Market movers today
Today we get the first estimate of Q4 GDP growth in the UK. Q4 economic indicators such as the PMIs were solid in Q4 and the NIESR GDP estimate suggests GDP grew by 0.5% q/q, which is also our expectation (2.1% y/y). That said, a downward correction of the large increase in inventories in Q3 is a downside risk to our forecast.
In the US we get the service PMI index for January. It has declined for the last two months and was 53.9 in December, down from 54.8 in October. In our view the current level is too low and we expect the index to increase slightly to 54.5 in January.
There are a number of speeches by important ECB members including executive board member Mersch, Bundesbank President Weidmann and Bank of France's Villeroy. ECB members are likely to become increasingly split as headline inflation picks up but core inflation stays low. Earlier this week hawkish executive board member Lautenschläger said she would like talks soon on a gradual QE exit, but in line with other prominent ECB members she also said higher inflation could be temporary and underlying inflation is more important. We expect core inflation to stay low, implying President Draghi will stick to his dovish tone and that the ECB will announce a third QE extension in H2 this year (see Five Reasons the ECB Will Not Announce QE Tapering in 2017 , 4 January 2017).
In Scandinavia, we get Swedish and Norwegian unemployment figures. For more info see Scandi Markets on page 2.
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