Market movers ahead
The risk of deflation will again be in focus in the coming week, as inflation figures are scheduled for release in the US, Sweden and Denmark.
US inflation in December 2014 looks set to hit a five-year low at 0.8% y/y.
Headline inflation in Sweden is already negative and we look for price growth in December of -0.6% y/y, which is below the Riksbank’s forecast and supportive of further monetary policy easing in the coming months.
Denmark also skirted with deflation in December – we expect inflation of 0.2 % y/y
European eyes will be looking slightly further ahead to the week after next, when an ECB meeting and a general election in Greece are on the schedule.
Global macro and market themes
We focus on European deflation and conclude it is not ‘dangerous’. We expect growth in Europe to pick up despite deflation.
US growth is slowing, but the economy remains strong and we expect higher yields despite the prospect of even lower inflation.
Financial markets have started 2015 on a nervous footing, but we nevertheless remain optimistic.
