Weekly Focus Central banks provide life support to financial markets

Transcription

1 Investment Research General Market Conditions 8 March 206 Weekly Focus Central banks provide life support to financial markets Market movers ahead We expect focus to be on euro PMI and German ifo next week. After falling for some months, we look for stabilisation in March. The German ZEW should also find a bottom after the increase in market sentiment lately. In the US, data for home sales and durable goods orders are up before focus turns to ISM manufacturing and payrolls the following week Core PCE inflation is also likely to attract attention following the increase lately. In China, the next key release is PMI manufacturing, due on April. We look for a slight increase. Sweden releases business and consumer confidence data in the coming week. Contents Market movers for the next two weeks... 2 Global Macro and Market Themes... 6 Scandi update... 8 Latest research from Danske Bank Markets... 9 Macroeconomic forecast... 0 Financial forecast... Calendar... 2 Global macro and market themes Global central banks have been dovish across the board lately and have provided life support to financial markets. Risk markets are getting support from a turn in regional US business surveys pointing to a lower probability of US recession. The risk of a systemic crisis has eased, as the ECB has included corporate bonds in the purchase programme and a dovish Fed is giving support to commodities and emerging markets. The hunt for yield is set to flatten the euro yield curve. Financial views Major indices 8Mar 3M 2M 0yr EUR swap EUR/USD ICE Brent oil Mar 6M 224M S&P % 58% Source: Danske Bank Central banks have ended the currency war as policy divergence is becoming less. Focus FOMC Review: Concerned Fed sends very dovish message to the markets, 6 March. Note that this week s edition of Weekly Focus covers two weeks due to the Easter holiday next week ECB s very attractive TLTRO II loans, 8 March. Look for stabilisation in euro surveys Oil and stocks recover in tandem Follow us on Twitter for the latest on macroeconomic and financial market Source: Macrobond Source: Macrobond Editors Allan von Mehren alvo@danskebank.dk Las Olsen laso@danskebank.dk Important disclosures and certifications are contained from page 6 of this report.

2 Market movers for the next two weeks Global In the US, next week is a light one in terms of data releases. The two most important data releases will be Markit manufacturing PMI and durable goods orders due Tuesday and Thursday respectively. Also both existing home sales and new home sales for February are due during the week (Monday and Wednesday, respectively). In two weeks, the calendar is a heavy one. The week begins with the release of February PCE figures on Monday. We estimate that the PCE core index rose 0.2% m/m implying an inflation rate of.8% y/y, which would be the highest inflation rate since November 202. Both CPI and PCE core inflation have accelerated in recent months but the Fed wants to be sure that the pickup is not just temporary, see also FOMC review: Concerned Fed sends very dovish message to the markets, 6 March 206. Actual core inflation has accelerated Source: BLS, BEA On Tuesday we get the Conference Board s consumer confidence index for March. The index has been rangebound over the last year but is currently at the lower end of the range. We expect a rebound to 94, suggesting that consumers are still quite upbeat. The March jobs report is due on Friday April. The development of the labour market has been strong at the beginning of 206 despite the financial turmoil and some key economic figures being to the weaker side. However, as we have finally seen a rebound in the participation rate, the labour market has tightened relatively less. We still need further data before we are able to estimate employment growth in March but given the higherthanexpected prints in recent months, it is not unlikely that we would see employment growth rising less than trend growth. The development in average hourly earnings will attract attention as they declined from January to February. If wage inflation picks up, the Fed would be more confident raising rates. The unemployment rate was probably unchanged at 4.9 % in March. Lastly, the ISM manufacturing index for March is due on Friday. ISM manufacturing surprised to the upside as it rose to 49.5 in February, suggesting some stabilisation in the manufacturing sector which has otherwise been struggling. That being said, we are not that optimistic on the outlook for the US manufacturing sector as it is still struggling due to the strong dollar, weakness in manufacturing globally, low oil investments and wider credit spreads. Thus we do not see the potential for ISM manufacturing to get much higher, although we could see some stabilisation around 50. In the euro area the ZEW, Ifo and PMI business surveys for March will attract attention after all three figures declined in January and February, with the financial uncertainty having a negative spillover to economic sentiment. We expect the improved financial risk sentiment will result in a stabilisation, but not a strong rebound in the three figures. The biggest increase should be seen in the financial ZEW expectations, whereas the economic survey indicators (PMI manufacturing and Ifo expectations) are still faced with headwinds from weakness in global manufacturing, the stronger effective euro and Brexit risks. On the other hand, the low oil price supports private consumption and hence the domesticdriven PMI service. Employment growth is still strong Source: BLS, Danske Bank Markets Euro area economic business sentiment to stabilise in February Source: Ifo, ZEW, Markit PMI, Danske Bank 2 8 March 206

