Market Movers ahead

  • We expect good news for the ECB in the form of higher inflation and money supply growth. However, inflation is likely to decline again in coming months.
  • Germany is due to hold a general election on Sunday and is likely to publish upbeat Ifo numbers on Monday.
  • In the US, the August reading of the Fed’s preferred inflation measure, PCE, is due out as well as news on consumer sentiment.
  • The fourth round of Brexit negotiations is scheduled to begin on Monday, after Theresa May’s speech today and the Labour Party conference on Sunday.
  • Chinese PMIs are due for a weakening after being sustained over the summer by high steel production before pollution curbs in the winter.
  • We expect the pace of decline in unemployment in Norway to have eased but if it has not, this will put pressure on Norges Bank.

Global macro and market themes

  • Risk premia across asset classes are currently at pre-Lehman lows.
  • High GDP growth relative to funding costs supports low risk premia.
  • As US interest rates rise towards the natural rate, financial volatility and risk premia should rise
  • We expect this to play out in Q4.

Full Report in PDF

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