Market movers ahead
Rising money market rates and a stronger euro are probably not enough to prompt a rate cut or other easing measures at this week's ECB meeting, although we cannot rule this out.
Fed Chair Janet Yellen is scheduled to appear before Congress and is expected to signal a lengthy period between the end of the Fed's tapering and interest rates being hiked in the US.
Inflation numbers out of China are likely to show a significant drop. While not sufficient to prompt further easing, it means this option will remain in play should the economy continue to weaken.
Norges Bank may signal that a rate hike could come sooner than previously expected but we think this is unlikely.
Global macro and market themes
Gently falling unemployment and lower long rates in southern Europe will help lift the pressure on the ECB to act. However, it is a close call - we still see a 50% chance of a rate cut in June.
Inflation is on the rise, but is still far below the ECB's target.
The US economy was weak in Q1, but looks in much better shape in Q2.
In contrast, Japan's economy appears to be slowing and we expect monetary policy to be eased further in June.
Both the Swedish and Norwegian economies are showing signs of improvement, though not enough to change our expectation of a rate cut in Sweden.
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