3 After Easter the euro area inflation figure for March is released and we expect it to remain in deflation territory. This should occur because the drag from energy price inflation is set to go up despite the higher oil price. This is caused by the oil price being at a higher level last year, hence taking the yearly inflation rate lower. Core inflation will also be in focus after it declined to 0.8% in February from.0% in January. We look for higher core inflation in March as the early timing of Easter will be supportive. That said, the ECB's updated core inflation forecast of.% on average in 206 still looks optimistic to us. M3 money supply and bank lending for February will give the first data point in determining the price on the ECB s new TLTRO II loan. The lending figures are relevant as the interest rate on the new TLTRO II loan is dependent on lending growth in the period from February 206 to January 208. If a bank exceeds its benchmark in the TLTRO II loan it will be charged a negative rate down to the deposit rate over the entire period of the loan. Note the seventh auction on the TLTRO I is scheduled for 30 March and could be a bit more interesting than the previous once as the amount borrowed can be rolledover into the new TLTRO II. The euro area unemployment rate, which has been on a downward trend since mid 203, is also released and we expect the figure was unchanged at 0.3% in February. Although this is a high level of unemployment, it is not that far from the European Commission s estimate of the structural unemployment rate of 9.8%. When the unemployment rate reaches this level, the upward pressure on wages should start to pickup. In the UK, we have some important releases in the coming two weeks although their importance has declined due to the upcoming EU in/out referendum, see also Presentation: The UK s EU Referendum: Brexit what if?, 22 February 206. Next week, we get CPI figures for February which are expected to show that the inflation pressure in the UK is still muted. This means that the Bank of England is in no hurry to raise rates and can stay on hold until after the referendum. We have several activity indicators due, such as GfK consumer confidence, PMI manufacturing, index of services and retail sales. We expect them to show that growth has slowed as Brexit uncertainties have hit the economy. Also the third estimate of GDP growth in Q4 5 is due. Next week will be quiet on the data front in China. The next big mover is PMI on Friday April. Following a disappointment in February we look for a small increase in March. Easing capital outflows and signs of a gradual bottom in housing starts are expected to feed into slight improvement in the Chinese manufacturing sector. We look for the Caixin PMI manufacturing to increase from 48.0 to 48.2 and the official NBS PMI to increase from 49.0 to A rise in PMI normally underpins the stock market and we expect an increase in PMI to give a further lift to the offshore Chinese stock market. The onshore market is not as correlated with economic data as it is mostly Chinese individuals trading in this market. ECB s updated core inflation forecast looks optimistic to us Source: ECB, Eurostat, Danske Bank Markets Bank lending important for the interest rate on the ECB s new TLTRO Source: ECB, Danske Bank Markets Subdued inflation means that BoE can stay patient amid Brexit uncertainties Source: ONS We look for a small lift to PMI s in March as sentiment has improved Source: Markit Economics, China Federation of Logistics and Purchasing, Danske Bank Markets 3 8 March 206

4 Scandi In Denmark the statistical office will publish consumer confidence for March and employment for January on Monday next week. Consumer confidence has been downward bound since March last year but still points to optimistic consumers. The worst of the financial market turmoil has now settled, and while we still have doubts about the global economic outlook, jobs continue to be created in Denmark. In December last year almost 5,200 more people found work, the biggest monthly increase since the statistics began in We do not therefore anticipate a fresh dip in consumer confidence, but expect the indicator to be unchanged at 4 in March. We also expect employment to increase further this year, but with the relatively strong employment growth to date having been accompanied by much weaker economic growth, it may well be that the rate of increase in employment slows somewhat. We expect around 3,000 jobs to be created in January. Also coming up that week are housing prices for Q4 last year, and it will be interesting to see whether the quarterly data confirm the trend seen in the monthly releases. The Thursday after Easter brings revised GDP figures for Q4 last year. It tends to be the subcomponents that are revised, while overall GDP growth is generally unchanged. Manufacturing confidence data for March are released on Wednesday, and finally the Nationalbank will publish figures for foreign portfolio investments and securities statistics on Thursday. In Sweden, the weeks ahead contain few interesting sets of data (NB Sweden sets the clock one hour forward on Sunday 27 March), with NIER data on business and consumer confidence (both on Wednesday 23 March at CET) and then 5 minutes later, the NIER publishes also its outlook for the Swedish economy. The week after Easter, we receive trade balance data (Tuesday 29 March at CEST) which is expected to rise a little and also retail sales data which should come down somewhat. Apart from data, there are indeed developments during the next couple of weeks that will be extremely interesting to follow: the large wage negotiation round must be concluded before March 3 if not strikes etc. will follow. And given anecdotal evidence, interviews in the media etc, employers and employees are far apart and nowhere is this more apparent than in the allimportant exports sectors. In short, we expect a low outcome below 2½ % y/y and little wage drift whereas all other commentators (including the Riksbank) expect above 2½% y/y and strong to very strong wage drift. We will keep you posted! In Norway there are some important releases in the week after Easter. The big downside risk to the Norwegian economy is a sharp slowdown in household demand. Consumer confidence fell steeply in 205, but actual spending has held up well, with growth in Q4 and an increase in January. February retail sales will therefore send important signals about whether higher unemployment and lower wage growth are now hitting private consumption. We expect retail sales to climb 0.2% m/m, which would mean that private consumption makes a solid contribution to GDP growth again in Q and signal that recession and zero rates are still some way off. The week after Easter also brings LFS unemployment for January (DecemberFebruary). As mentioned many times before, both we and Norges Bank prefer the NAV jobless figures, so it would take a big change in the LFS data to trigger significant market movements. We expect LFS unemployment to be unchanged at 4.5%, but the NAV data show that the labour market is deteriorating, albeit less so than a year ago. Also coming up are PMI data for March, and it will be interesting to see whether the start Labour market ends 205 with a bang Source: Statistics Denmark External and domestic trade Source: Statistics Sweden Weak retail growth Source: Statistics Norway 4 8 March 206

