Two pieces of bad news came from the Euro area yesterday: Flash PMIs and consumer confidence unexpectedly fell in November. 10-year Bund yields dropped by 4 bp to 0.80%, US Treasuries by 3 to 2.33%. EUR/USD was almost unchanged.
The US isn’t Europe. The Phily Fed index increased strongly, but more importantly fears of deflation are hugely exaggerated. Both headline (1.7% y/y) and core inflation (1.8%) printed slightly higher than expected. Against the background of a further acceleration in wages, we expect core CPI inflation to move closer to the Fed’s 2% target over the coming year, with the year-over-year change reaching 2¼% in Q4 2015.
Today will be a day full of potentially market-moving speakers as Draghi (9:00 CET) and Nouy from the ECB, Bundesbank’s Weidmann and German Finance Minister Schäuble are due to speak at a banking congress in Frankfurt.
It’s a very quiet day in terms of data releases, nothing remarkable out of the Euro area or the US. Also no bond supply today according to the Bloomberg calendar.
Nordea