Investment Research General Market Conditions Weekly …Also the RICS housing market survey for July...
Transcript of Investment Research General Market Conditions Weekly …Also the RICS housing market survey for July...
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Investment Research — General Market Conditions
Market movers ahead
The NIESR GDP estimate for July is due on Tuesday. It is usually a good predictor of
actual GDP growth and is likely to indicate a pronounced decline in UK economic
activity. The RICS housing survey for July is also scheduled for the coming week and
should provide interesting reading, as it indicated a sharp fall in house prices in June.
US retail sales figures for July are due on Friday. We estimate growth of 0.3% in the
component that feeds into GDP. If correct, private consumption will have got off to a
good start in Q3 after a very strong Q2.
Also due next week is Sentix investor confidence. This could further enlighten us on
how hard Brexit has hit the eurozone.
Denmark, Sweden and Norway are due to publish their respective inflation figures for
July. We estimate Norwegian core inflation at 3.1%, which is 0.2-0.3pp above Norges
Bank’s June projection and could fuel uncertainty about September’s rate decision.
Global macro and market themes
Focus recently has been turning to fiscal stimulus to supplement central bank actions.
Japan took action in late July, while the EU is relaxing its fiscal rule framework in
favour of looser fiscal policies.
In the UK and US, policymakers are also indicating their intention to use fiscal
policies to lift growth prospects.
Focus
Bank of England Review: Easing package, more to follow in November, 4 August.
We estimate strong retail sales
continued in July
Follow Sentix to get more info on the
impact of the Brexit vote
Source: Census Source: Ifo, Markit PMI, Sentix, ZEW
5 August 2016
Editor
Analyst Bjørn Tangaa Sillemann +45 45 12 82 29 [email protected]
Weekly Focus Sweden
Awaiting the fallout from Brexit
Contents
Market movers ..................................................... 2
Global Macro and Market Themes ......... 6
Scandi update ....................................................... 7
Latest research from Danske Bank
Markets .................................................................. 12
Macroeconomic forecast .......................... 13
Financial forecast ............................................ 14
Calendar................................................................. 15
Financial views
Source: Danske Bank
Follow us on Twitter for the latest on
macroeconomic and financial market developments:
@Danske_Research
Major indices
05-Aug 3M 12M
10yr EUR swap 0.28 0.42 0.55
EUR/USD 111 107 114
ICE Brent oil 43 49 54
05-Aug 6M 12-24M
S&P500 2164 -3 -+3% 0-5%
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Market movers
Global
In the US, we have a few important data releases next week. In particular, we get
some interesting releases on the consumer side of the economy, which will attract
attention as private consumption continues to be the main growth engine in the US.
Although we think the US economy also risks disappointing in H2 16 due to
contagion effects from Brexit uncertainties, we think US consumers will be relatively
unaffected. It is mainly through continued weak non-residential investments that the
US economy could take a hit from Brexit. However, any contagion effects are yet to
be seen. The most important data release is the retail sales report for July due on
Friday. We estimate the retail sales control group (the component that feeds into
GDP) grew 0.3% m/m in July. If we are right, private consumption growth was off to
a great start in Q3 after a very strong Q2. Preliminary consumer sentiment index from
University of Michigan for August is also due on Friday. We expect it to stay around
its current level at 90, which is a relatively high level suggesting that US consumers
are still optimistic.
The Fed’s Labour Market Condition Index has attracted some attention recently as it
has declined every month this year so far. On Monday we find out whether the
declining trend continued in July. However, notice that Yellen has said that it is only
an experimental index so one should probably not put too much weight on it. Weekly
jobless claims data are due on Thursday.
So far no Fed speeches are scheduled next week so we have to wait a little longer
before we get to know why the Fed included a sentence that ‘near-term risks have
diminished’ in the statement from the last FOMC meeting.
The euro area next week is very thin in terms of data releases. Most interesting is the
release of Sentix Investor Confidence which will be examined to gain additional
information about the impact on the euro area from the UK’s decision to leave EU.
The figure dropped in July, but the weakness in investor sentiment (also seen in ZEW
expectations) has only had limited impact on economic sentiment (both PMI and Ifo
expectations have been fairly resilient). In our view it is early days and a long period
of negotiations may drag out the uncertainty thus resulting in lower investments. Note
that a survey from the European Commission showed unchanged support for the euro
before the Brexit-vote, see Unchanged support for the euro before Brexit but
optimism about EU’s future is lower, 1 August 2016.
The second release of euro area GDP growth in Q2 is due for release together with the
first release of the German figure. The first estimate for the euro area showed
economic growth at 0.3% q/q and 1.6% y/y, which is still higher than the potential
growth rate of the euro area. Domestic demand has been the main driver of GDP
growth in recent years, but the higher oil price during Q2 is likely to have been a
headwind to private consumption, see Flash Comment – Euro area: higher inflation,
activity data are pre-Brexit, 29 July 2016.
Euro area and German industrial production in June are also set to be released. In line
with the GDP figures mentioned above, the industrial production covers the period
before the Brexit-vote, implying they will attract less attention.
During the Summer, the European Commission recommended cancelling the fines for
Spain and Portugal despite their lack of effective action to correct excessive deficits,
see From strict EU fiscal rules to growth-supportive policies despite high public debt
ratios, 3 August 2016.
