EUROPEAN SESSION

In the European session, we don’t have much on the agenda other than a couple of low tier releases like the Italian final CPI and the German ZEW index. The data won’t change anything for the ECB, so the market reaction will likely be muted. Moreover, we can expect sentiment indices like the ZEW or PMIs to improve in the next months on easing rate hike expectations and lower energy prices.

AMERICAN SESSION

In the American session, the only highlight is the US housing starts and building permits report. This is not market-moving data and won’t change anything for the Fed.

The markets are now focused on the positive effects stemming from the US-Iran deal and the official end of the war. Expectations of lower oil prices are easing inflation concerns and leading to a dovish repricing in interest rates. The short-term effect is certainly positive for growth and risk assets like stocks are the main beneficiaries.

Looking ahead, the question will be whether this negative supply shock turns into a positive demand one where economic activity strengthens significantly and keeps inflationary pressure high eventually forcing the Fed to intervene with rate hikes. This is likely going to be the next tail risk for markets.

CENTRAL BANK SPEAKERS

• 10:55 GMT/06:55 ET – ECB’s Escriva (neutral – voter)
• 13:10 GMT/09:10 ET – ECB’s Lane (neutral – voter)
• 19:05 GMT/15:05 ET – ECB’s Sleijpen (neutral – voter)