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Weekly Focus: The End of the Yellen Era

Market Movers ahead

  • We do not expect the Fed to change rates on Wednesday, nor any major change to its statement, as the market has priced in three hikes this year already in line with the Fed’s rate expectations.
  • We expect the US employment to continue to show gains in Friday’s non-farm payroll report, but hourly earnings are the key focus, where upside could add fuel to the global reflation theme.
  • We expect another strong eurozone GDP reading for Q4 17, due to be released on Tuesday.
  • We think the China PMI release for January will show a small fall, although staying at robust levels.

Global macro and market themes

  • Risk sentiment off to a strong start supported by strong fundamentals.
  • Strong data out of the US and euro area.
  • USD weakening has further to go.
  • Bond yields set to move higher in the medium term.
  • Trump has made his first move on protectionism – more will come.

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Danske Bank
Danske Bankhttp://www.danskebank.com/danskeresearch
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