We expect strong retail sales
continued in July
Source: Census
Sentix will be followed to get more info
about the impact of the Brexit-vote
Source: Ifo, Markit PMI, Sentix, ZEW
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In the UK, focus continues to be on the economic impact of UK’s EU vote. So far,
most post-Brexit survey data have been very weak, indicating that the UK economy is
heading for a recession in the second half of the year. This also explains why the
Bank of England announced a substantial easing package yesterday, see also Bank of
England Review However, it is still early on as the EU vote took place only one and a
half month ago and no ‘hard’ data have been released yet. The most important release
is the NIESR GDP estimate for July on Tuesday, which usually is a good indicator for
actual GDP growth. It is likely that it will show that economic activity has declined
significantly after Brexit in line with the PMI’s for July. Also the RICS housing
market survey for July due on Thursday will attract attention as the June survey
indicated a sharp decline in both housing market activity and prices in June. Usually
the RICS survey is a quite good indicator, see also chart to the right. Less important
are data for British Retail Consortium (BRC) sales in July, which are due on Monday.
Normally this is not an important indicator but since the official ‘hard’ economic data
are lagging, markets and analysts are analysing whatever information they can get.
Production and construction data for June (due on Tuesday and Friday, respectively)
will give us information about whether to expect revisions to the first estimate of Q2
GDP growth, which came out pretty strong at 0.6% q/q.
The coming week will be busy in terms of Chinese releases. The trade balance
(Monday) will give some input on the strength of exports. The external sector has
seen a big tailwind from a 10% depreciation of the trade weighted CNY over the past
year and moderate pick-up in the US. However, note that the data are quite volatile
and not a good gauge of underlying activity. CPI and PPI (Tuesday) are expected to
show unchanged CPI inflation at 1.9% y/y and clearly below the 3% target. PPI
inflation has increased over the past months pushed up by higher commodity prices.
We look for a further rise in PPI inflation to -1.8% in July from -2.6% y/y in June.
The week is rounded off on Friday with data for industrial production and retail sales.
Industrial production growth is expected to continue broadly sideways just above 6%
y/y while retail sales should increase around 10.5% y/y.
Most recent RICS survey indicated a
sharp decline in the housing market
Source: Land Registry, Nationwide, Halifax, RICS
China: industrial production growth
hovering around 6%
Source: Macrobond Financial
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Scandi
In Denmark the statistical office will release the consumer price index for July on
Wednesday. After dipping right down to zero in the spring, inflation climbed to 0.3%
y/y in June, and we still expect it to rise in the coming months, although much
depends on oil prices. We predict a rate of 0.2% y/y in July, slightly down from June
due to a drop in fuel prices outweighing the upward pressure from base effects.
Tuesday brings figures for the current account and exports in June. Exports struggled
last year but got off to an excellent start in Q1, so it will be interesting to learn
whether this trend continued in June. Monday has figures for industrial production in
June. Industrial production has looked solid so far this year, and it will be exciting to
see if this continues.
In Sweden, July inflation is released next week and we expect to see both CPIF and
CPIF excluding Energy 0.2pp below the Riksbank’s forecasts. From there on we see a
quite different path than the Riksbank with a gradual widening of our forecasts. In our
view the inflation trend has turned down after peaking in H1. Our long-standing view
is that 1) domestic price pressure is contained by low wage costs – only rising due to
repeated tax hikes (alcohol, tobacco and energy taxes, congestion charges and reduced
ROT renovation subsidy) over the past years and 2) import prices are falling again as
the SEK no longer depreciates on a trend basis. There is also a downside risk related
to oil: it appears as if the pattern seen in the past two years is repeated, i.e. implying
lower prices in the fall.
In Norway the statistical office will be releasing consumer prices for July. The June
figures surprised to the upside, due mainly to higher food prices. We reckon that part
of this increase is permanent and will not reverse in the July figures. On the other
hand, we have the impression that fashion retailers began their summer sales earlier
than usual, which may pull the annual rate down slightly. The big question, though, is
how the change in tourist flows (more foreign and Norwegian tourists holidaying in
Norway) will impact prices for goods and services in July. We forecast core inflation
of 0.1% m/m and 3.1% y/y in July. This would mean that inflation over the past
couple of months has been 0.2-0.3pp higher than Norges Bank assumed in the June
monetary policy report. Along with better data in general and a tight housing market,
this may further fuel uncertainty about the interest rate decision in September.
Inflation still record-low
Source: Statistics Denmark
Diverging inflation views
Source: Riksbank, Danske Bank
Inflation is still high
Source: Statistics Norway
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Market movers ahead
Source: Bloomberg, Danske Bank Markets
Global movers Event Period Danske Consensus Previous
Mon 08-Aug 10:30 EUR Sentix Investor Confidence Index Aug 2.5 3.6 1.7
Tue 09-Aug 3:30 CNY PPI y/y Jul -1.8% -2.0% -2.6%
3:30 CNY CPI y/y Jul 1.9% 1.8% 1.9%
12:00 USD NFIB small business optimism Index Jul 94.5 94.5
14:30 USD Unit labour cost, preliminary q/q 2nd quarter 1.8% 4.5%
Wed 10-Aug 23:00 NZD Reserve Bank of New Zealand (cash rate decision) % 2.0% 2.0% 2.3%
Fri 12-Aug 4:00 CNY Industrial production y/y Jul 6.2% 6.2%
4:00 CNY Retail sales y/y Jul 10.5% 10.6%
14:30 USD Retail sales control group m/m Jul 0.3% 0.4% 0.5%
16:00 USD University of Michigan Confidence, preliminary Index Aug 91 91.3 90.0
Scandi movers
Wed 10-Aug 8:00 SEK Prospera inflation expectations
9:00 DKK CPI m/m|y/y Jul -0.2%|0.2% 0.1%|0.3%
9:30 SEK Industrial production s.a. m/m|y/y Jun -0.8%|1.7%
9:30 SEK Service production m/m|y/y Jun -0.1%|5.4%
10:00 NOK Core inflation(CPI-ATE) m/m|y/y Jul 0.1%|3.1% 0.3%|3.0%
Thurs 11-Aug 8:00 SEK PES unemployment % Jul 3.8%
9:30 SEK Underlying inflation CPIF m/m|y/y Jul -0.2%|1.1% -0.1%|1.2% 0.1%|1.5%
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Global Macro and Market Themes
Central bank fatigue gives way to fiscal stimulus
The focus is turning to fiscal stimulus
In the quiet lull of the summer haze we have seen a dramatic turn of events on the
global economic scene: first the Brexit shock and now in recent weeks the rebirth of
fiscal stimulus as a way to fight the global low growth, low inflation nexus. While the
Brexit shock has been covered at length, the re-opening of the fiscal toolbox poses
interesting questions for the markets, especially in view of the already high public debt
levels seen in many advanced economies.
