Market Movers ahead
In the US, ISM manufacturing should decline a bit and close some of the gap to production figures. The Fed's preferred inflation measure should come out well below FOMC's longer-run goal. Housing market data should in general reflect recovery.
In Europe, manufacturing PMIs for Italy and Spain should continue to suggest higher growth in the periphery. Inflation figures for Italy and Spain are set to be broadly flat even though December euro inflation should fall to a new cycle low.
Euro area monetary development is expected to improve in 2014, when the ECB has taken its snapshot of bank balances for the Asset Quality Review.
In Japan, we expect core inflation to accelerate and hit the highest level since 1998. The activity data in Japan is expected to remain strong and point towards a rebound in growth in Q4 13.
Danmark's Nationalbank is due to publish foreign exchange reserve figures.
Global macro and market themes
The Fed finally had the data on hand to start the tapering process. However, the aim is not for tighter financial conditions but simply a different mix, in which it takes the foot a bit off the gas on QE while stepping it up on forward guidance.
We believe the key drivers for financial markets in the first half of 2014 will be a stronger global recovery, low inflation (but deflation is not on the cards), low rates for very long and diverging monetary policy.
The implication for financial markets will be spread compression, a moderate rise in bond yields and a stronger USD. We take a cautious stance on stock markets in the short term.
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