The TD Securities Team previews the key events in the week ahead for Eurozone, noting that BOE’s QIR and Greece will likely be the spotlight.
Key Quotes
“The Bank of England releases its Inflation Report on Thursday and our base case is for a slightly hawkish outcome.”
“Although near-term CPI will be revised substantially lower, the BoE has already spent a lot of time talking through this. And with growth forecasts likely to be pushed a little higher, due to the “unambiguously positive” boost from lower energy prices and the stimulus from lower rates, the risks seem to be tilted toward 2y ahead inflation forecasts being nudged a little higher, implicitly signalling that markets have pushed back BoE rate hikes a little too far.”
“Also in the UK this week, we will receive industrial production where we look for a small gain against consensus expectations of a 0.1% M/M fall.”
“Turning to the Eurozone, Greece will remain in the spotlight with the Eurogroup meeting on Wednesday evening and the EU leaders summit taking place on Thursday. All of the attention on Greece will focus on whether we see progress towards some interim agreement here which buys the several months the new Greek government wants in order to devise a comprehensive solution.”
“We also have Eurozone GDP data on Friday where we look for a 0.2% Q/Q print in line with consensus but see slight upside risks.”
“We also have the Riksbank decision on Thursday, where we expect a rate cut of up to 25bp. Consensus is split and we’re on the dovish end of the spectrum, as recently when the Riksbank has wanted to ease, it’s gone all the way and has delivered larger cuts than markets were looking for, so with inflation expectations continuing to creep lower, a more aggressively dovish surprise would be quite welcome.”
Key Quotes
“The Bank of England releases its Inflation Report on Thursday and our base case is for a slightly hawkish outcome.”
“Although near-term CPI will be revised substantially lower, the BoE has already spent a lot of time talking through this. And with growth forecasts likely to be pushed a little higher, due to the “unambiguously positive” boost from lower energy prices and the stimulus from lower rates, the risks seem to be tilted toward 2y ahead inflation forecasts being nudged a little higher, implicitly signalling that markets have pushed back BoE rate hikes a little too far.”
“Also in the UK this week, we will receive industrial production where we look for a small gain against consensus expectations of a 0.1% M/M fall.”
“Turning to the Eurozone, Greece will remain in the spotlight with the Eurogroup meeting on Wednesday evening and the EU leaders summit taking place on Thursday. All of the attention on Greece will focus on whether we see progress towards some interim agreement here which buys the several months the new Greek government wants in order to devise a comprehensive solution.”
“We also have Eurozone GDP data on Friday where we look for a 0.2% Q/Q print in line with consensus but see slight upside risks.”
“We also have the Riksbank decision on Thursday, where we expect a rate cut of up to 25bp. Consensus is split and we’re on the dovish end of the spectrum, as recently when the Riksbank has wanted to ease, it’s gone all the way and has delivered larger cuts than markets were looking for, so with inflation expectations continuing to creep lower, a more aggressively dovish surprise would be quite welcome.”
