Market movers ahead

  • We expect the US PMI to fall back in May, while the euro area PMI should stabilise after the recent month’s weakness.
  • We do not expect the minutes from either the Fed (Wednesday) or ECB (Thursday) to change the market’s perception of the monetary policy stance in the US and euro area.
  • In the UK, we expect inflation to moderate further amid the fading impact of the GBP depreciation.
  • Further details on the formation of the new Italian government between the League and Five Star movement will be a key market focus for EUR fixed income markets.
  • Keep an eye on the unemployment numbers from Sweden and Norway, where the Swedish numbers might well be the lowest since May 2008.

Global macro and market themes

  • Breakthrough in Italian politics but worrying coalition formations have spooked financial markets and Brussels.
  • Further EUR weakening in the near term, but stronger in the medium term.
  • Substantial deepening of EMU is not looming.

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