Allan von Mehren
Danske Bank A/S
Market movers today
There are no big market movers today.
Key data this week will be German ZEW (Tuesday), US retail sales (Wednesday) and Flash PMI for US and the euro area (Friday). FOMC minutes (Wednesday) will be scrutinized for any discussion on tapering of bond purchases. News on COVID and vaccines also continues to be in focus.
In Scandi attention turns to Swedish inflation and oil investment survey in Norway.
The 60 second overview
Risk-on sentiment: Financial markets had a strong start to the week in Asia with gains in equities and a further rise in oil and metal prices. EUR/USD has risen further from Friday's level. NOK and SEK is stronger as well. USD/CNH has fallen to a new cycle low of 6.40.
Equities: Friday saw another buoyant session for equities, as investors continue to load up on risk. Both US and European equities closed mostly higher, and by doing so, sealed another up-week for both regions, see also Weekly Focus: Strong earnings season despite COVID headwinds, . Energy, Materials and Financials were the top performers while defensive sectors, communication services and consumer discretionary were behind. On a micro level, performance was also characterized by recent bottlenecks, with semiconductors outperforming. In opposite, Autos were among the losers as the most affected sector by these shortages.
Italian politics: On Friday night, former ECB president Mario Draghi emerged as Italy's new prime minister to lead as a technocrat PM after Renzi stepped down on the back of a dispute on the NextGenEU funds planning. Draghi has chosen a number of key technocrats in the more budget sensitive positions such as the finance minister (Banca d'Italias deputy governor Franco), energy and environment as well for the digital transformation. On the EU political scene, Draghi will certainly form a strong pro-EU approach, while also a pragmatic approach to strike the deals. Italy has to have elections by 2023, while some media outlets has floated Draghi to replace President Mattarella already next year, hence Draghi's tenure is for a limited time. The positive sentiment in notably Italian bond markets is set to continue.
COVID and vaccine news: UK crossed 15 million people who have received vaccination, close to 25% of the population. If UK continues at the current pace the whole population will have received the first vaccination by the end of May, see chart for vaccine development. Israel reported a 94% drop in symptomatic COVID-19 cases among people who were vaccinated, see Reuters. British scientists are working on a universal vaccine that would combat all variants by targeting the core of the virus and not the spike protein. It could be available within a year, see VOA. New COVID cases continue to fall rapidly in the US and across Europe. The number of new cases globally is the lowest since October. New York extended closing times for bars, restaurants and gyms to 11pm as cases are coming down.
FI: There was a decent rise in yields in the long end of the US Treasury curve on Friday and there was a spill-over effect to the German yield curve, where 10Y Bunds rose 3bp and are now trading close to levels seen back in August/September 2020. Given the amount of liquidity in the system and the ECB QE program, the upward move in rates should be capped.
FX: Last week was fairly uneventful in FX majors space with most cross moving sideways. On Friday we published new FX forecasts. The EUR/USD market narrative has changed towards our own view over the past month. We continue to see EUR/USD around 1.22 in 1-3M, before a move towards 1.16 in 12M. Scandi tailwinds near-term, but we see headwinds in H2.
Credit: Most parts of credit took a slight step wider on Friday, with Xover widening to 242bp (+2bp) and Main to 47bp (+½bp). While HY cash bonds tightened around 1½bp, IG was ½bp wider.
Nordic macro and markets
No key movers today. Look out for Swedish CPI and oil investment survey in Norway, see Weekly Focus, 12 February for further comments.
This publication has been prepared by Danske Bank for information purposes only. It is not an offer or solicitation of any offer to purchase or sell any financial instrument. Whilst reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it. Danske Bank, its affiliates or staff, may perform services for, solicit business from, hold long or short positions in, or otherwise be interested in the investments (including derivatives), of any issuer mentioned herein. Danske Bank's research analysts are not permitted to invest in securities under coverage in their research sector.
This publication is not intended for private customers in the UK or any person in the US. Danske Bank A/S is regulated by the FSA for the conduct of designated investment business in the UK and is a member of the London Stock Exchange.
Copyright () Danske Bank A/S. All rights reserved. This publication is protected by copyright and may not be reproduced in whole or in part without permission.
Recommended Content
Editors’ Picks
EUR/USD tests fresh tops above 1.0870 on NFP
The selling bias in the US Dollar gathers extra pace on Friday after the US economy created fewer jobs than initially estimated in February, sending EUR/USD to the area of new highs around 1.0870.
GBP/USD hovers around recent highs above 1.2900
The continuation of the downward trend in the Greenback encourages GBP/USD to maintain the trade just above the 1.2900 mark following the release of US NFP in February.
Gold remains bid above $2,900 after US Payrolls
Gold prices manage to leave behind Thursday’s pullback and revisits the area of $2,920 per troy ounce in the wake of the publication of the US labour market report in February.
White House Crypto Summit could boost adoption across financial markets: Binance exec Rachel Conlan
US President Donald Trump signed an executive order for a Strategic Bitcoin Reserve on Friday, shifting industry leaders’ focus from regulation to adoption. Within just over six weeks of his term, the President is set to host the first Crypto Summit, hosting industry giants and executives from the ecosystem.
February CPI preview: The tariff winds start to blow
Consumer price inflation came out of the gate strong in 2025, but price growth looks to have cooled somewhat in February. We estimate headline CPI rose 0.25% and the core index advanced 0.27%. The moderation in the core index is likely to reflect some giveback in a handful of categories that soared in January.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.