Danske Daily - May 24, 2013‏

German IFO expectations are projected to grind slightly higher in line with this month's ZEW and PMI releases. The prospect for increases is somewhat limited however, as IFO expectations are already at a relatively high level.

U.S. durable goods orders are expected to show a fairly strong increase in April after the 5.8% drop in March. Capital goods orders excluding defence and aircraft rose last month, and we expect them to be stable in this month.

ECB's Vítor Constâncio and the European Commission's Olli Rehn both speak on financial regulation.

In Sweden we look for a further rise in consumer confidence, while manufacturing confidence is expected to take a break.

Selected market news

Japanese stocks initially recovered some of the lost ground in overnight trading, only to see another set-back late in the session. The USD/JPY also took another dive following the initial recovery. Markets are clearly still nervous and the risk of further correction is still evident.

On Thursday, though, markets were underpinned by positive data surprises out of both the U.S. and Europe. U.S. house prices and new home sales posted strong increases, and the euro area Flash PMI surprised to the upside for the first time in several months.

Overall we believe the equity bull market will continue as liquidity will stay ample for a very long time, even if the Fed starts tapering as soon as autumn. We expect to see more healing of the global economy over the coming years, especially with the U.S. pulling rank. Some stock markets have been very overbought, though, and it is only natural, and healthy, to see corrections occasionally.

Speaking in Tokyo, Bank of Japan governor Haruhiko Kuroda said on Friday morning that he wants to stabilize the bond market with flexible operations, and he will continue to strengthen communication with the market. Kuroda also said he will continue to make efforts to end deflation and that Bank of Japan had announced sufficient monetary easing.

On Thursday, a couple of Fed members also delivered some soothing comments. John Williams (dove, non-voter) said that even if Fed adjusts the purchases downward , it does not mean that it is on autopilot. The Fed could even increase purchases again if the economy weakened. James Bullard (dove, voter) expressed concern that inflation was lower than expected, and that he would like to see it turn around and go back towards the target before the Fed starts to taper asset purchases.

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