Danske Research Team
Danske Bank A/S
Market movers today
Another quiet day for markets. ECB President Lagarde and Bundesbank President Weidmann will speak about the European recovery.
In Norway, we anticipate mainland GDP growth of 2.5% in Q3.
UK retail sales for October are also on the agenda.
The 60 second overview
Japan: Prime Minister Kishida revealed details of a fiscal package to help aid the economic recovery which was bigger than first expected. Overall, fiscal measures may total as much USD690bn or 10% of GDP.
Fed: Atlanta Fed's Raphael Bostic said yesterday a first rate hike next summer would likely be appropriate, while Chicago Fed's Charles Evans said he thought it might not be appropriate at all to raise rates next year.
Equities: Stock markets retreated somewhat on Thursday, with most markets recording slight declines. Defensives and growth outperformed, while value cyclicals such as materials and banks lagged. Hence, last week's inflation theme in markets reversed. S&P500 closed up 0.3% (but breadth very thin), Dow -0.2%, Nasdaq 0.5% and Russell 2000 0.6%. Asian markets are rebounding this morning. Similarly, US futures point higher.
FI: European curves bull flattened yesterday amid weak risk appetite, mirroring USTs. Bund ASW widened 1bp to 48bp. Short end Germany performed 2bp to levels observed after the cash-collateral increase on Monday.
FX: Yesterday's session was characterised by the rate cut-induced sell-off in TRY and also reflation sensitive currencies in ZAR, MXN and NOK posting losses. EUR/NOK has moved above the 10.00 threshold while EUR/SEK has edged closer to 10.10. EUR/USD remains in the mid 1.13s.
Credit: Yesterday was a fairly neutral day for credit risk. Itraxx Main was unchanged at +49bp while Xover tightened slightly by 1bp to 248bp. We also saw two notable Nordic prints in the investment-grade arena. Maersk printed a 10 year senior unsecured green bond at MS+70bp, while Sandvik printed a 7 year senior unsecured bond at +45bp.
Nordic macro
In Norway, the economic recovery has continued more or less as expected since May, and we anticipate mainland GDP growth of 2.5% in Q3. Mainly higher private consumption is driving the recovery, but there has been solid growth in investment and exports from the mainland economy as well.
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