UK inflation and Phase One trade deal amongst market movers today – Danske Bank

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Danske Bank analysts point out that they are looking very much forward to the signing of the US-China phase 1 trade deal although the signing in itself is not a huge market mover.

Key Quotes

“The signing ceremony is scheduled to take place in the White House at 17:30 CET. The 86-page agreement will also be released today. The US and China have said that now the phase 1 trade deal has been finalised, they will get started with phase 2. We think those negotiations are going to be more complicated and think there is a 50% chance of a permanent deal ahead of the US presidential election. The good news is that we have gone from a period with trade war escalation to now de-escalation and we do not think US President Trump dares to U-turn again, as the trade war was hurting the US economy, in particular the to him very important manufacturing sector, hence damaging his re-election chances.”

“We also get UK inflation data for December today. Due to the high uncertainty and weak growth, focus has turned away from inflation, but if inflation comes in lower than expected, it could add fuel to the recent repricing of the Bank of England ahead of the upcoming meeting on 30 January. CPI core was 1.7% y/y in November and is expected to remain unchanged.”

“In the euro area, industrial production data for November is due out at 11:00 CET, which will be interesting given the weakness we have seen in the European manufacturing sector in 2019.”

“Today’s key release in the Scandis is the Swedish inflation data for December. We expect CPIF and CPIF excluding energy to print 1.6% y/y and 1.7% y/y, respectively, which is close to one-tenth of a percentage point below the Riksbank’s forecast.”

“The US empire manufacturing index for January is due out at 14:30 CET.”

“We also have some Fed speeches and the Fed Beige Book although we do not expect neither of them to be very interesting.”

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