Wed, Feb 01, 2023 @ 08:27 GMT
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Riksbank And Norges Banks Take Centerstage

Market movers today

The key event will be the meeting in the Swedish Riksbank (9:30 CET announcement), which is widely expected to result in a rate hike. The timing is unusual as most data suggests that GDP growth is slowing towards zero, see more on page 2.

In Norway on the other hand, we do not expect Norges Bank to touch interest rates (10:00 CET announcement). At its September meeting, the central bank signalled clearly that interest rates would be unchanged for a long period, see page 2.

Bank of England will round off central bank meetings of the day. Despite the weaker economy and softer policy signal we do not expect the Bank of England to change anything, as it is an interim meeting. We expect a cut at the following meeting in January as data has deteriorated lately pointing to very weak growth. UK also releases retail sales for November, which we doubt will move markets. Also in the UK, the new MPs are sworn in today and the House of Commons is reopened with the Queen’s speech, outlining the government’s previously announced legislative programme alongside new measures.

In the US, data on Philadelphia Fed survey for December will be the most interesting. The index has held up quite well lately in contrast to ISM manufacturing. We will also get jobless claims and existing home sales from the US.

Overnight Japan will release inflation for November. Inflation (excluding fresh food) increased 0.4% y/y in October and is thus still far from the 2% target.

Selected market news

After the significant post-trade deal equity market rally, markets remain relatively calm in both Asia this morning and the US yesterday. The US House voted to impeach President Trump for abuse of power and for obstruction of Congress. Almost all Democrats in the House supported the vote while not a single Republican voted in favour. The Senate will hold a trial early next year to decide whether the president should be convicted on the charges and removed from office, though the Republicans who have the majority in that chamber will almost certainly acquit him. There was some light USD selling in FX markets but reaction was mostly muted.

As widely expected, the BoJ kept its QQE with yield curve control unchanged at a meeting ending this morning. It was one of the small meetings with no outlook report so no new forecasts. Overall, the assessment of the economy and the outlook remains that it is expected to continue on a moderately expanding trend. However, they now recognise that “exports, production, and business sentiment have shown some weakness, mainly affected by the slowdown in overseas economies and natural disaster”. No reaction in USD/JPY to the decision.

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