BoJ Keeps The Pledge To Double The Monetary Base In Two Years

At a meeting that ended early Friday morning, the Bank of Japan kept the pledge to double the monetary base in two years . Focus now turns to the revised macroeconomic forecast that the BoJ published later Friday morning. In light of BoJ’s aggressive commitment to the 2% inflation target it will be interesting to see if BoJ revises its longer-term inflation forecast higher. The BoJ’s current inflation forecast for FY 2014 excluding the impact from a consumption tax hike in April 2014, is 0.9%.

The German Bundesbank criticises ECB’s bond-purchase programme in a confidential opinion prepared for the German constitutional court, according to Handelsblatt. The Bundesbank is against sovereign bond purchases, as they would increase the risks for the central bank. The Bundesbank says the OMT could undermine the independence of central banks and is concerned that the strong conditionality will not be imposed on countries that receive aid. The Bundesbank also says that diverging borrowing costs for companies in different countries may reflect different sovereign fiscal risks.

It has been a relatively calm session overnight, with U.S. stock indices continuing to grind slightly higher. The S&P500 ended the session up by 0.2%, supported by one of the lowest initial jobless claims readings since 2008. Asian stock markets are trading in positive territory this morning.

Global Daily
Focus today. According to WSJ, Spain is set to revise its fiscal deficit target Friday. Spain has repeatedly missed the target without any major critique from the European Commission, which is another confirmation that the appraisal of the austerity path is diminishing. The main release in the euro area will be data on monetary development. M3 has been decreasing recently, and consensus expectations are for a figure of 3.0% y/y, which highlights the need for additional measures from the ECB at the May meeting. In the U.S. session, the main release will be the first Q1 GDP estimate. Generally we saw a strong first quarter, where especially the first two months pointed to decent growth and, although both demand and employment growth fell back in March, we expect an increase in GDP of 3.0% q/q annualised.

Scandi Daily
There's a hearty round of Swedish data. We expect the NIER Survey for April to show rising confidence in the manufacturing sector in the wake of the PMI data released earlier. It seems likely that consumer confidence may rise slightly too against the background of rising stock markets, rising employment and greater optimism about house prices. The March trade balance is forecast to show a SEK6bn surplus compared to 4.8bn last year. Last but not least, are the figures for March household lending. We see a risk that household credit growth accelerated in the wake of a clear increase in house prices over the past three months.

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