5 up of work on Johan Sverdrup and slightly higher global industrial activity give manufacturers somewhat less of a headwind. Market movers ahead Global movers Event Period Danske Consensus Previous Tue 22Mar 0:00 EUR PMI manufacturing, preliminary Index Mar :00 EUR PMI services, preliminary Index Mar :00 DEM IFO expectations Index Mar :00 DEM ZEW current situation Index Mar :45 USD Markit manufacturing PMI, preliminary Index Mar Thurs 24Mar 3:30 USD Durable goods orders, preliminary m/m Feb 2.5% 4.7% 3:30 USD Capital goods orders, nondefense ex air, prelimina % Feb 0.6% 3.4% Scandi movers Wed 23Mar 9:00 SEK Manufacturing confidence Index Mar Global movers Event Period Danske Consensus Previous Mon 28Mar 4:30 USD Personal income m/m Feb 0.2% 0.5% 4:30 USD Personal spending m/m Feb 0.2% 0.5% 4:30 USD PCE core m/m y/y Feb 0.2%.8 0.3%.7% Wed 30Mar 4:00 DEM HICP inflation, preliminary m/m y/y Mar 0.3% 0.4% 0.2% Thurs 3Mar :00 EUR HICP core inflation, preliminary y/y Mar 0.9% 0.8% :00 EUR HICP inflation, preliminary y/y Mar 0.2% 0.2% Fri 0Apr 3:00 CNY PMI manufacturing Index Mar :00 CNY PMI nonmanufacturing Index Mar :45 CNY Caixin Manufacturing PMI Index Mar :30 USD Non farm payrolls 000 Mar 242 4:30 USD Average hourly earnings, nonfarm m/m y/y Mar 0.% 2.2% 4:30 USD Unemployment % Mar 4.9% Scandi movers Tue 29Mar 9:30 SEK Retail sales s.a. m/m y/y Feb 0.5% 4.3% 0.7% 4.0% 9:30 SEK Trade balance SEK bn Feb Wed 30Mar 0:00 NOK Unemployment (LFS) % Jan 4.5% 4.5% Thurs 3Mar 0:00 NOK Retail sales, s.a. m/m Feb 0.2% 0.9% 0:00 NOK Norges Bank's daily FX purchases m Apr Fri 0Apr 8:30 SEK PMI manufacturing Index Mar 5.7 9:00 NOK PMI manufacturing Index Mar 48.4 Source: Bloomberg, Danske Bank Markets 5 8 March 206

6 Global Macro and Market Themes Dovish central banks support global financial markets The world s major economies have held central bank meetings during March and across the central banks there has been a convergence in sending a common message that it is appropriate to keep policy rates lower for longer. Hence, although we did not get a coordinated policy response following the G20 meeting at the end of February, it seems that there has been more of a coordinated move towards a dovish stance, which has been individually and gradually revealed. The coordinated move towards a more dovish stance among the major central banks has supported global risk sentiment. Moreover, some of the individual policy responses seem to have been particularly aimed at reducing the systemic risk (see figure below). The ECB took a first step in reducing the systemic risks by including corporate bonds in the QE universe and offering very cheap funding to banks in the new TLTRO II loans. This followed as it reduced the risk of a spill over to a financial tightening from pressure on European banks and the corporate bond market (see ECB s easing package and markets zigzag, March 206). The Fed was surprisingly dovish, which also reduced the systemic risks as the dovish stance has supported emerging markets assets as well as commodity prices, which were also under severe stress at the beginning of February. The Fed now seems less eager to raise policy rates, as it now only signals two hikes (down from four) reflecting that it believes global economic and financial developments continue to pose risks ( Concerned Fed sends very dovish message to the markets, 6 March). Key points Major central banks have sent a common message of keeping policy rates lower for longer. The coordinated move has supported global risk sentiment amid a still fragile global recovery. The ECB and Fed s moves will support risky assets by the hunt for yield. Currencies disobey their central bank masters we still look for a higher EUR/USD longer term. Global economy in need of support The recent central bank moves come at the right time to support a still fragile global recovery. Our business cycle model (macroscope) points out that the economic outlook in Europe has recently turned more bearish, while the US outlook looks a bit stronger without being rock solid. This week, US survey data was very strong and suggests the US manufacturing cycle has turned, which reduces the fear of a US recession. Central banks actions have reduced market fears Source: Macrobond Financial Senior Analyst Pernille Bomholdt Henneberg perni@danskebank.com Source: Macrobond Financial Chief Analyst Jakob Ekholdt Christensen jack@danskebank.dk 6 8 March 206

