Danske Daily - 27 May 2013‏

ECB's Asmussen speaks about Europe's fundamentals this morning. Otherwise, the calendar is very thin.

The U.S. and U.K. markets are closed; liquidity will probably be lower than usual.

There are several important Scandi data releases. In Sweden, April retail sales will be one of the first activity indicators that are released for Q2. The Norwegian labour market data is due.

Selected market news

Overnight minutes from the April 26 BoJ meeting were released. This was the first meeting after the step-up in quantitative easing on April 4, and saw the BoJ commit to reaching its inflation target within three fiscal years. However, the minutes showed some division developing across the board, with a few members doubting whether it would be possible to reach the 2% inflation target towards the latter half of the projection period to March 2016. BoJ board members Kiuchi and Sato both dissented against the economic forecasts, holding the view that they were too ambitious. Both made proposals to water down the commitment to monetary easing. Notably, Kiuchi suggested limiting the period of ultra-loose monetary policy to two years and review it thereafter. However, the proposal was defeated by majority vote, as only Kiuchi voted in favour.

BoJ Governor Kuroda backs bullish asset market views. Speaking in Tokyo, Kuroda said that there are no signs investors have 'excessively bullish expectations' and that Japanese financial institutions have sufficient buffer against losses from rises in yields, citing an April BoJ report (see wrap-up on Reuters). However, the comments from Kuroda have so far failed to ease market volatility, as witnessed by the sharp moves this morning.

Downward correction in Japanese equities resumes. Japanese stocks are tumbling this morning, trading at levels close to the trough reached on Friday before selling pressure eased. The downside correction has taken Japanese equities 11% lower (at the time of writing) since the peak on Thursday. Although last week saw the release of disappointing economic data from China and further discussion on Fed tapering, it seems hard to justify a move of such magnitude by fundamental factors. Rather, it seems like a correction overdue, following the recent strong gains in Japanese equities which are still up 18% since early April. However, this morning the minutes from the April BoJ meeting may have contributed to the fall. There are several Japanese key data releases this week, and the Chinese PMI on Saturday will also be important for market participants, following the soft data from last week.

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