In the US, we expect the labour market report for December to be strong, due partly to some catch-up effects from previous months.
In the minutes from the December FOMC meeting, we will look for clues as to whether other members other than Charles Evans and Neel Kashkari came close to dissenting.
We expect euro-area headline inflation to decline in December on weaker energy price inflation, while core inflation is expected to increase only slightly. We expect headline inflation to remain in the range of 1.1-1.4% throughout 2018, as long as underlying inflation pressure remains muted.
In Scandinavia, the housing market remains in focus, particularly in Sweden where property prices are now falling. In Norway, households have remained resilient to uncertainty on the housing market and we expect retail sales to rebound somewhat.
Global macro and market themes
With the US tax reform, they have adopted an expansionary fiscal policy for next year at a time when the economy is operating close to full employment.
The US is using up limited fiscal ammunition in good times instead of saving it until the economic cycle turns.
Relatively strong US economic growth and a further boost from the tax reform underscores our overweight US equities and creates upside risk for our forecast for US 10-year rates.
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