7 ECB and Fed s moves to support risky assets by hunt for yield Global fixed income markets should benefit from the common dovish message from the central banks. The Fed being more dovish than expected has supported the hunt for yield, which the ECB initiated with its upscale of the monthly QE purchases. Following the FOMC meeting, we have seen a rally in US Treasuries and a bullish steepening of the 20Y part of the curve as the money market curve flattened. In the euro area, the curve should gradually flatten further, as investors go further out on the yield curve with the front end being anchored by the ECB s forward guidance. Notably, the ECB is set to scale up its monthly QE purchases to EUR80bn from EUR60bn from April, whereas the purchases of nonfinancial corporate bonds will not be started before the end of Q2. This implies the ECB s purchases of euro government bond will increase considerably in coming months. Together with the Fed s dovish message this week, this supports further performance of periphery and semicore bonds. European corporate credits set to benefit from ECB support Source: European Commission, German Statistical office, Danske Bank Markets The actions of the Fed and the ECB also support equities. Particularly, emerging markets should outperform developed markets in this environment and in terms of sectors, parts of the cyclical space are likely to generally outperform defensives. Currencies disobey their central bank masters The currency moves to the central bank decisions in March have been remarkable as the central banks seem less interested in targeting their own currencies. Overall, the story of divergence across central banks has become smaller and the latest policy moves indicate the start of the end of the currency war. As a result, despite policy easing by the ECB, Norge s Bank and the Riksbank, we have actually seen several currencies strengthening instead of weakening. Particularly, the ECB s shift from cutting the policy rate and targeting the exchange rate to focusing on the banklending channel is a sensible step (see Strategy: ECB exists the currency war, March 206). For the time being, we do not see EUR/USD moving lower and still expect.6 on a 2M horizon. Global market views (threesix months) Asset class Equities Short term: buy on dips Medium term: moderately positive Main factors Fed s late dovish stance and ECB s action lead to another risk rally. Follow through on easing to be expected from other central banks globally. The weakening of the USD makes the world a better place; commodities should stabilise further and be supportive of Chinese growth as it provides an opportunity for the PBoC to ease further. EM should outperform DM in this environment and in terms of sectors, parts of the cyclical space will generally outperform defensives. Bond market Core yields: Bund yields close to bottoming out, higher medium term USeuro spread: wider but not before we see Fed hikes Peripheral spreads set to tighten further from here Credit spreads: neutral to tighter Higher QE and new TLTRO means that the 'hunt for yield' continues, but no more rate cuts and higher US yields We still look for policy divergence, but the 'hunt for yield' supports treasuries QE, improving fundamentals and search for yield. But vulnerable to risk sentiment and political uncertainties. Liquidity abundance and QE in corporate bonds. FX EUR/USD in.0.4 range short term, rebound further out Fundamental factors support cross in the medium to long term, driven short term by Fed pricing and Brexit risks. USD/JPY rangebound with risks skewed to the upside on BoJ USD/JPY set to head higher again on FedBoJ divide as BoJ is set to fight further JPY appreciation with negative rates. EUR/SEK trapped in range near term, lower medium term Riksbank loosening up on SEK appreciation aversion; EUR/SEK set to fall eventually on strong Swedish fundamentals. EUR/NOK settling in interval now, then lower as cycle turns Limited room for more easing to be priced in from Norges Bank, fundamentals point to lower EUR/NOK in H2 6. Commodities Oil prices dovish Fed removes downside risk; subdued recovery in H2 Metal prices anticipating recovery in Chinese construction Gold prices flat near term Source: Danske Bank Markets Price support from OPEC is gone; now awaiting nonopec supply cuts and weaker US dollar. Consolidation in mining industry puts a floor under prices, awaiting support from higher global economic growth Shortterm support from repricing of Fed rate hikes. Agriculturals risks remain on the upside Attention has turned to La Niña weather risks in H March 206

