Market Movers
In the US, focus will be on the CPI inflation figures for April. CPI core inflation for March came out lower than expected at 0.1% m/m. This suggests that the pickup in core inflation is not yet 'durable', although low March inflation might just be a bump in the road. This makes the April CPI inflation print important, as continued low core inflation will likely prolong the more dovish stance by the Fed and lower the number of hikes, as the Fed wants to see core inflation move even higher before taking further action. We view the negative effects on core inflation as temporary and estimate the core CPI index rose 0.2% m/m in April, implying a core inflation rate of 2.1% y/y.
US industrial production figures for April are also due today. The rebound in the ISM manufacturing index, indicating a rebound in the manufacturing cycle, has not yet been visible in the 'hard' production data, as manufacturing production has declined for two months in a row. Although manufacturing production figures are quite volatile on a monthly basis, we expect it rose 0.2% m/m in April as ISM was above 50, suggesting higher manufacturing activity.
ECB's Chief Economist Peter Praet speaks about economic reforms in Brussels. At the latest ECB meeting, Draghi put a renewed emphasis on the need for structural reforms and Praet is expected to be more specific in terms of how long-term, sustainable growth should be achieved.
In Sweden, Riksbank deputy governors Ohlsson and Floden are set to speak today.
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