Economic Outlook for the week 23 Mar to Mar 27: Commerzbank

Economic data: We look for the German Ifo business climate to have moved higher in March. More importantly the manufacturing PMI is likely to break out of its recent sideways trend.

Bond market: The spectacular rally on euro area bond markets is losing steam. In the medium-term, peripheral yields will drop further although a period of stronger price volatility appears to be on the cards.

FX market: For the first time, the Fed has hinted that the recent appreciation of the USD is too rapid for comfort. However, the FX market ignored this warning, suggesting that it will take more than words to rattle the market, and EUR-USD is likely to retreat further.

Equity market: The outperformance of the DAX versus the S&P500 should lose momentum in the coming months as the P/E valuation gap has narrowed sharply.

Commodity market: Rising US crude oil stocks should continue to weigh on oil prices whilst gold could regain a bit of its shine as the downside pressure from a strong US dollar is easing and demand from China and India appears to be picking up.