8 Scandi update Denmark Nationalbank cuts growth forecast The Nationalbank revised down its expectations for GDP growth this year during the week. The central bank previously expected growth of.8% but is now looking at.3%. Although it might seem that the bank has become more downbeat about the Danish economy, it is actually optimistic. A quarterly increase in GDP of 0.5% would be needed for this forecast to become reality. This is because GDP growth was a big disappointment in H2 5 and some of this effect will have an impact on the figures for 206. Our most recent forecast is for GDP growth of.5% this year but we are in the process of revising this downward. Although our new forecast is not yet complete, we expect it to end up somewhere around %. This relatively low GDP growth should not be seen as a sign of crisis, however. Employment climbed relatively strongly in 205 and we expect it to do so again this year. So, there is no point calling for fiscal easing to kickstart growth. We are already creating jobs, just not translating this into GDP growth, and this will require investment and reforms, not hasty fiscal intervention. Sweden a rare inflation surprise It has been a safe bet to expect inflation to come in lower than Riksbank forecasts over the past few years. However, once in a blue moon inflation exceeds the Riksbank s forecast. February 206 was one of those rare occasions, as clothing, furniture and electricity prices spiked, pushing inflation 0.pp and 0.2pp higher than the Riksbank s and our forecast respectively. Looking ahead, we feel rather confident that prices will again moderate but we are far from certain, as retailers have expressed a need to increase prices to ward off cost pressure from a previously weak SEK. Now, it is more than a year since the SEK reached its nadir and it has strengthened ever since. Looking also at import prices, we see the same pattern upstream prices are coming down. It will be interesting to follow developments over the next few months but we feel most indicators point in the wrong direction from an inflation perspective. Higher starting point for CPIF ex Energy Source: Statistics Sweden, Danske Bank calculations Norway rates cut as expected As expected, Norges Bank cut its key rate by 25bp at the week s ratesetting meeting. The main reason was even lower interest rates in the outside world, together with a somewhat weaker domestic growth outlook. Lower wage growth and slightly higher financing costs also pulled in the same direction. The interest rate path has been revised down in the new monetary policy report and the central bank is now signalling further rate cuts later this year, no later than September. Norges Bank also sees a roughly 20% chance of interest rates falling to zero before the year is out but the threshold for moving into negative territory is relatively high and would require the economy to be hit by a major shock. Norges Bank now expects growth in the Norwegian economy of 0.8% this year and.8% next year. This is slightly below our own forecast and appears to be due to lower growth in private consumption this year and a slightly larger decrease in oil investment next year. The other projections are closely in line with our own, so we now expect Norges Bank to cut rates again in June but then leave the sight deposit rate at 0.25%. Lower rates ahead Source: Norges Bank, Danske Bank Markets 8 8 March 206

9 Latest research from Danske Bank Markets 8/3 ECB's very attractive TLTRO II loans ECB's new TLTRO II provides very cheap bank funding with a long maturity and no mandatory early repayments. The TLTRO II has a fixed size and maturity while the price of the loans varies with eligible net lending. 7/3 Norges Bank Review: A 25bp cut, a dovish bias and a June cut in store As expected, Norges Bank this morning cut the sight deposit rate by 25bp to 0.50%. 6/3 FOMC review: Concerned Fed sends very dovish message to the markets As widely expected, the Fed maintained the Fed funds target rate unchanged at 0.25% 0.50% but Fed sent a dovish signal. 6/3 China: China drafts plan for Tobin tax on FX transactions implications and recommendations According to sources close to the People s Bank of China, the central bank is drafting rules for a tax on FX transactions a socalled Tobin tax. 9 8 March 206

10 Macroeconomic forecast Macro forecast, Scandinavia Year GDP cons. Private cons. Fixed inv. Stock build. 2 Exports Imports Inflation Unemploym. 3 budget 4 debt 4 Current acc. 4 Denmark Sweden Norway Macro forecast, Euroland Year GDP cons. Private cons. Fixed inv. Stock build. 2 Exports Imports Inflation Unemploym. 3 budget 4 debt 4 Current acc. 4 Euroland Germany France Italy Spain Finland Macro forecast, Global Year GDP Private cons. cons. Fixed inv. Stock build. 2 Exports Imports Inflation Unemploym. 3 budget 4 debt 4 Current acc. 4 USA China UK Source: OECD and Danske Bank. ) % y/y. 2) % contribution to GDP growth. 3) % of labour force. 4) % of GDP. 0 8 March 206

11 Financial forecast Bond and money markets Source: Danske Bank Markets Currency vs USD Currency vs DKK USD 8Mar m m m EUR 8Mar m m m JPY 8Mar m m m GBP 8Mar m m m CHF 8Mar m m m DKK 8Mar m m m SEK 8Mar m m m NOK 8Mar m m m Equity Markets Regional Risk profile 3 mth Price trend 3 mth Price trend 2 mth Regional recommendations USA (USD) Strong domestic demand, strong USD, low oil price Medium 03% 58% Overweight Emerging markets (local ccy) Commodities and China stabilising High 3 +3% 03% Neutral Japan (JPY) Reflation, strong earnings growth, BoJ easing, weakining JP High 03% 80% Overweight Europe (excl. Nordics) Brexit, political uncertainty, weak growth, weak EUR High 3 +3% 58% Underweight Nordics Earnings growth, expensive valutaion Medium 03% 58% Overweight Commodities Key int. rate 3m interest rate 206 2yr swap yield 0yr swap yield Currency vs EUR Average 8Mar Q Q2 Q3 Q4 Q Q2 Q3 Q NYMEX WTI ICE Brent Copper 5,070 4,550 4,550 4,800 5,000 5,00 5,200 5,300 5,400 4,725 5,250 Zinc,836,600,600,700,800,850,900,950 2,000,675,925 Nickel 8,895 8,500 8,500 0,000,000,200,400,600,800 9,500,500 Aluminium,529,500,500,600,700,750,800,850,900,575,825 Gold,259,50,250,250,250,225,200,75,50,225,88 Matif Mill Wheat ( /t) Rapeseed ( /t) CBOT Wheat (USd/bushel) CBOT Corn (USd/bushel) CBOT Soybeans (USd/bushel) March 206