The newfound interest in using fiscal means should not come as a surprise.
Following a period of aggressive monetary easing, there has lately been a growing chorus
stressing that central banks alone cannot lift the global economy out of a weak growth
scenario arising from concerns that the monetary transmission mechanism has become
ineffective in translating monetary expansions into higher real GDP growth (for
discussion see for example our note EM rally, helicopter money and central bank fatigue,
21 April 2016).
Leading international organisations such as the IMF and OECD have over the
course of the spring become increasingly vocal in calling for pro-growth fiscal
expansions and structural reforms as supplements to central bank easing. In its most
recent note ahead of the G20 finance ministers and central bank governors meeting in
China 23-24 July, the IMF stressed that ‘where monetary policy space is narrowing and
there is fiscal space, fiscal policy can help support demand and close output gaps—
including through measures that will strengthen growth also in the medium and long term
(e.g., Canada, Korea) or, where necessary, facilitate balance sheet repair’. The OECD has
been advocating targeted public investment programmes in response to sluggish growth
prospects in most of its member countries. It estimates that high quality public investment
can lift growth significantly, which will more than compensate the possible higher
borrowing requirement.
So are policymakers starting to take on this advice?
Chart 1: OECD estimates of first year effects of a ½ per cent of GDP
public investment stimulus by all OECD economies
Source: OECD Interim Economic Outlook, February 2016
Today’s key points
The focus has lately been turning
to fiscal stimulus to supplement
central bank actions
Japan took action in late July while
the EU is relaxing its fiscal rule
framework in favour of looser
fiscal policies
In the UK and US policymakers are
also indicating their intention to
use fiscal policies to lift growth
prospects
Equity markets will be positively
affected by fiscal easing
In the current environment of
highly accommodative monetary
policies, the initial impact on
interest rates should also be fairly
limited
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Policymakers in major countries now committing to fiscal
expansions
Over the past couple of weeks we have seen direct fiscal actions (Japan) or
intentions to loosen fiscal policies (US). In the euro area, the loosening has so far
been more indirect in allowing a laxer interpretation of the fiscal rule framework.
More concretely:
Japan: The Prime Minister approved a government stimulus package totalling
JPY28trn over several years, which includes new spending of JPY7.5trn (1.4% of
GDP). The fiscal package complements another round of monetary expansion
approved by the BoJ on 29 July, which was seen, however, as a disappointment by
markets which had hoped the central bank would boost the pace of JGB purchases or
lower the policy rate (please see BoJ Review: BoJ disappoints but keeps door open for
more easing, 29 July 2016).
Euro area: Our eurozone expert Pernille Bomholdt Henneberg this week sent out a
piece providing an overview of the recent changes in the fiscal setup in Europe
(please see From strict EU fiscal rules to growth-supportive policies despite high
public debt ratios, 3 August 2016). The most prominent change of course was the
European Commission recommending cancelling the fines for Spain and Portugal
despite their lack of effective action to correct excessive deficits. This sends an
important signal of more lenience towards divergence from EU fiscal rules. In
addition, the deadline for several member countries for correction of excessive
deficits has been extended, including France and the Netherlands. Overall, the fiscal
stance in the euro area is set to be growth supportive again in 2016-17 following a
period when the euro area was faced with a significant fiscal headwind (see Chart 2).
UK: In welcoming the new easing package by the Bank of England, the new
Chancellor of the Exchequer, Phillip Hammond, said that he is prepared to take any
step to support the economy. So we think it is likely that the easing measures from the
BoE will be supported a by more expansionary fiscal policy when Hammond presents
the next budget later this year (see our Bank of England review Easing package, more
to follow in November, 4 August 2016).
US: In their convention speeches, both president candidates Trump and Clinton
highlighted the need for big public investment plans to reinvigorate US growth
potential. Hence we think that a fiscal expansion in the US in 2017 on the back of the
presidential election is likely, especially if US growth continues to be relatively
sluggish.
Hence, more aggressive use of fiscal expansions may well become increasingly important
over the course of the next 12 months if global growth continues disappoint. The
question for investors is what the possible impact such actions will have on bond,
equity and FX markets.
Chart 2: Small fiscal tailwind in both
2016 and 2017 in the Euro area
Source: European Commission (forecast), Danske
Bank Markets
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What could the market implications of looser fiscal policy be?
