Weekly Focus: Deal or no deal

Market Movers ahead

• Markets await more details from the EU on a package for Greece but are likely to be disappointed as we doubt many details will come out.

• In terms of Euroland data, flash PMI and German ZEW should give more input to the strength of the recovery after mixed data in Germany have made the outlook more murky.

• Mainly tier 2 data due out of the US in the coming week. The main events will be FOMC minutes, housing data and inflation figures.

• Fairly quiet in Asia with the main focus on Japanese GDP data for Q4. In Scandi focus turns to unemployment figures in Denmark and Sweden and Q4 GDP in Norway.

Global Update

• The EU made it clear this week that Greece will get help if needed. Although no detailed plan was released, the EU finally talked with one voice, backing Greece and this managed to calm down markets.

• US data point to a decent improvement in payrolls just around the corner although adverse weather conditions add uncertainty in the near term. The retail sales report for December was encouraging with signs of solid spending early in the year.

• Data out of Asia continue to be strong. Most Asian central banks are likely to tighten in Q2.

Focus

We look at the Fed‟s exit strategy and the road to the first rate hike. Fundamentals would call for an unchanged fed funds rate through 2011 but we believe that a hike will come earlier than that – our forecast is for late 2010.

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