12 Calendar Key Data and Events in Week 2 During the week Period Danske Bank Consensus Previous Monday, March 2, 206 Period Danske Bank Consensus Previous :0 GBP Rightmove House Prices m/m y/y Mar 2.9% 7.3% 8:45 EUR ECB's Coeure speaks in Paris 9:00 DKK Consumer confidence Net. bal. Mar :00 DKK Employment (monthly).000 m/m Jan :5 USD Fed's Lacker (nonvoter, hawkish) speaks 0:00 EUR Current account EUR bn Jan :30 EUR ECB's Constancio speaks in London 5:00 USD Existing home sales m (m/m) Feb :40 USD Fed's Lockhart (non.voter, neutral) speaks Tuesday, March 22, 206 Period Danske Bank Consensus Previous 5:30 JPY All industry activity index m/m Jan.9% 0.9% 8:00 CHF Trade balance CHF bn Feb 3.5 9:00 DKK Retail sales m/m y/y Feb 0.5% 0.3% 9:00 FRF PMI manufacturing, preliminary Index Mar :00 FRF PMI services, preliminary Index Mar :30 DEM PMI manufacturing, preliminary Index Mar :30 DEM PMI services, preliminary Index Mar :00 EUR PMI manufacturing, preliminary Index Mar :00 EUR PMI composite, preliminary Index Mar :00 EUR PMI services, preliminary Index Mar :00 DEM IFO business climate Index Mar :00 DEM IFO current assessment Index Mar :00 DEM IFO expectations Index Mar :30 GBP PPI input m/m y/y Feb 0.4% 7.5% 0.7% 7.6% 0:30 GBP PPI output m/m y/y Feb 0.0%.2% 0.%.0% 0:30 GBP CPI m/m y/y Feb 0.4% 0.4% 0.8% 0.3% 0:30 GBP CPI core y/y Feb.2%.2% :00 DEM ZEW current situation Index Mar :00 DEM ZEW expectations Index Mar :00 HUF Central Bank of Hungary rate decision %.35%.35%.35% 4:00 USD FHFA house price index m/m Jan 0.5% 0.4% 4:45 USD Markit manufacturing PMI, preliminary Index Mar :30 USD Fed's Evans (nonvoter, dovish) speaks Wednesday, March 23, 206 Period Danske Bank Consensus Previous USD Fed's Harker (nonvoter, hawkish) speaks 9:00 SEK Consumer confidence Index Mar :00 SEK Economic Tendency Survey Index Mar :00 SEK Manufacturing confidence Index Mar :00 DKK House prices q/q y/y 4th quarter 0.3% 5.9% 9:5 SEK NIER economic forecasts 0:30 EUR ECB's Lautenschlaeger speaks in Frankfurt 2:00 USD MBA Mortgage Applications % 3:40 EUR ECB's Weidmann speaks in Liechtenstein 5:00 USD New home sales 000 (m/m) Feb (9.2%) 5:30 USD DOE U.S. crude oil inventories K 37 6:00 EUR Consumer confidence, preliminary Net bal. Mar :45 NZD Trade balance NZD M Feb 90 8 Source: Danske Bank Markets 2 8 March 206

13 Calendar continued Thursday, March 24, 206 Period Danske Bank Consensus Previous 3:00 JPY Nikkei Manufacturing PMI, preliminary Index Mar 50. 8:00 DEM GfK consumer confidence Net. Bal. Apr :45 FRF Business confidence Index Mar :30 SEK PPI m/m y/y Feb.0% 3.% 0:00 EUR ECB Publishes Economic Bulletin 0:30 GBP Retail sales m/m y/y Feb.0% 3.5% 2.3% 5.2% 0:30 GBP Retail sales ex fuels m/m y/y Feb.0% 3.4% 2.3% 5.0% :20 EUR ECB's 7. auction result 3:00 TRY Central Bank of Turkey rate decision % 7.5% 7.5% 7.5% 3:5 USD Fed's Bullard (voter, hawkish) speaks 3:30 USD Durable goods orders, preliminary m/m Feb 2.5% 4.7% 3:30 USD Capital goods orders, nondefense ex air, preliminary % Feb 0.6% 3.4% 3:30 USD Initial jobless claims 000 5:45 USD Markit service PMI, preliminary Index Mar :45 USD Markit composite PMI, preliminary Index Mar 50.0 Friday, March 25, 206 Period Danske Bank Consensus Previous 0:30 JPY CPI national y/y Feb 0.3% 0.0% 0:30 JPY CPI national ex. fresh food y/y Feb 0.0% 0.0% 0:30 JPY CPI national ex. fresh food and energy y/y Feb 0.8% 0.7% 0:30 JPY CPI Tokyo y/y Mar 0.% 0.% 0:30 JPY CPI Tokyo ex fresh food y/y Mar 0.2% 0.% 6:00 JPY Leading economic index, final Index Jan 0.4 8:45 FRF Consumer confidence Index Mar :45 FRF GDP, final q/q y/y 4th quarter 0.3%.4% 0.3%.4% 3:30 USD Personal consumption, third release q/q 4th quarter 2.0% 2.0% 3:30 USD PCE core, third release q/q 4th quarter.3% 3:30 USD GDP, third release q/q ann. 4th quarter.0%.0% 3:30 USD GDP price deflator, third release q/q 4th quarter 0.9% 0.9% Source: Danske Bank Markets 3 8 March 206

