Market movers today
Today will be fairly quiet with no global market movers being released. Later in the week, focus is on Donald Trump’s State of the Union speech (Tuesday), the Fed meeting (Wednesday), euro area HICP figures for January (Wednesday), and not least Chinese PMI data (Thursday).
In the US, PCE headline and core inflation as well as personal spending data for December are due to be released.
EU27 ministers will meet in Brussels today to finalise a set of negotiating directives for the Brexit negotiations, which could give new det ails on the EU’s position in the transition period.
Selected market news
On Friday, EUR fixed income markets continued to be under pressure following Thursday’s ECB meeting (see ECB Review – Language to be revisited in March, 25 January 2018). Once again, the 5Y segment on the yield curve was the catalyst point for the move higher in yields, climbing around 4bp higher. Meanwhile, further out on the curve, the 30Y segment dropped a couple of basis points (out right ) leading to a further curve flat tening of the 5Y-30Y. Over the weekend ECB, GC member Klas Knot (hawkish) said that the ECB QE programme has to end ‘as soon as possible’ also saying that ‘the program is fixed until September’ (see Bloomberg).
On Friday, the Bank of Japan (BoJ) clarified that Governor Haruhiko Kuroda was not revising the inflation outlook when he said in Davos that inflation was finally moving close to the 2% target (see Bloomberg). After Kuroda’s remarks on Friday , the USD/JPY dropped nearly 1% and has since regained some of the initial fall.
In the US today, focus will be on the PCE inflation print, which is expected to increase to 1.6% y/y. After the higher-than-expected US CPI inflation print in December the marketimplied probability of a Fed March hike has edged higher. Currently, markets have priced in a March Fed hike with an 85% probability and a total of two and a half hikes in 2018.
. Once again, the 5Y segment on the yield curve was the catalyst point for the move higher in yields, climbing around 4bp higher. Meanwhile, further out on the curve, the 30Y segment dropped a couple of basis points (out right ) leading to a further curve flat tening of the 5Y-30Y. Over the weekend ECB, GC member Klas Knot (hawkish) said that the ECB QE programme has to end ‘as soon as possible’ also saying that ‘the program is fixed until September’ (see Bloomberg).){kind=link}