In focus today
In the Eurozone, the European Central Bank will publish the minutes of its March meeting today. Given recent comments from board members, the minutes likely reflect increasingly tough discussions about further policy increases.
Also in the eurozone, business sentiment indicators will be released for May, with particular attention to expectations for corporate selling prices, which last month saw the largest monthly increase in the survey’s 25-year history. We look forward to seeing whether the increased expectations continue.
In Norway, GDP figures will be published. We expect mainland GDP to grow by 0.2% in the first quarter. If this proves true, growth will be somewhat lower than the 0.4% forecast in the Norwegian Central Bank’s March monetary policy report, marginally reducing the likelihood of a rate hike in June. The uncertainty around this number is a little greater than usual, with more of the Easter holidays falling into the first quarter of this year.
In addition, in Norway, the Oil Investment Survey will also be published today, where we will be watching closely to see whether the recent rise in energy prices has affected investment plans among oil companies.
The NIER survey in Sweden is scheduled for 09:00 CET. Along with updating consumer and business sentiment figures, we will pay close attention to rate plans, which carry a lot of weight for the Riksbank. Half an hour later, the Swedish National Debt Office publishes its latest borrowing forecast. Despite the turbulent backdrop since the previous report in November, and especially in recent months shaped by developments in the Middle East, we do not expect major revisions from the debt office.
In the US, April PCE inflation figures, the Fed’s preferred measure of core inflation in the US, will be released. The figure rose 3.2% year-on-year in March, well above the Fed’s 2% target, with markets anticipating continued price pressure in April’s numbers. Also in the United States, a second GDP estimate will be released.
Economic and market news
What happened overnight
Between the United States and Iran, the Iranian Revolutionary Guards overnight struck a US military base in retaliation after the United States carried out its second attack this week on Iranian military targets. Iran has warned that any further US strikes would trigger a greater response, putting the April ceasefire and peace talks under intense pressure. The attacks come after Iranian state television published details of a potential peace proposal on Wednesday. Under the proposed terms, the United States would end the naval blockade of Iranian shipping ports, while Iran would return traffic through the Strait of Hormuz to pre-war levels within a month. The White House denied the report, calling it a “complete fabrication,” while the Iranian government did not comment.
Oil markets reflected yesterday’s optimism over a potential US-Iran deal, with the price of Brent crude rising to around US$98 per barrel following overnight strikes. Prediction markets have also shifted, with Polymarket now pricing the probability of shipping returning to normal through the Strait of Hormuz before the end of June at around 37%, down from around 50% yesterday, reflecting growing uncertainty over whether an agreement will be reached soon.
Stock: Stocks took a break yesterday and will fall further as markets open today. Instead of the peace agreement, which investors were eagerly awaiting and pricing in, the United States carried out new strikes on Iran last night. Korea’s Kospi is down 3% this morning, and US and European futures point to a 0.5-1% decline today, as oil prices and yields bounce higher.
Big trading in the markets – momentum – brought back some of the gains yesterday. Interestingly, this happened despite lower oil prices and yields yesterday. US stocks are up 5% in a week, and nearly 30% over the past month, so it makes sense to see days of profit taking. In the absence of technology, consumer stocks led the market yesterday, across retail, commodities, homebuilders, etc. There was no macro data or earnings catalyst driving this surprising favoritism, rather it should be viewed as a catch-up move, given the winners are taking profits. Likewise, most of the shorted stocks performed well yesterday.
FI and FX: Risk sentiment turned negative overnight amid reports that the US launched new strikes on Iran. EUR/USD fell below 1.16 and Brent crude rose from yesterday’s low of US$94.25 per barrel towards US$98 per barrel. Yields also rose overnight due to higher oil prices. Yesterday, we entered a long recommendation for USD/SEK, seeing potential in both a stable scenario and in a risk scenario as looming Fed hikes begin to impact broader risk sentiment. There’s a lot of interesting macro data today with PCE numbers from the US, and closer to home we have Sweden’s NIER survey on economic sentiment and Q1 GDP from Norway.