14 Calendar Key Data and Events in Week 3 During the week Period Danske Bank Consensus Previous Sun DEM Retail sales m/m y/y Feb 0.5% 0.% 0.8% Mon GBP Nationwide house prices m/m y/y Mar 0.3% 4.8% Fri 0 5 SEK PES unemployment % Mar 4.% Fri 0 07 JPY Official reserves assets USD bn Mar 254. Monday, March 28, 206 Period Danske Bank Consensus Previous 4:30 USD Personal income m/m Feb 0.2% 0.5% 4:30 USD Personal spending m/m Feb 0.2% 0.5% 4:30 USD PCE deflator m/m y/y Feb 0.4% %.3% 4:30 USD PCE core m/m y/y Feb 0.2%.8 0.3%.7% 4:30 USD Advance goods trade balance USD bn Feb :00 USD Pending home sales m/m y/y Feb 2.5% 0.9% Tuesday, March 29, 206 Period Danske Bank Consensus Previous :30 JPY Household spending y/y Feb 3.% :30 JPY Unemployment rate % Feb 3.2% :30 JPY Jobtoapplicant ratio Feb.28 :50 JPY Large retailers' sales y/y Feb 0.9% :50 JPY Retail trade m/m y/y Feb 0.4% 0.2% 7:00 JPY Small business confidence Index Mar :30 SEK Retail sales s.a. m/m y/y Feb 0.5% 4.3% 0.7% 4.0% 9:30 SEK Household lending y/y Feb 7.5% 9:30 SEK Trade balance SEK bn Feb :00 ITL Business confidence Index Mar :00 EUR Money supply (M3) y/y Feb 4.8% 5.0% 0:00 EUR Loans to households (adj. for sales and sec.) y/y Feb.4% 0:00 EUR Loans to NFCs (adj. for sales and sec.) y/y Feb 0.6% :5 USD Fed's Williams (nonvoter, neutral) speaks 5:00 USD S&P Case Shiller House prices Index Jan :00 USD Conference Board consumer confidence Index Mar Wednesday, March 30, 206 Period Danske Bank Consensus Previous EUR EU summit in Brussels :50 JPY Industrial production, preliminary m/m y/y Feb 3.7% 3.8% 9:00 DKK Confidence indicator, industry, s.a. Net balance Mar 7 0:00 NOK Unemployment (LFS) % Jan 4.5% 4.5% :00 EUR Business climate indicator Net bal. Mar 0. :00 EUR Industrial confidence Net bal. Mar 4.4 :00 EUR Economic confidence Index Mar 03.8 :00 EUR Service confidence Net bal. Mar 0.6 4:00 DEM HICP inflation, preliminary m/m y/y Mar 0.3% 0.4% 0.2% 4:5 USD ADP employment 000 Mar 24 Source: Danske Bank Markets 4 8 March 206

