Next week’s headlines will be US ISM and Nonfarm payrolls, along with policy meetings from the ECB and the Riksbank. We will see Euro area Inflation and Norwegian Retail sales. Find out what we expect…
Johnny Bo Jakobsen
Johnny Bo Jakobsen is Nordea Markets' Chief Analyst on the US. He is responsible for Nordea's view on the US economic outlook and Fed policy.
Johnny has been with Nordea for 15 years and during that time he has also covered Japan, the UK and Denmark. Prior to joining Nordea, Johnny worked at the Danish Ministry of Economic Affairs and he holds an M.Sc. (econ) from the University of Aarhus.
Although Q1 GDP was revised more than expected we still don't take the weakness as evidence of a sudden deterioration of the underlying trend in activity. GDP growth is still expected to exceed 4% in Q2 and 3% in H2 2014.
After Bank of England governor Carney’s speech on the potential for an earlier rate increase, the first BoE rate hike is priced in for Q4 2014, while the first Fed hike is priced in for Q2 2015. But actually we believe that Yellen will be the canary in the coal mine for Carney, with the Fed hiking before the BoE, and not the other way round.
This is the last financial forecast update before summer. The next scheduled update is 18 August.
Flash PMI’s are out next week for the US, Euro area, and China. Most significant number from the US will be the PCE prices. We get a small hint of what the Euro area HICP might bring, when Germany and Spain delivers their flash estimates, and Norway will provide us with unemployment figures...
Last week’s warning from Bank of England Governor Mark Carney that interest rate hikes could come earlier than anticipated raised expectations for a more hawkish Fed today. But the Fed delivered a relatively neutral message from today’s FOMC meeting, indicating that the policy outlook has not yet changed significantly.
Central Banks on the stage, yet again, with events from the Fed, BoE, SNB, and Norges Bank. Inflation figures from US and confidence data from Sweden. Find our expectations for the week ahead here…
At next week’s meeting the FOMC may appear somewhat more hawkish. Thus, we see a good chance that that the median FOMC projections for the fed funds rate will be lifted a touch higher. The rate projections in the “longer run” will be in special focus.
JPY has weakened, trimming a weakly gain, after the Bank of Japan kept its policy unchanged. We maintain our JPY depreciation forecast on the longer term.
Markets seem in a state of calm right now, but the boredom might not last long. Markets will likely soon focus completely on the Fed’s eventual exit from its ultra-easy policy stance.
Eyes will be fixed on the ECB next week as markets await the easing package. We have important indicators from the US with ISM and payrolls. BoE to announce their policy rate and Norwegian house prices.
The minutes of the 29-30 April FOMC meeting contained no major surprises, but reaffirmed that tapering of the Fed’s asset purchases will continue in measured steps, and that a rate hike is not imminent.
In this chart book we outline our main macro story for the US economy and argue why we still expect to see upward pressure on especially front-end USD rates and a strengthening of the exceptionally weak USD.
Next week is of to a quiet start. Scandi prints from Swedish unemployment and Norwegian GDP. Central Bank action Wednesday with FOMC- and BoE minutes and BoJ interest rate decision. Flash PMIs Thursday and Ifo Friday. Find out what we expect from the coming week...
Japan’s economy grew at the fastest pace since 2011 in Q1 as companies stepped up investment and consumers splurged ahead of the April 1 consumption tax hike to 8% from 5%. However, we do not see any particular impact on monetary policy.
We have made a number of changes to our new financial forecasts. The most prominent is that we now forecast rate cuts from the ECB in June and have lowered the entire ECB path. The new ECB forecast implies even lower EUR rates, a widening transatlantic spread, and a slightly lower EUR/USD in the near term. We have also changed our forecast for the Riksbank and the SEK, and we have made a number of adjustments to EM FX forecasts.