Market movers ahead
Lower inflation in the euro area has also strengthened our expectations that the ECB will deliver an aggressive easing move at Thursday's meeting.
In the US, we still expect Friday's job report to show solid gains in May but we expect growth in retail sales to have stayed relatively subdued as the boost from weather-related pent-up demand in recent months has faded.
In China, the flood of May data scheduled for next week is expected to show a slight improvement but a weak housing market remains a substantial headwind.
The Bank of Japan is not expected to announce new easing measures and it looks increasingly likely it will be on hold for the rest of 2014.
We still expect the Danish central bank to follow the ECB and cut the certificate of deposit rate by 10bp but it is possible that the spread to the euro will widen in light of the weak DKK and moderate intervention in the FX market.
In Norway, inflation in May is expected to have declined close to Norges Banks forecast, making it less likely that the interest rate path will be raised later in June.
Global macro and market themes
We expect bond yields to move higher from here. The main drivers are stronger growth, higher inflation in the US and aggressive Fed pricing.
The ECB's aggressive easing moves should firmly anchor the short end of the yield curve in the euro area. The main message here is a steeper yield curve after the ECBs expected aggressive easing.
The remainder of 2014 is still expected to be a favourable environment for risk assets with global growth poised to pick up in H2 and still very accommodative monetary policy from the major central banks.
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