Fra Danske Bank:
Emilie Dorph Herbo, [email protected] , Assistant Analyst
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In the US, the most important data release of the week will be the April CPI this afternoon. We forecast headline inflation at 0.6% m/m SA (3.7% y/y) and core inflation at 0.3% m/m SA (2.6% y/y), with the latter below consensus. Markets are naturally looking for signs of underlying inflation accelerating due to the war in Iran.
In the euro area, the German ZEW index is due today, providing financial analysts’ view of the current economic situation and expectations for May.
Economic calendar
In the Middle East conflict , President Trump warned the ceasefire with Iran is “on life support” after Tehran’s counterproposal. Brent crude is trading around USD105/bbl this morning, extending gains from yesterday’s session. Trump is reportedly meeting his national security team to consider next steps, including a possible resumption of military action and a renewed naval mission in the Strait of Hormuz. The conflict is also likely to be on the agenda when he meets President Xi Jinping this week.
In Japan, the Bank of Japan’s April summary showed a clear hawkish tilt, with some policymakers arguing for raising rates soon and one flagging a possible move at the 15-16 June meeting. Three of nine members backed a hike in April, and the Iran-related oil shock, upgraded inflation outlook and second-round effects were central to the debate, pushing 10-year Japanese government bond yields to a 29-year high this morning. We continue to expect a June rate hike, although developments in the Middle East will be important.
Japan and the US reaffirmed close coordination on exchange rates and FX intervention, Finance Minister Katayama said on Tuesday after a meeting in Tokyo with US counterpart Scott Bessent. Katayama said Japan is acting in line with last September’s joint statement allowing FX intervention against excessive volatility, reinforcing expectations that recent large yen-buying operations have tacit US backing.
In Norway, core inflation rose to 3.2% y/y in April, as expected and in line with Norges Bank’s March MPR. Headline inflation eased to 3.4% y/y (prior: 3.6%). The details show a stronger-than-expected rebound in food prices, while lower service inflation excluding rent surprised to the downside, driven mainly by transport services and hotels/restaurants. There are still no signs of second-round effects from higher energy prices, and higher imported inflation is entirely driven by food, while inflation on other imported goods edged lower.
In Denmark, headline inflation increased as expected to 1.4% y/y in April from 1.2% y/y in March. Electricity prices hit a 25-year low, offsetting higher fuel prices. Food prices rose 0.8% m/m after several months of decline, and signals on the food price outlook remain mixed. A key uncertainty is whether a new government will implement the proposed fee cuts on chocolate and coffee, which could lower food prices by 2%. Core inflation edged down to 1.6%, and seasonally adjusted m/m momentum remains weak.
Equities: Global equities ended 0.2% higher following a solid rally during the US hours. S&P500 rose 0.2% with Nasdaq up 0.1% and Russell2000 0.3% higher. The performance was centred around specific names and sectors, with only 43% of the names in the S&P500 ending higher. Energy was the top performer driven by higher oil prices, amid hostile Trump comments, yet it was the tech and specifically the semi-conductor names that secured the overall performance of the index. US futures are modestly lower and Asian equities are mixed.
FI and FX: Yields rose across tenors and regions during yesterday’s session as negotiations between Iran and US took a setback. President Trump warned the ceasefire with Iran is “on life support” after Tehran’s counterproposal. Brent crude is trading around USD105/bbl this morning, extending gains from yesterday’s session. EUR/USD continues to trade just below 1.18 despite the renewed uptick in oil prices. The rebound in oil prices coupled with softer details in the Norwegian inflation print caused the NOK to perform among G10 peers. Today’s US April CPI release is a key data point, and we forecast headline inflation close to consensus at 3.7% y/y but expect to see core inflation below consensus at 2.6% y/y, which could lift EUR/USD above 1.18 even amid the geopolitical concerns. If the print undershoots expectations it could act as a trigger for intervention in the USD/JPY cross which has gradually drifted above 157.5 and in such a scenario we expect the cross to drop to 156.0.
See also our in-depth FI and FX morning comment *
Reading the Markets USD – Cheap USD funding, 12 May
Geopolitical Radar: The Devil is In the Details, 8 May
Weekly Focus – Higher hopes of Hormuz harmony , 8 May
Riksbank review – unchanged at 1.75% with a ‘wait-and-see’ approach , 7 May
NB review – A hike to 4.25% – but more neutral on policy outlook , 7 May
China Headlines – Beginning of the end of the domestic slump, Xi-Trump meeting coming up , 5 May
Report completed: 12 May 2026, 07:00 CEST
Report first disseminated: 12 May 2026, 07:35 CEST
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