There is a large literature on the impact of fiscal spending on economic growth and
financial markets. It is outside the scope of this note to discuss these factors in detail,
but below we will outline the key factors and possible effects on financial markets in
today’s economic situation with high public debt ratios and very low interest rates on
public debt. A lot depends on how credible, sustainable the fiscal package is perceived by
the markets. In addition, the interplay with monetary policies is also important as
concurrent monetary easing can help keep a lid on government borrowing costs.
Key arguments against fiscal easing are the already high public debt levels and
substantial declines in unemployment rates in most advanced countries. Since the
financial crisis public debt has increased from around 70% of GDP to over 100% of GDP
(see chart 3). So in theory the fiscal space to embark on further fiscal easing is limited.
However, low interest rates mean that the cost of servicing the debt is in most cases at, or
close to record lows. Even in Japan, the cost of servicing public debt accounts for less
than 2% of national income. This is lower than in the 1980s at a time when its debt ratio
was only 70% compared to over 220% today. Perhaps a more salient argument is also the
fact that the unemployment rate has been declining in the major economies for years and
is probably not far away from structural levels. Hence policy makers in these countries
could soon have to tighten fiscal policies.
So what will be the impact of fiscal easing on financial markets? There is no doubt
that a coordinated fiscal easing will be perceived positively by equity markets as stronger
real demand will support earning growth. What about the interest rates? Given the highly
accommodating monetary policies in advanced economies the impact on interest rates
will probably be fairly limited at least in the short run. A case in point is the development
in Japanese yields over the past week. Although they increased somewhat following the
announcement of the fiscal package, some of the increase was also caused by
disappointment on the BoJ side. Moreover, yields are still in negative territory and the
yield curve only steepened very modestly. On FX markets, the traditional macroeconomic
model would suggest that a fiscal easing should lead to a stronger currency as higher
interest rates generate capital inflows. However, over time some of the additional demand
will give rise to higher imports and hence mitigate some of the currency strength. If all
countries pursue looser fiscal policies in a coordinated manner, the impact on the crosses
should be less pronounced.
Chart 3. Public debt in advanced
economies has surged since the
financial crisis
Source: IMF world economic outlook database
10-year Japanese government yields
have increased after the latest
packages
Source: Macrobond Financial
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Global market views
Source: Danske Bank Markets
Asset class Main factors
Equities
Short term: sell on rallies
M edium term: moderately positive Underweight Europe
Overweight US
Underweight Japan
Bond market
Core yields: Low for even longer with increased uncertainty We expect the ECB wil pro long the QE programme another six months
US-euro spread: wider but not before we see Fed hikes Fed on hold until 2017
Peripheral spreads: ECB support QE buying and hunt for yield means further performance
Credit spreads: neutral ECB keeping spreads contained
FX
EUR/USD - Lower near-term on European uncertainty, then higher Valuations and CA differential support cross in the medium- to long term; short-term downside risks from EU risks
EUR/GBP - Further GBP weakness in next few months BoE monetary easing and financial account flows to send cross higher
USD/JPY - Risks skewed to downside BoJ easing limiting downside potential stemming from fundamentals and relative current account flows
EUR/SEK - To move gradually lower over coming months To move lower on relative fundamentals, valuation and natural domestic sellers returning post summer-lull
EUR/NOK - range short-term then lower Global factors, o il price end Norges Bank to keep cross in range in coming months, then lower on valuation and fundamentals
Commodities
Oil price – Consolidation in US oil sector leading to recovery OPEC has lost leverage over o il price; sliding dollar and supply disruption have added support recently
M etal prices – Positive outlook anticipating recovery in Chinese construction Consolidation in mining industry puts a floor under prices, awaiting support from higher global economic growth
Gold price – Bouncing on re-pricing of Fed and other major central banks Brexit risk safe haven flows and more dovish major central banks support demand for gold
Agriculturals – Support from disruptive weather, higher o il price Attention has turned to La Niña weather risks in H2 16.
Tactical overweight emerging markets vs. developed markets-->growth prospecst stronger in EM than in DM and thereby
higher earning growth
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Scandi update
Denmark – Brexit fails to trigger currency flight to Denmark
An otherwise quiet week saw the Nationalbank release July currency reserves data
showing that the UK’s vote to leave the EU did not spark the influx of currency into
Denmark that some had predicted. The reserves actually fell DKK2.4bn, which has to
count as a fairly minor change. The period leading up to the vote brought a substantial
inflow of currency but this did not balloon following the result of the referendum – quite
the opposite. There is therefore no prospect of Nationalbank needing to cut interest rates
to avoid an overly strong krone.
The week also brought jobless figures for June, showing a decrease of 1,500 people,
which translates into an unchanged unemployment rate of 4.2%. Unemployment has been
coming down since mid-2012 but the Brexit vote means that we could be facing a period
of economic decline and, therefore, substantially reduced, or even zero, job growth in
coming months.
Sweden – SEKset to take back most of its summer losses
The Swedish krona has seen some terrible weeks (while many of us have had a well-
deserved vacation), with EURSEK revisiting post-Brexit peaks around 9.60. It is not
entirely clear why.
We argue that it is not due to the repricing of relative (the ECB versus the Riksbank)
monetary policy. It is true that Swedish short rates have outperformed the eurozone but
this is due to liquidity and factors related to the upcoming US money-market reform
rather than any monetary policy considerations. Nor is it related to risk sentiment; the
normally strong negative correlation between equities (which have rebounded strongly)
and EUR/SEK would suggest the latter should be trading around 9.30-9.35.
