It would be easier for the #ECB to wait at least until the June meeting for better visibility on the how the situation in the #MiddleEast evolves, how the economy reacts to the higher prices, notes #NordeaMarkets

In 2011 another spike in oil prices also lifted market-implied #inflation expectations, but they remained clearly lower compared to the 2008 episode. The economy was in better shape compared to 2008, but core inflation was clearly below 2%, chart #NordeaMarkets

History (meaning #Berlin ‘s obsession with #austerity) suggests readiness for the #ECB to react to higher energy prices despite limited signs of broader #inflation pressures, chart #NordeaMarkets

#Norway
#Norges Bank signals a rate hike to 4.25% at one of the forthcoming monetary policy meetings and the new path indicates an increase in the policy rate to b/w 4¼ and 4½% by the end of this year, chart #NordeaMarkets

#ECB pricing
Markets assign more than 50% risk of a rate hike at the 30 April meeting, while a June rate hike is fully discounted with some risk of a 50bp hike priced -- 2x full 25bp rate hikes are priced by July and almost 3x full rate hikes are priced for the year, chart #NordeaMarkets

#euro area
#inflation expectations are mainly contained, chart #NordeaMarkets

A 25bp rate hike is fully in prices by the June meeting, while a total of some 60bp of tightening is being priced by the end of the year, chart #NordeaMarkets

#oil price shocks and UST #yields and US #inflation - chart #NordeaMarkets

#Iran #war and #energy prices
In the #euro area, #inflation expectations are contained (for now), chart #NordeaMarkets

(Oh boy!) #VeronikaGrimm talks about a renewed inflationary dynamic. The new member @svrwirtschaft.bsky.social #Felbermayr is already calling on the #ECB to react quickly with interest rate hikes if the worst comes to the worst - chart #NordeaMarkets

(my two cents)
#ECB tends to label any price increase as “inflation” and tackle it without regard for the real economy. In 2022 and 2023, almost all mainstream economists made exactly the same mistake as in the 1970s, chart #NordeaMarkets

(my two cents)
Falling #ASWs across #Europe could mean 1) more bond supply or 2) less #collateral scarcity, or 3) lower bank funding stress or 4) not (yet) sovereign credit panic, chart #NordeaMarkets

30y Govt bond yields, UST, #Japan and #Germany -
chart #NordeaMarkets

Reducing the #Fed balance sheet would probably run into higher and more volatile spread b/w #SOFR and #Fed funds rate, at least if no other major changes were done to bank regulation. Higher long end rates would also seem likely, chart #NordeaMarkets

#FX US #dollar
Usually in risk-off episodes, investors rush into dollars, strengthening the currency. But this time, the opposite happened, the dollar weakened, which suggest investors are not as confident about the US as usual, chart #NordeaMarkets

#FX
The spread b/w US 10y UST yield and those of other DM suggests the USD is broadly in line with interest rate differentials, meaning there is little risk premium embedded in the currency today, chart #NordeaMarkets

#FX
The spread b/w 10y UST yield and those of other DM’s suggests tUSD is broadly in line with interest rate differentials, meaning there is little risk premium embedded in the currency today, chart #NordeaMarkets

#investors expect the #Fed to #cut its rate b/w 3x and 4x, chart #NordeaMarkets

#gold #silver #copper
The #commodity market has heated up again. The underlying driver is straightforward: the world is running into capacity constraints related to #AI buildouts, chart #NordeaMarkets

By cutting when the economy is already under strain, #Finland ‘s Govt has mechanically subtracted #demand and deepened the downturn, chart #NordeaMarkets

#fiscal #austerity triggers contraction in public consumptions and investment - pushing GDP below zero:
#Finland GDP in 3Q2025: -0.3%Q and -0.6%Y, chart #NordeaMarkets

US service price #inflation, chart #NordeaMarkets

If o/n rates remain > IORB rate for a sustained period, #Fed will have to start buying assets again, restarting QE, just like it had to do back in 2019, when #repo rates spiked. #Fed will obviously not call it #QE, but it will by definition amount to #moneyprinting – says #NordeaMarkets

UST Sec. #Bessent had been openly dismissive of his predecessor #JanetYellen's strategy of boosting bills with maturities up to one year in US #debt issuance—a critique that now rings hollow as he pursues the identical policy, chart #NordeaMarkets

#euro area #inflation expectations measured by 5y5y inflation swap rate, chart #NordeaMarkets

The #productivity benefits of #AI are uneven and unknown. In the near term, #automation may even create some adverse effects, such as reducing demand for low-skilled service #jobs, chart #NordeaMarkets

Just say #austerity dude! The damn #austerity, instead of beating around the bush! The #cuts in social benefits, VAT increase etc … for fudge’s sake! - chart #NordeaMarkets

#Finland's private consumption has been on a downward trend for a couple of years now -- in #Finland, disposable income is close to the level of 2019, while real income in the #euro area has risen by about 6% since 2019, notes #NordeaMarkets

On the #inflation side, #tariffs have been lifted to their highest level in a century, flipping goods from a source of #disinflation into a source of renewed price pressures. The greater risk is that tariffs pressure households and businesses to expect higher inflation, notes #NordeaMarkets

#French public #deficit is the highest in the #euro area, notes #NordeaMarkets