is still a deal by the end of Q2, as further escalation would hurt both sides significantly.
- The EU Commission downgraded its growth projections for the euro area, especially on the back of a gloomier outlook for Germany.
- In the UK, pressure is mounting on Prime Minister Theresa May to resign after the Conservatives suffered a heavy defeat at the local elections.
- US and German 10-year yields have fallen again on the renewed uncertainty, as the downside risk to growth and inflation has increased.