Yes, there have been a couple of disappointing macro releases, such as Q2 GDP, but this
in itself does not explain why the krona should have taken such a hard hit (macro has
been weak elsewhere too). We would not put too much emphasis on any house market
concerns as a driver behind the collapse in the Swedish currency. So, what is it? We
believe that the normal summer lull is to blame, where ‘natural SEK buyers’ have been
absent (on vacation), both commercial interests stemming from exporters and rebalancing
needs stemming from financial institutions (which would need to buy SEK, as foreign
assets have increased in value).
In our view, pent-up demand from these ‘natural SEK buyers’, together with strong
economic fundamentals where the krona is substantially undervalued versus the euro and
US dollar and where the Swedish growth outlook, while moderating, remains strong on a
relative basis, will help the krona to take back most of its summer losses in the weeks to
come.
Currency reserves unchanged in July
Source: Danmarks Nationalbank
Breakdown of correlation – likely to be
a temporary summer phenomenon
Source: Macrobond Financial, Danske Bank
Markets
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Norway – brighter growth outlook
Data over the summer has largely confirmed our view that activity is picking up as the
headwinds from the oil industry ease and growth in government demand and housing
investment accelerate. Leading indicators now point to growth in industrial activity in Q2
for the first time since 2014. The jobless data also shows that unemployment has now
stabilised and even begun to edge down. This may mean that demand as a whole is now
picking up. Housing prices have also risen surprisingly quickly over the past two months
and homebuilding is accelerating further. It may therefore seem that the risk of a more
severe and persistent downturn is now receding, and growth is normalising. On the other
hand, we still expect a weaker growth contribution from Europe following Brexit, and oil
prices have fallen again. It is therefore still likely that Norges Bank will cut interest rates
by 25bp at its September meeting but the probability of this has decreased somewhat over
the past month.
Industry over the worst
Source: Macrobond Financial, Danske Bank
Markets
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Latest research from Danske Bank Markets
4/8 Bank of England review: easing package, more to follow in November
As expected the Bank of England (BoE) delivered a substantial easing package today
3/8 From strict EU fiscal rules to growth-supportive policies despite high public debt
ratios
High government debt no longer rules out fiscal policy easing, as EU member states and
authorities are now paying more attention to counter-cyclical fiscal policy than fiscal
sustainability considerations.
2/8 US Labour Market Monitor: July report set to attract much attention as both
employment and growth have slowed in 2016
Jobs report preview. Fed on hold for the rest of the year.
1/8 Unchanged support for the euro before Brexit but optimism about EU's future is
lower
The European Commission’s Spring Eurobarometer survey shows unchanged support for
the euro as a common currency.
1/8 Euro-area banking stress test better than feared
The euro-area banking stress test was better than feared
29/7 Euro area: higher inflation, activity data are pre-Brexit
Euro area HICP inflation was slightly higher than expected in July as it increased to 0.2%
y/y from 0.1% y/y in June (consensus 0.1%).
29/7 BoJ Review: BoJ disappoints but keeps door open for more easing
The Bank of Japan (BoJ) is increasing its purchases of ETFs but has kept the policy
