Week ahead to be dominated by uncertainty

Week ahead to be dominated by uncertainty

The dust has not yet settled after yesterday’s ECB press conference, where President Draghi dealt a blow to hopes that the central bank will quickly make huge bond purchases to address the Euro-area debt crisis. The fact that the ECB did not deliver concrete action but only tough words implies a lot of uncertainty about what to expect from the central bank’s potential interventions in terms of amount, timing and interest rate targets.

With no major data releases from the Euro area and the US this uncertainty is likely to dominate markets next week. Thus we expect to see significant volatility, potentially influenced by comments from policymakers, with no clear trends unless Draghi spells things out in more detail as early as next week.

Regarding economic data, releases from China will likely attract most attention. We expect generally positive surprises compared to consensus estimates next week, with more relatively good news to come in the autumn. Bank of England’s inflation report is released on Wednesday.

On the issuance front, upcoming auctions could put some pressure on US Treasuries. USD 32bn of 3-year notes will be sold on Tuesday, USD 24bn of 10-year notes on Wednesday and USD 16bn of 30-year bonds on Thursday. In the Euro area, the main focus will be on the German EUR 4bn 10-year notes auction on Wednesday.

Please read more in our Global Week Ahead

Latest research

CHF: Floored but no one’s counting

Published date: 23 May 2013 | Analysts: Fredrik Paulsson, Anders Svendsen

We forecast EURCHF at 1.25 by year-end and at mid-2014, and 1.30 at end-2014 Recent CHF weakness reflects the general risk-on environment while also speculations about additional easing measures being imposed by the SNB It remains to be seen if equity markets stabilizes over…

Is Bank of Japan already failing?

Published date: 23 May 2013 | Analyst: Jan von Gerich

After being characterized by a lack of potential and passion for years, the Japanese markets have definitely been reinvigorated by the actions taken by the new government and the central bank. However, is the more than doubling in government bond yields undermining the stimulus of the Bank of Japan?

Inflation picked up, budget deficit can widen

Published date: 23 May 2013 | Analyst: Dmitry Savchenko

Inflation again showed noteworthy pick up last week, CPI increased by 0.2%, comparing with 0.1% week earlier. Thus inflation pressure remains high. Poor 2012 harvest still effects the market as food component is continuing to increase with higher pace. High inflation makes more and more…