Market movers today

In the US, retail sales numbers for February are due for release. Retail sales fell unexpectedly in January, pointing to a slowdown in consumer spending. Yet, we think this was a fluke, as consumer confidence remains extremely high.

In Germany, Angela Merkel will be sworn in as chancellor of the new grand coalition government today.

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In the Scandi countries, we get Swedish inflation figures and HOX house price data for February and the Danish central bank is due to publish its outlook for the Danish Economy (see overleaf).

Selected market news

Another one bites the dust. Donald Trump fired his Secretary of State Rex Tillerson and appointed CIA director Mike Pompeo in his stead. Rex Tillerson and Gary Cohn were some of the more mainstream officials. Tillerson stood for relatively traditional foreign policy and Cohn for orthodox economic policy.

Birds of a feather flock together. Trump is surrounding himself with likeminded people, which translates into a preference for unorthodox hawks. Peter Navarro and Wilbur Ross are China and trade hawks and Pompeo is a foreign policy hawk. Our FX valuation models provide the means to run scenario analysis for tariffs and trade restrictions as they are based on terms of trade and the price ratio of tradables versus non-tradables. We document the effects, which are significant, in our piece published this morning.

Reflation scare recedes further. US core consumer price inflation came in as expected, moderate and unchanged at 1.8% y/y. To an extent, it corroborated the weakish wage figure from the jobs report. Unchanged CPI and lacklustre wage growth took some of the shine off the US reflation story. Further discussion on fixed income reactions follows below. We discuss US inflation on in our recent thematic piece.

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