Greetings from Copenhagen.

The coming week will be all about the FOMC meeting on Wednesday, with several other central bank decisions, including BoE, SNB, and BoJ, also on the docket for Wednesday and Thursday. While the economic calendar may not be packed with major releases affecting the macro picture, these central bank meetings could set the tone for bond yields and the USD.

Today’s retail sales report hinted at further weakness beneath the surface of the U.S. economy. While the control group (excluding several volatile categories) showed strength, the overall report was weak and appeared stronger than it actually was due to downward revisions to the February data.

With the U.S. market open behind us, the direction is now clearly set lower for U.S. bond yields—it’s no longer a question of if they move lower but rather how quickly (which will largely depend on the Fed).

Our U.S. nowcast has flattened out in March, suggesting that the growth outlook will start to improve relative to expectations in the coming weeks. This sets up a stronger outlook for U.S. equities, just as every analyst is rushing to raise recession probabilities and slash earnings expectations.

Chart 1: Macro Will Look a Lot Brighter in Relative Terms From April Onward