DAX Quiet on Lack of Data

The DAX has started the week with little movement. In the Monday session, the index is trading at 13,442.50, up 0.06% on the day. The only two releases on the calendar are the Eurogroup meetings and the German Buba monthly report. On Tuesday, Germany and the eurozone will release the ZEW Economic Sentiment reports. As well, the eurozone will release Consumer Confidence.

Germany’s economy continues to outperform its eurozone peers, but the country’s current account and budget surpluses have turned into ‘too much of a good thing.’ A strong demand for German products, record low unemployment and the ECB’s expansionary monetary policy have all contributed to the surpluses. What should be done with all these funds? This was a source of disagreement a recent conference in Frankfurt, hosted by the IMF and German Bundesbank. IMF Managing Director Christine Lagarde suggested that Germany should increase public spending. However, Bundesbank President Jens Weidmann acknowledged that the surpluses may be getting too large, but that increasing public expenditures was not the solution.

The US government shutdown has entered its third day, but global stock markets have not reacted  negatively, and European stock markets are steady on Monday. Without funding, many non-essential government services have been forced to shut down. Democrats and Republicans are now playing the ‘blame game’ and pointing fingers at who is responsible for the crisis. The Democrats refused to vote for the spending measure until a deal is hammered out over Daca, a program for children who are illegal immigrants that Trump has threatened to deport. On Sunday, Senate majority leader, Mitch McConnell suggested that he would allow a vote on immigration reform in February if Democrats agree to fund the government. With congressional elections looming, both parties will not want to anger voters, so we could see the crisis resolved this week.

US Shutdown, Earnings and Central Banks in Focus

Economic Calendar

Monday (January 22)

• All Day – Eurogroup Meetings
• 6:00 German Buba Monthly Report

Tuesday (January 23)

• 5:00 German ZEW Economic Sentiment. Estimate 17.8
• 5:00 Eurozone ZEW Economic Sentiment. Estimate 29.7
• All Day – ECOFIN Meetings
• 10:00 Eurozone Consumer Confidence. Estimate 1

*All release times are GMT

*Key events are in bold

DAX, Monday, January 22 at 7:30 EDT

Open: 13,435.50 High: 13,454.50 Low: 13,411.50 Close: 13,442.50

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