15 Calendar continued Thursday, March 3, 206 Period Danske Bank Consensus Previous :05 GBP GfK consumer confidence Index Mar 0.0 7:00 JPY Housing starts y/y Feb 0.2% 8:45 FRF Household consumption m/m y/y Feb 0.6% 0.6% 8:45 FRF HICP inflation, preliminary m/m y/y Mar 0.3% 0.% 9:00 DKK CB's securities statistics Feb 9:00 DKK Foriegn portfolio investments Feb 9:00 DKK Gross unemployment s.a. K (%) Feb 6 (4.4) 9:00 ESP HICP inflation, preliminary m/m y/y Mar 0.4%.0% 9:00 ESP Retail sales y/y Feb 3.3% 9:00 DKK GDP, final q/q y/y 4th quarter 0.2% 0.2%... 9:55 DEM Unemployment % Mar 6.2% 0:00 NOK Retail sales, s.a. m/m Feb 0.2% 0.9% 0:00 NOK Norges Bank's daily FX purchases m Apr :30 GBP Broad money M4 m/m y/y Feb 0.0% 0.8% 0:30 GBP GDP, third estimate q/q y/y 4th quarter 0.5%.9% 0:30 GBP Index of services m/m 3m/3m Jan 0.2% 0.7% 0:30 GBP Mortgage approvals 000 Feb 74.6 :00 ITL HICP inflation, preliminary m/m y/y Mar 0.4% 0.2% :00 EUR HICP core inflation, preliminary y/y Mar 0.9% 0.8% :00 EUR HICP inflation, preliminary y/y Mar 0.2% 0.2% 4:30 CAD GDP m/m y/y Jan 0.2% 0.5% 5:45 USD Chicago PMI Index Mar :30 CHF SNB's Andrea Maechler speaks in Zurich Friday, April, 206 Period Danske Bank Consensus Previous EUR Fitch may publish Germany's debt rating EUR S&P may publish Spain's debt rating USD Total vechicle sales m Mar 7.43 :50 JPY Tankan large manufacturers index (outlook) Index st quarter :50 JPY Tankan large nonmanufacturers index (outlook) Index st quarter :00 CNY PMI manufacturing Index Mar :00 CNY PMI nonmanufacturing Index Mar :45 CNY Caixin Manufacturing PMI Index Mar :30 SEK PMI manufacturing Index Mar 5.7 9:00 NOK PMI manufacturing Index Mar :5 CHF Retail sales y/y Feb 0.2% 9:5 ESP PMI manufacturing Index Mar :30 CHF PMI manufacturing Index Mar 5.6 9:45 ITL PMI manufacturing Index Mar :00 NOK Credit indicator (C2) y/y Feb 5.3% 0:30 GBP PMI manufacturing Index Mar 50.8 :00 EUR Unemployment % Feb 0.3% 0.3% 4:30 USD Non farm payrolls 000 Mar 242 4:30 USD Average hourly earnings, nonfarm m/m y/y Mar 0.% 2.2% 4:30 USD Unemployment % Mar 4.9% 4:30 USD Manufacturing payrolls 000 Mar 6 4:30 USD Private payrolls 000 Mar 230 4:30 USD Average weekly hours Hours Mar :00 USD University of Michigan Confidence, final Index Mar 6:00 USD Construction spending m/m Feb.5% 6:00 USD ISM manufacturing Index Mar :00 USD ISM prices paid Index Mar 38.5 Source: Danske Bank Markets 5 8 March 206

16 Disclosures This research report has been prepared by Danske Bank Markets, a division of Danske Bank A/S ( Danske Bank ). The authors of the research report are Allan von Mehren, Chief Analyst and Las Olsen, Senior Analyst. Analyst certification Each research analyst responsible for the content of this research report certifies that the views expressed in the research report accurately reflect the research analyst s personal view about the financial instruments and issuers covered by the research report. Each responsible research analyst further certifies that no part of the compensation of the research analyst was, is or will be, directly or indirectly, related to the specific recommendations expressed in the research report. Regulation Danske Bank is authorised and subject to regulation by the Danish Financial Supervisory Authority and is subject to the rules and regulation of the relevant regulators in all other jurisdictions where it conducts business. Danske Bank is subject to limited regulation by the Financial Conduct Authority and the Prudential Regulation Authority (UK). Details on the extent of the regulation by the Financial Conduct Authority and the Prudential Regulation Authority are available from Danske Bank on request. The research reports of Danske Bank are prepared in accordance with the Danish Society of Financial Analysts rules of ethics and the recommendations of the Danish Securities Dealers Association. Conflicts of interest Danske Bank has established procedures to prevent conflicts of interest and to ensure the provision of highquality research based on research objectivity and independence. These procedures are documented in Danske Bank s research policies. Employees within Danske Bank s Research Departments have been instructed that any request that might impair the objectivity and independence of research shall be referred to Research Management and the Compliance Department. Danske Bank s Research Departments are organised independently from and do not report to other business areas within Danske Bank. Research analysts are remunerated in part based on the overall profitability of Danske Bank, which includes investment banking revenues, but do not receive bonuses or other remuneration linked to specific corporate finance or debt capital transactions. Financial models and/or methodology used in this research report Calculations and presentations in this research report are based on standard econometric tools and methodology as well as publicly available statistics for each individual security, issuer and/or country. Documentation can be obtained from the authors on request. Risk warning Major risks connected with recommendations or opinions in this research report, including a sensitivity analysis of relevant assumptions, are stated throughout the text. Date of first publication See the front page of this research report for the date of first publication. General disclaimer This research has been prepared by Danske Bank Markets (a division of Danske Bank A/S). It is provided for informational purposes only. It does not constitute or form part of, and shall under no circumstances be considered as, an offer to sell or a solicitation of an offer to purchase or sell any relevant financial instruments (i.e. financial instruments mentioned herein or other financial instruments of any issuer mentioned herein and/or options, warrants, rights or other interests with respect to any such financial instruments) ( Relevant Financial Instruments ). The research report has been prepared independently and solely on the basis of publicly available information that Danske Bank considers to be reliable. While reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and Danske Bank, its affiliates and subsidiaries accept no liability whatsoever for any direct or consequential loss, including without limitation any loss of profits, arising from reliance on this research report. The opinions expressed herein are the opinions of the research analysts responsible for the research report and reflect their judgement as of the date hereof. These opinions are subject to change, and Danske Bank does not undertake to notify any recipient of this research report of any such change nor of any other changes related to the information provided in this research report. 6 8 March 206

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