Market movers today

Today’s releases were collected before the spreading of the coronavirus to Europe and hence they are already outdated to some extent.

In the Scandi space, we get retail sales for January both from Norway and Sweden. In Sweden, we also get confidence indicators. See page 2 for details.

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In the euro area we get February confidence indicators but as mentioned before they are outdated, as they are collected before the spreading of the coronavirus to Europe. In the US, we get preliminary core capex orders for January.

A couple of FOMC members will speak in the evening. While we may not see a shift in the Fed’s rhetoric ahead of the FOMC meeting concluding on 18 March, we think it is just a matter of time, as the economy and markets are in worse shape than in June 2019 when Fed chair Powell started hinting at making insurance cuts. For more details see Fed Monitor: Why the Fed may soon move in a dovish direction , 27 February.

The UK is set to publish its negotiation objectives ahead of the upcoming trade talks with the EU starting next week (the EU approved this on Tuesday). The recent developments suggest that the two sides are far apart.

Selected market news

Markets continue to focus on the coronavirus, where the big concern remains that the number of new cases continues to rise outside China. The number of new cases jumped to 729 this morning up from 449 yesterday. The total number of infections is now 3,667 outside China. South Korea is particularly hard hit and there are now 1,595 infected in South Korea. In Italy the numbers continue to rise as well. New infections in mainland China increased to 433 from 406 yesterday, though still trending lower. Hence, there are now more cases outside China than in China.

The equity rut deepened this morning after we saw some signs of stabilisation yesterday night. Nikkei is down more than 2% and both European and US equity futures are trading in deep red. 10Y US treasury yields dropped below 1.30% this morning.

Markets are now pricing in aggressive easing from the Fed. A 25bp cut at the April meeting is now fully priced and on a one-year horizon three rate cuts are priced. Markets also expect the ECB to cut rates by 10bp. That said, the South Korean central bank did not cut rates this morning, which was expected by a majority of analysts. However, it did introduce loans for coronavirus-hit companies.

Fiscal policy easing has now started in selected countries outside mainland China. In Hong Kong all permanent residents are handed a HK$ 10,000 cash handout. Similar measures have also been announced in Singapore. In Germany the Finance Minister has proposed a suspension of the debt brake rules. This is not directly related to the coronavirus, but to help indebted municipalities. However, it does provide a small hope that also Germany will ease fiscal policy if or when the effect of the virus becomes visible in the German economy.

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