interest rate and bond purchase programme unchanged at -0.1% and JPY80trn,
respectively
27/7 Research: Is Chinese growth slowing down again?
Chinese economic indicators have been mixed lately with some pointing to softer growth.
However, we do not look for a renewed slowdown but rather a muddle-through scenario
in H2.
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Macroeconomic forecast
Source: OECD and Danske Bank. 1) % y/y. 2) % contribution to GDP growth. 3) % of labour force. 4) % of GDP.
Macro forecast, Scandinavia
Denmark 2015 1.0 2.3 -0.7 1.1 -0.3 0.3 0.0 0.5 4.6 -2.1 40.2 7.02016 0.7 1.9 0.5 1.1 0.1 0.7 1.7 0.5 4.3 -1.7 39.3 6.82017 1.0 1.9 0.5 0.9 0.1 2.6 3.5 1.3 4.3 -1.4 39.2 6.9
Sweden 2015 4.2 2.7 2.6 7.0 0.1 5.9 5.5 0.0 7.4 -0.3 43.4 4.92016 2.6 3.0 3.2 4.6 0.0 1.4 4.1 0.8 7.1 -0.4 41.5 5.02017 1.4 1.6 2.0 -0.3 -0.1 2.0 2.3 0.6 7.2 -1.5 41.7 5.2
Norway 2015 1.0 2.0 1.9 -4.2 0.3 3.4 1.1 2.1 3.0 - - -2016 0.9 1.5 3.0 -1.6 0.0 0.8 0.9 3.1 3.4 - - -2017 1.9 2.2 3.1 0.9 -0.2 0.9 2.2 2.8 3.5 - - -
Macro forecast, Euroland
Euroland 2015 1.6 1.7 1.3 2.7 - 5.1 5.9 0.0 10.9 -2.1 90.7 3.62016 1.2 1.5 1.5 1.7 - 2.7 4.0 0.3 10.3 -2.0 90.2 3.72017 0.7 0.9 1.2 -0.7 - 3.2 3.3 1.3 10.3 -1.8 89.8 3.6
Germany 2015 1.4 2.0 2.5 1.6 - 4.8 5.4 0.1 4.6 0.7 71.2 8.82016 1.2 1.6 2.2 2.0 - 2.2 4.0 0.4 4.4 0.2 68.6 8.52017 1.0 1.2 1.4 -0.3 - 3.3 3.6 1.6 4.5 0.0 66.5 8.3
France 2015 1.2 1.5 1.4 0.9 - 6.0 6.4 0.1 10.4 -3.5 95.8 -1.52016 1.2 1.6 1.3 1.8 - 1.9 4.6 0.5 10.2 -3.5 96.5 -1.12017 0.3 0.7 1.0 -0.8 - 3.0 3.3 1.4 10.3 -3.4 97.5 -1.0
Italy 2015 0.6 0.9 -0.7 0.6 - 4.1 5.8 0.1 11.9 -2.6 132.7 2.22016 0.6 1.1 0.9 0.8 - 0.1 1.3 0.1 11.8 -2.6 132.9 2.42017 0.4 0.6 0.7 -0.6 - 3.2 3.3 1.4 11.5 -2.3 132.5 2.3
Spain 2015 3.2 3.1 2.7 6.4 - 5.4 7.5 -0.6 22.1 -5.1 99.2 1.42016 2.4 2.8 2.1 2.8 - 2.4 4.0 -0.2 20.3 -4.0 100.5 1.52017 1.1 1.4 1.3 0.3 - 2.9 3.2 1.7 19.0 -3.5 100.0 1.3
Finland 2015 0.7 1.4 -0.9 -1.4 - 0.6 -0.4 -0.2 9.4 -2.8 63.0 0.12016 0.8 1.1 0.0 2.5 - -1.0 0.0 0.4 9.2 -2.9 65.9 0.22017 0.5 0.5 -0.5 1.5 - 2.0 1.5 0.5 9.0 -2.8 68.6 0.2
Macro forecast, Global
USA 2015 2.4 3.1 0.7 4.0 0.2 1.1 4.9 0.1 5.3 -2.6 105 -2.72016 1.7 2.7 0.9 0.6 -0.2 0.3 0.9 1.4 4.8 -2.9 105 -2.92017 1.9 2.3 0.8 2.3 0.0 2.4 2.8 2.5 4.6 -2.8 103 -3.3
China 2015 6.8 - - - - - - 1.7 4.2 -0.8 41.8 2.42016 6.7 - - - - - - 2.3 4.2 -0.8 42.8 2.32017 6.6 - - - - - - 2.0 4.3 -1.0 43.5 2.5
UK 2015 2.2 2.6 1.4 3.3 0.3 4.8 5.8 0.1 5.4 -5.0 87.4 -5.22016 1.1 2.3 1.2 -2.9 0.2 2.6 3.0 0.8 5.2 -3.9 88.9 -5.52017 -0.4 0.5 0.2 -3.4 0.0 2.0 2.4 2.4 5.6 -2.9 88.3 -5.2
Current
acc.4
GDP 1
Private
cons.1
Public
cons.1
Fixed
inv.1
Stock
build.2
Ex-
ports1
Im-
ports1
Infla-
tion1
Unem-
ploym.3
Public
budget4
Public
debt4
Year
Year GDP 1
Private
cons.1
Public
cons.1
Fixed
inv.1
Stock
build.2
Ex-
ports1
Im-
ports1
Infla-
tion1
Unem-
ploym.3
Public
budget4
Current
acc.4
Public
debt4
Current
acc.4
Im-
ports1
Public
debt4
Public
budget4
Ex-
ports1
Infla-
tion1
Unem-
ploym.3
Year GDP 1
Private
cons.1
Public
cons.1
Fixed
inv.1
Stock
build.2
14 | 5 August 2016 www.danskeresearch.com
Weekly Focus
Financial forecast
Source: Danske Bank Markets
Bond and money marketsCurrency
vs USDCurrency
vsSEK
USD 05-Aug - 851.8
+3m - 869.2
+6m - 836.4+12m - 798.2
EUR 05-Aug 111.4 949.0
+3m 107.0 930.0
+6m 110.0 920.0+12m 114.0 910.0
JPY 05-Aug 101.1 8.43
+3m 107.0 8.12
+6m 108.0 7.74+12m 108.0 7.39
GBP 05-Aug 131.3 1118.2
+3m 121.6 1056.8
+6m 122.2 1022.2+12m 129.5 1034.1
CHF 05-Aug 97.3 875.1
+3m 100.0 869.2
+6m 100.0 836.4+12m 99.1 805.3
DKK 05-Aug 667.6 127.6
+3m 695.1 125.0
+6m 676.1 123.7+12m 652.4 122.4
SEK 05-Aug 851.8 100.0
+3m 869.2 -
+6m 836.4 -+12m 798.2 -
NOK 05-Aug 843.4 101.0
+3m 878.5 98.9
+6m 836.4 100.0+12m 789.5 101.1
Equity markets
Regional
Pris trend12 mdr.
