HomeContributorsFundamental AnalysisDonald Trump's First Budget Outline Was Presented Yesterday

Donald Trump’s First Budget Outline Was Presented Yesterday

Market movers today

In the US, we are due to get preliminary University of Michigan consumer confidence data (one of the soft economic indicators) for March today.

The Donald Trump and Angela Merkel meeting, initially scheduled for this Monday but postponed due to the blizzard in the north eastern part of the US, is set to take place at the White House today. This will be the first meeting between the German Chancellor and the new American President. Likely topics on the agenda are the future of the transatlantic alliance but also funding for NATO and relations with Russia.

In the euro area, S&P is scheduled to update its rating and outlook on Portugal, Finland, Austria and Cypress, while Moody’s will be reviewing Estonia.

In Denmark, the Association of Danish Mortgage Banks is due to release its housing market statistics for Q4 16.

Selected market news

Different camps of the Governing Council within the ECB seem to be forming, both when it comes to how the ‘normalisation’ of monetary policy should start and regarding when it is time to embark on a clearer adjustment to the forward guidance. Overnight Ewald Nowotny (Hawk) was quoted in a Handelsblaat interview as saying that the ‘deposit rate could rise before [the] main rate’, while Peter Praet said during a speech in Brussels that ‘inflation dynamics haven’t yet become self-sustained’. It will be interesting to see how this ‘gorge’ continues to develop.

Donald Trump’s first budget outline was presented yesterday. As expected, it had heavy emphasis on infrastructure spending without further detail and an increased defence budget, which he plans to fund with deep cuts to diplomatic and foreign aid programmes. Also, the Environmental Protection Agency is set to see its budget cut by 31%. The full 2018 budget is due to be released later this spring and it will include ‘our specific mandatory and tax proposals, as well as a full fiscal path’.

Yesterday’s Norges Bank meeting did not bring any surprises, as the sight deposit rate was left unchanged at 0.50% and the Board maintained the ‘neutral bias’ introduced in September. The rate path was revised ‘postponing’ the expectation of when the first rate hike will occur and stating ‘the key policy rate will most likely remain at today’s level in the period ahead’.

The Bank of England meeting did not surprise much either, as it made no policy changes and reiterated its neutral stance by repeating it could move ‘in either direction’. However, the meeting was not completely uneventful, as Kristin Forbes (a known hawk) voted for a March hike and the statement disclosed that ‘some members noted that it would take relatively little further upside news…for them to consider that a more immediate reduction in policy support might be warranted’. See more in Bank of England Review: Maintains neutral stance with hawkish twist,

The overnight session was very quiet, with the Asian equity indices seeing marginal gains and losses, no big FX moves and slightly higher yields of Japanese government bonds.

Danske Bank
Danske Bankhttp://www.danskebank.com/danskeresearch
This publication has been prepared by Danske Markets for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Markets´ research analysts are not permitted to invest in securities under coverage in their research sector. This publication is not intended for private customers in the UK or any person in the US. Danske Markets is a division of Danske Bank A/S, which is regulated by FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange. Copyright (©) Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.

Featured Analysis

Learn Forex Trading