Market movers ahead
There are downside risks to the coming week's US retail sales data and upside risks to the preliminary December University of Michigan's consumer sentiment index.
Furthermore, the Fed's Labour Market Condition Index for November will be released on Monday, which will provide important input for the FOMC meeting on 16-17 December.
In the euro area, the result of the ECB's December TLTRO will be announced. We expect only a small take-up of EUR120bn, which suggests that the expected boost to liquidity will be smaller than expected and hence have a smaller impact.
We expect the TLTROs to be the main contribution in the expansion of the ECB's balance sheet towards the level in 2012. Hence, we expect a disappointment to lead to an announcement of corporate bond purchases in January followed by sovereign bond purchases in Q2.
In China, most hard economic data for November will be released next week.
In Norway, the rate decision on Thursday will be a close call. Although we do not expect a rate cut, we expect Norges Bank to signal a 50% likelihood of a cut before next summer.
Global macro and market themes
Three macro themes are set to shape markets in 2015: a) synchronised global recovery with low inflation, b) the historic divergence in monetary policy and c) the biggest global liquidity boost since 2011.
This will underpin outperformance of risk assets, higher US short yields, US bond yield flattening and more USD strength.
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