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In addition to the continued developments surrounding the North Korean summit and auto tariffs, this week is relatively data-heavy in both the US and the Euro area, according to Andreas Steno Larsen, Senior Strategist at Nordea Markets.

Key Quotes

“The European inflation print  (Thursday)  will be extra closely scrutinised by markets, as the very weak April print caused a dovish shift in market expectations for the ECB. We expect Euro-area core inflation to rebound to 1%, while headline inflation could print at 1.6%.”

“Given the seasonal pattern in Euro-area core inflation for the past ten years,  core inflation better rebound in May, otherwise a very weak summer for core inflation could be on the cards.  A rebound to 1% alongside headline inflation at 1.6% should limit the need for a further dovish repricing of the ECB short term. We get the first inflationary hints out of Germany already on Wednesday.”

“We will get new clues on whether the US will continue to outpace the rest of the world  in terms of economic momentum when the ISM index is published  (Friday). The regional surveys point to a rebound in the ISM. While most of this anticipated rebound in the ISM is already priced in (consensus expects a rebound from 57.3 to 58.1), it should still work to emphasise that the US is in the driving seat at the moment. But we still don’t judge that there is good risk/reward in betting on a high ISM print. Also the job report will be in focus in the US on Friday afternoon.”

“In Scandinavia, the week will kick off with the  Oil Investment Survey from Norway on Monday. Strong growth in oil investment both in 2018 and 2019 is an important reason for ours and Norges Bank’s upbeat view on the economy. The rise in oil investment more than counteracts the effect of lower housing activity which follows last year’s slowdown in housing prices.  We believe in a moderate upward revision of the oil investments this year, which will point to growth at 8-10%. Also Norwegian registered unemployment will be important for Norges Bank  (Friday).”

“From Sweden, the first quarter GDP report is due out on Wednesday.  We believe that GDP growth moderated in the early months of the year  – and more than the Riksbank anticipates. Household consumption grew at a healthy pace, while exports flattened.  On Friday the Swedish PMI is due.”