Market movers ahead
Comments from the last FOMC meeting indicated that the Fed will be willing to let inflation slightly overshoot the 2% target. Thus, we expect the PCE core inflation figures on Friday to attract special interest. We expect an increase of 0.2% m/m, implying 1.7% y/y.
In the euro area, we are due to get HICP inflation figures for March. We believe headline inflation will decline to 1.6%, partly as the energy price inflation support starts to wear off. We also look for a small increase in the German IFO expectations, as other surveys still indicate optimism in the business economy.
In the UK, we look for the Article 50 trigger on Wednesday and the EU's Brexit guidelines, which should be published within 48 hours of Article 50 being triggered.
Global macro and market themes
We see an increasing risk of a market correction.
We see less support for risk sentiment, as we are close to a peak in global PMIs and the risk of Donald Trump disappointing the markets is increasing.
Monetary policy is set to stay accommodative in both the US and Europe.
Changes to US economic policy are likely to come later and be smaller than previously expected.
In our view, the risk of US military conflict with North Korea is rising.