We expect the ECB to take a significant step at the June meeting by introducing a negative deposit rate. In our view, another lowering of the ECB's inflation projections is inevitable and this will result in more easing.
The most interesting data release ahead of the ECB meeting is the inflation number for May, which we expect to be unchanged at 0.7% y/y. Data for the monetary development will also be followed closely.
The US job report for May looks to be a bit softer than the April reading due to the recent slower growth and we expect an increase in non-farm payrolls of 250,000.
In China the main event in the next two weeks is the release of manufacturing PMI, where we expect a small improvement.
In Denmark we expect the Q1 national accounts to show growth of 1% q/q and 1.8% y/y driven by the inventory component.
Global Macro And Market Themes
This week provided yet more evidence that private consumption (the main engine of global growth) is gaining more power with euro area consumer confidence reaching a seven-year high and UK retail sales rising at the fastest pace in 10 years.
Short-term indicators point to a re-acceleration of growth in the US and China and the macro environment is thus giving increasing support to risk assets.
We continue to have a favourable view on peripheral bond spreads due to a fundamentally positive environment for credit despite the recent volatility.
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