FED: US TSY 9Y-10M TIPS AUCTION: HIGH YLD 1.896%; ALLOTMENT 93.45%

Despite a boost in domestic personal support amid the standoff with the US over Greenland, PM Mette Frederiksen's centre-left Social Democrats look set to require additional support from leftist parties if she is to remain in power post-election. The vote does not have to take place until end-October, but there has been speculation that Frederiksen could call the election early to benefit from a 'rally round the flag' effect. Bloomberg News reports, "There are signs the government has been positioning itself for the possibility of an early vote: It has rushed through relief grants on food prices, further sharpened its stance on immigration, and presented plans to reform Denmark’s school system."

• Opinion polling shows the incumbent gov't formed by the Social Democrats, the conservative-liberal Venstre and centrist Moderates would fall well short of a majority in the Folketing (unicameral parliament). Historically, Denmark has come under the control of the 'red bloc' of left-leaning parties, or the 'blue bloc' of those on the right. However, a fracturing of political support between a number of parties within each bloc makes reaching a majority difficult.
• Indeed, only one opinion poll in 2026 to date has shown either bloc winning a majority (and that was by a single seat). Instead, Foreign Minister Lars Lokke Rasmussen's Moderates, which do not sit in either bloc, look set to emerge as kingmakers.
• There is also the prospect that, as in 2022, the old left vs. right blocs break down and a multiparty centrist administration is formed. Frederiksen has shifted the Social Democrats to the right, particularly on immigration in recent years, which could prove an obstacle to parties such as the Socialist People's Party or Social Liberals. 

Chart 1. Opinion Polling by Political Bloc, Seat Projections

Source: Voxmeter, Megafon, Epinion, MNI

The Chicago Fed's Advance Retail Trade Summary (CARTS) showed a downward revision in its final estimate for January ex-autos retail sales, to -0.1% from +0.1% in the preliminary report. There's still no schedule for the release of Census Bureau January retail sales data but the CARTS update will only add to suggestions that core growth has slowed sharply in the last few months after December's official report badly missed expectations.

• CARTS's estimate for December ex-auto sales proved too high, with the actual print of 0.0% well below the 0.6% CARTS. The miss appears to have also spilled into the downward revision for January.
• Combined with the December "miss", the 3M/3M annualized ex-auto retail sales growth for January as implied by the CARTS series has been revised down to 2.4% from 4.5%. That would be the slowest implied quarterly nominal growth rate since April 2024 and well down from the recent peak of 5.8% as of end-Q3.
• Inflation adjusted, that quarterly rate is barely positive (CARTS estimates -0.1% M/M in January, and the core CPI figure was close to 3% on a 3M/3M annualized basis in the month).
• The CARTS prelim for February is out on March 9.

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