Regionale rekommen-dationer
USA (USD) Strong domestic demand, USD weakening 0-5% Overweight
Emerging markets (lokal valuta) Commodities and China stabilising 0-5% Overweight
Japan Stronger JPY, weak earnings outlook 0-3% Underweight
Europa (ex. Norden) ECB monetary easing, weaker GDP growth 0-3% UnderweightNorden Earnings growth, expensive valutaion 0-5% Overweight
Commodities
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2016 2017
NYMEX WTI 34 46 49 50 52 54 56 58 45 55
ICE Brent 35 47 49 50 52 54 56 58 45 55
Copper 4,672 4,731 5,000 5,100 5,200 5,300 5,400 5,500 4,876 5,350
Zinc 1,687 1,930 2,150 2,150 2,150 2,150 2,100 2,100 1,979 2,125
Nickel 8,537 8,885 10,500 ### 10,900 11,100 11,300 11,500 9,655 11,200
Aluminium 1,516 1,584 1,650 1,750 1,800 1,850 1,900 1,950 1,625 1,875
Gold 1,183 1,260 1,325 1,325 1,300 1,275 1,250 1,225 1,273 1,263
Matif Mill Wheat 157 159 154 158 161 159 159 159 157 160
Rapeseed 359 370 380 390 400 400 400 400 375 400
CBOT Wheat 466 470 450 475 500 510 520 530 465 515CBOT Corn 363 391 380 390 400 410 415 420 381 411
CBOT Soybeans 881 1,059 1,175 1,175 1,175 1,150 1,125 1,100 1,072 1,138
Medium -3 -+3%
Medium -3 -+3%
High -3 -+3%
High -5 -+5%
High -5 -+5%
410331
1,000
41
43
4,897
2,205
10,695
1,609
359
2016 2017 Average
05-Aug
1,336
166
Risiko profil3 mdr.
Pris trend3 mdr.
0.00 0.40 0.75 1.45 900.0
0.25 0.70 0.85 1.30 940.0
0.00 0.45 0.75 1.40 920.0
-0.50 -0.50 -0.40 0.70 910.0
0.50 1.10 1.04 1.36 939.7
-0.50 -0.50 -0.45 0.65 930.0
-0.50 -0.50 -0.45 0.65 920.0
0.05 -0.14 0.00 0.84 743.8
-0.50 -0.59 -0.48 0.63 949.0
0.05 -0.20 -0.02 0.71 743.8
0.05 -0.16 0.00 0.74 743.8
-0.75 - - - 113.0
0.05 -0.19 -0.01 0.57 743.8
-0.75 - - - 107.0
-0.75 - - - 110.0
0.10 0.10 0.55 1.05 88.0
-0.75 -0.75 -0.73 -0.34 108.4
0.10 0.09 0.42 0.97 88.0
0.10 0.09 0.45 1.00 90.0
-0.10 - - - 123.1
0.25 0.49 0.39 0.77 84.9
-0.10 - - - 114.5
-0.10 - - - 118.8
0.00 -0.30 -0.20 0.55 -
-0.10 -0.01 -0.06 0.05 112.6
0.00 -0.30 -0.22 0.42 -
0.00 -0.30 -0.20 0.45 -
0.75 0.94 1.05 1.75 114.0
0.00 -0.30 -0.22 0.28 -
0.50 0.63 0.85 1.50 107.0
0.50 0.64 0.95 1.60 110.0
Key int.rate
3m interest rate 2-yr swap yield 10-yr swap yieldCurrency
vs EUR
0.50 0.78 0.92 1.39 111.4
15 | 5 August 2016 www.danskeresearch.com
We
ekly Focu
s
Weekly Focus
Calendar
Calendar
Source: Danske Bank Markets
Continued
Source: Danske Bank Markets
Calendar
Source: Danske Bank Markets
Continued
Source: Danske Bank Markets
Source: Danske Bank Markets
Key Data and Events in Week 32
During the week Period Danske Bank Consensus Previous
Sun 07 CNY Foreign exchange reserves bn. USD Jul 3200 3205.2
Mon 08 CNY Exports y/y Jul -3.5% -4.8%
Mon 08 CNY Imports y/y Jul -7.0% -8.4%
Mon 08 CNY Trade balance USD bn Jul 47.3 48.1
Monday, August 8, 2016 Period Danske Bank Consensus Previous
- CNY Trade balance USD bn Jul 47.3 48.1
- CNY Imports y/y Jul -7.0% -8.4%
- CNY Exports y/y Jul -3.5% -4.8%
1:50 JPY Bank lending y/y Jul 2.0%
7:00 JPY Eco Watchers Survey Outlook (Current) Index Jul 42.0 41.5|41.2
8:00 DEM Industrial production m/m|y/y Jun 0.7%|… 0.9%|0.6% -1.3%|-0.4%
9:00 DKK Industrial production m/m Jun 1.0%
9:15 CHF CPI m/m|y/y Jul -0.5%|-0.3% 0.1%|-0.4%
10:30 EUR Sentix Investor Confidence Index Aug 2.5 3.6 1.7
16:00 USD Fed's LMCI m/m Jul
16:00 USD Construction spending m/m Jun 0.5% -0.8%
Tuesday, August 9, 2016 Period Danske Bank Consensus Previous
1:50 JPY Money supply M2 y/y Jul 3.3% 3.4%
3:30 CNY PPI y/y Jul -1.8% -2.0% -2.6%
3:30 CNY CPI y/y Jul 1.9% 1.8% 1.9%
3:30 AUD NAB Business Conditions Index Jul 12.0
7:45 CHF Unemployment % Jul 3.3% 3.3%
8:00 DEM Trade balance EUR bn Jun 23.9 21
9:00 DKK Trade balance ex ships DKK bn Jun 5.5
9:00 DKK Exports m/m Jun
9:00 DKK Current account (nsa|sa) DKK bn Jun 10.5|7.9
