Market movers today
After a few quiet days in terms of data releases, today is more interesting, not least Sweden, where Prospera inflation expectations are due at 08:00 CET, Valueguard house prices at 09:00 and the Riksbank rate decision at 09:30 (see page 2).
In the US, we estimate CPI core index rose 0.2% m/m in January, implying a fall in CPI core inflation to 1.7% y/y from 1.8%. Retail sales data is also due out today.
At 11:00, the second release of euro area Q4 GDP growth figures is due out, where will we for the first time get details of the GDP components. We expect the first estimate of 0.6% q/q growth to be confirmed.
In Denmark, we will get the GDP indicator for Q4, which we expect to show that growth rebounded to 1.0% q/q after the surprise fall of 0.5% in Q3 (see page 2).
Selected market news
Asian stocks are retreating after two days of trading higher, while the S&P 500 barely rose yesterday (+0.26%) and volatility was slightly lower, with VIX falling settling around 25. The yen strengthened to 107.1 overnight, not seen since 15 month ago. Officials still need to express concern for the appreciation. EUR/USD was higher at 1.238 amid treasury yields being lower yesterday. European rates were mixed, with the longer end suffering relative to the shorter end. Oil was broadly unchanged over the day as a whole at around 63 dollar per barrel. The rand was relatively calm amid the ANC’s decision to replace now-former South African President Jacob Zuma with ANC leader Cyril Ramaphosa, although no time for the transition has been yet .
Fed Chair Jerome Powell’s swearing-in remarks yesterday reflected comments on the Fed being alert to developing risks to financial stability as well as to go ahead with a process of gradual normalisation on both interest rates and balance sheet reduction. This has to be seen in light of recent lower equities. The Fed fund futures point to a virtual 100% probability of the FOMC hiking rates in the March meeting.
On a new Fed Vice-Chair, sources indicate that Loret ta Mester (Cleveland Fed) is to be considered by the White House.
We published Yield Outlook yesterday. We argue that the rapid rise in yields seen this year is now slowing down but that risk is still seen on the upside, especially if we look six to 12 months forward. We forecast that 10Y US Treasury yields will rise to 3.30% (previously 2.90%) on a 12-month horizon. We expect German 10Y Bund yields to rise to 1.20% (previously 1.0%) on a 12-month horizon.
 and volatility was slightly lower, with VIX falling settling around 25. The yen strengthened to 107.1 overnight, not seen since 15 month ago. Officials still need to express concern for the appreciation. EUR/USD was higher at 1.238 amid treasury yields being lower yesterday. European rates were mixed, with the longer end suffering relative to the shorter end. Oil was broadly unchanged over the day as a whole at around 63 dollar per barrel. The rand was relatively calm amid the ANC’s decision to replace now-former South African President Jacob Zuma with ANC leader Cyril Ramaphosa, although no time for the transition has been yet .){kind=link}