10:00 NOK Credit indicator (C2) y/y Jun 4.8%
10:30 GBP Industrial production m/m|y/y Jun 0.0%|1.6% -0.5%|1.4%
10:30 GBP Manufacturing production m/m|y/y Jun -0.2%|1.3% -0.5%|1.7%
10:30 GBP Trade balance GBP mio. Jun -2550 -2263
12:00 USD NFIB small business optimism Index Jul 94.5 94.5
14:30 USD Unit labour cost, preliminary q/q 2nd quarter 1.8% 4.5%
16:00 GBP NIESR GDP estimate q/q Jul 0.4% 0.6%
Wednesday, August 10, 2016 Period Danske Bank Consensus Previous
- CNY Money supply M2 y/y Jul 11.0% 11.8%
- CNY New Yuan loans CNY bn. Jul 900 1380
- CNY Aggregate financing bn CNY Jul 1024 1629.3
1:50 JPY PPI m/m|y/y Jul -0.1%|-4.0% -0.1%|-4.2%
1:50 JPY Machine orders m/m|y/y Jun 3.3%|-4.4% -1.4%|-11.7%
2:30 AUD Westpac Consumer Confidence Index (% m/m) Aug 99.1|-3.0%
6:30 JPY Tertiary industry index m/m Jun 0.3% -0.7%
8:00 SEK Prospera inflation expectations
8:45 FRF Industrial production m/m|y/y Jun -0.1%|-0.8% -0.5%|0.5%
9:00 DKK CPI m/m|y/y Jul -0.2%|0.2% 0.1%|0.3%
9:30 SEK Industrial production s.a. m/m|y/y Jun -0.8%|1.7%
9:30 SEK Service production m/m|y/y Jun -0.1%|5.4%
9:30 SEK Industrial orders m/m|y/y Jun 0.0%|-0.5%
10:00 NOK CPI m/m|y/y Jul 0.6%|3.7%
10:00 NOK PPI m/m|y/y Jul 2.8%|-9.7%
10:00 NOK Core inflation(CPI-ATE) m/m|y/y Jul 0.1%|3.1% 0.3%|3.0%
13:00 USD MBA Mortgage Applications % -3.5%
16:30 USD DOE U.S. crude oil inventories K 1413
20:00 USD Budget statement USD bn Jul -129.5 -149.2
23:00 NZD Reserve Bank of New Zealand (cash rate decision) % 2.0% 2.0% 2.3%
16 | 5 August 2016 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
Calendar — continued
Source: Danske Bank Markets
Thursday, August 11, 2016 Period Danske Bank Consensus Previous
1:01 GBP RICS house price balance Index Jul 0.1 0.2
8:00 SEK PES unemployment % Jul 3.8%
8:45 FRF HICP, final m/m|y/y Jul -0.4%|0.4% -0.4%|0.4%
9:30 SEK Underlying inflation CPIF m/m|y/y Jul -0.2%|1.1% -0.1%|1.2% 0.1%|1.5%
9:30 SEK CPI m/m|y/y Jul -0.2%|0.8% -0.2%|0.8% 0.1%|1.0%
10:00 ITL HICP, final m/m|y/y Jul ...|-0.1% ...|-0.1%
14:30 USD Initial jobless claims 1000 265 269
14:30 USD Import prices m/m|y/y Jul -0.3%|-4.3% 0.2%|-4.8%
Friday, August 12, 2016 Period Danske Bank Consensus Previous
0:45 NZD Retail sales q/q 2nd quarter 1.0% 0.8%
4:00 CNY Fixed assets investments y/y Jul 8.9% 9.0%
4:00 CNY Industrial production y/y Jul 6.2% 6.2%
4:00 CNY Retail sales y/y Jul 10.5% 10.6%
8:00 DEM HICP, final m/m|y/y Jul ...|0.4% 0.4%|0.4% 0.4%|0.4%
8:00 DEM GDP, preliminary q/q|y/y 2nd quarter 0.2%|… 0.3%|1.4% 0.7%|1.6%
9:00 ESP HICP, final m/m|y/y Jul ...|-0.6% …|-0.6% -1.3%|-0.6%
10:00 ITL GDP, preliminary q/q|y/y 2nd quarter 0.2%|… 0.2%|… 0.3%|1.0%
10:30 GBP Construction output m/m|y/y Jun -1.0%|-2.0% -2.1%|-1.9%
10:30 EUR Portugal, GDP, preliminary q/q|y/y 2nd quarter 0.2%|0.9%
11:00 EUR Industrial production m/m|y/y Jun 0.5%|… 0.6%|0.9% -1.2%|0.5%
11:00 EUR GDP, preliminary q/q|y/y 2nd quarter 0.3%|… 0.3%|1.6% 0.3%|1.6%
14:30 USD Retail sales less autos m/m Jul 0.2% 0.7%
14:30 USD Retail sales less autos and gas m/m Jul 0.4% 0.7%
14:30 USD Retail sales m/m Jul 0.4% 0.6%
14:30 USD Retail sales control group m/m Jul 0.3% 0.4% 0.5%
14:30 USD PPI m/m|y/y Jul 0.1%|0.3% 0.5%|0.3%
14:30 USD PPI core m/m|y/y Jul 0.2%|1.2% 0.4%|1.3%
16:00 USD University of Michigan Confidence, preliminary Index Aug 91 91.3 90.0
The editors do not guarantee the accurateness of figures, hours or dates stated above
For furher information, call (+45 ) 45 12 85 22.
17 | 5 August 2016 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
Disclosures This research report has been prepared by Danske Bank Markets, a division of Danske Bank A/S (‘Danske
Bank’). The author of this research report is Bjørn Tangaa Sillemann, Analyst.
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