Japan IP: Trend contraction continues

Genevieve Signoret

Monday 29 June, Japan published its May industrial production report. The index maintained its six-month moving average (6mma) pace of year-on-year growth of –1.7%, implied by a month-on-month drop of 2.2% (both rates of change are based on seasonally adjusted data). This result marks no change from April in the six-month trend rate of contraction. However, its release surprised analysts to the downside and led Barclays to infer that “the economy slowed in Q2.”

Barclays still believes that Japan is recovering, and our own reading of the data is consistent with that view. In support of our reading, we put forth that the –1.7% trend rate of change observed in March and April marks an slight improvement over February (–1.8%).

We also note, however, that Japan’s industrial output still remains 16 percentage points lower than its pre–Great-Recession level. This fact supports our view that Japan will continue to apply extraordinary monetary stimulus for not months but years still to come.

Japan’s industrial output is still 16 ppts below that of Dec 2007. With so much slack, we anticipate years still of QE.
image2

Although Japan’s May –1.7% 6-month moving average y/y rate of change in IP is a sad number, it’s less sad than April’s –1.8%
image3

 

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Crisis en Grecia: actualización martes 30 junio

Genevieve Signoret

Hoy a partir de la media noche, tiempo de Europa, se venció el plazo para que Grecia pague €1.5MMn al FMI. Anticipando esta situación el primer ministro griego, Alexis Tsipras, envió al Eurogrupo una propuesta para alcanzar un acuerdo y obtener de sus socios europeos un tercer rescate.

La solicitud bajo este tercer rescate de €29.15MMn, tiene como objeto garantizar los fondos para realizar el pago de los diversos vencimientos de deuda comprendidos entre 2015 hasta el 2017, causó que el Eurogrupo convocara a una teleconferencia en la cual los ministros de finanzas discutieron la petición del gobierno griego.

No queda claro si Tsipras está dispuesto a negociar con Europa y cancelar su llamado al referéndum o simplemente busca culpar a Europa de su situación para fortalecer el llamado que ha hecho a los ciudadanos griegos a votar por el No.

Por su parte, la canciller alemana, Angela Merkel, ha expresado que no habrá ninguna negociación a no ser de que se suspenda el referéndum o hasta conocer el resultado de éste. Además afirmó que toda negociación se suspenderá si en el referéndum del domingo triunfara el No. Ante esta situación, diversos líderes europeos han hecho el llamado a la ciudadanía griega a votar por un Sí.

Hoy Grecia se ha convertido en la primera economía desarrollada en declararse en un estado de impago con el FMI, perdiendo así todo acceso al capital disponible de dicha institución. Por su parte, Christine Lagarde tendrá que informar de la situación a la junta de directores del FMI, iniciando así un proceso en el que Grecia podría ser expulsado de la organización internacional si no realiza los pagos correspondientes.

Sin embargo, el impago al FMI no tendrá mayor repercusión en su calificación de deuda, pues, al ser una institución pública ante la que se ha declarado el impago, las calificadoras no lo pueden clasificar como un default. Solamente la calificadora S&P ha degradado la nota crediticia de Grecia de CCC a CCC-.

Y así en medio de la incertidumbre transcurrió un día más en una Grecia, donde los bancos han permanecido cerrados y se ha impuesto un control de capitales que limita las transferencias de dinero al extranjero y los retiros de efectivo a solo €60. Mientras tanto, los ministros de finanzas de la zona euro suspendieron su reunión para reanudarla el miércoles por la mañana pues al no haber alcanzado ningún acuerdo.

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Crisis en Grecia: actualización lunes 29 junio

Genevieve Signoret

Las negociaciones entre Grecia y sus acreedores llegaron a su fin el viernes pasado por la noche, cuando el ministro de finanzas griego abandonó la mesa de discusión en Bruselas para regresar a su país. Poco tiempo después, el primer ministro, Alexis Tsipras, sorprendía al mundo anunciando un referéndum programado para el próximo domingo 5 de julio en el cual los ciudadanos griegos decidirán si se aceptan las condiciones impuestas por los acreedores de Grecia para la entrega de los últimos €7.2MMn correspondientes al segundo rescate.

El anuncio del referéndum hace que se dispare la incertidumbre sobre el desenlace final de Grecia, ya que no será hasta después del 30 de junio, fecha límite de pago al FMI de €1.5MMn, que se conocerá si ganó el Sí o el No. Por lo tanto, el ministro de finanzas griego, Yanis Varoufakis, solicitó una extensión del plazo de las negociaciones y de la fecha límite del pago. Sin embargo, el sábado 27, el Eurogrupo[1] emitió un comunicado en el que afirma tomar nota de la decisión de Grecia de realizar un referéndum pero negarse a conceder la extensión de las negociaciones una semana más.

Por su parte, el BCE se reunió nuevamente el sábado 27 con los ministros de finanzas de los países miembros de la eurozona para discutir el tema de Grecia y generar un plan que garantice la estabilidad financiera de la zona del euro en el evento de un impago. En su comunicado del 28 de junio, el BCE anunció mantener el techo de €89MMn aprobado el viernes 26 para la línea de asistencia de liquidez de emergencia a la banca de Grecia (ELA), así como su firme propósito de utilizar todos los instrumentos permitidos por su mandato para garantizar dicha estabilidad.

La respuesta del gobierno heleno no se hizo esperar: anunció el cierre de los bancos desde este lunes hasta después de la realización del referéndum, el 5 de julio, con el fin de evitar que continúe la constante fuga de depósitos que los bancos griegos han experimentado desde noviembre pasado. Se trató del primer paso para implantar un control de capitales que permitiría el cambio a una nueva moneda si se llegara a dar el caso de que Grecia abandone el euro.

La suerte está echada: sin un cambio en las posturas por parte de los acreedores o de Grecia, parece inminente el impago al FMI. Sin embargo, ésta no es ya la única cuestión en juego. El referéndum parece estarse interpretando más como un voto sobre la permanencia de Grecia en el euro que sobre si  aceptar las condiciones del rescate.

Sea cual sea el resultado, los panoramas esperados no se ven nada alentadores.

Por un lado, si gana el Sí, podría significar la caída del gobierno de Alexis Tsipras y el inicio de una crisis política que resultaría en un nuevo gobierno que tendría que negociar nuevamente un plan con sus acreedores. Por el otro, si gana el No, la salida del euro por parte de Grecia será inminente y la incertidumbre sobre el futuro heleno y la estabilidad financiera europea e internacional será aún mayor.

La cuestión sobre la permanencia en el euro ha divido a la población. Incluso el gobierno ha anunciado que pedirá a los ciudadanos votar No. Sin embargo, cerca del 70% de la población griega quiere permanecer en la unión monetaria a pesar de los sacrificios que se tengan que hacer. Y así, mientras se da el desenlace final en esta auténtica tragedia griega, la volatilidad en los mercados financieros se ha disparado.

 

[1] Club de los ministros de finanzas de los países miembros de la eurozona.

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Greece and US jobs: offsetting forces on UST rates this week

Genevieve Signoret

Macro Views

Para español favor de desplazarse hacia abajo.

As we publish this blog entry, Greece is in flux. Its government has called for what may be an unconstitutional referendum to be held on the deal being offered by its creditors. But now rumors are coming in that creditors have taken the deal off the table. Stand by—and expect market turbulence till this is sorted out). We continue to expect an agreement to emerge, but not a definitive one. We think that Greece will need a third bailout, one with debt reduction. We also perceive the risk of a Grexit to be rising sharply.

Besides an unfolding of the Greek crisis, the main market event next week is the U.S. labor report. The consensus and we expect unemployment to have ticked back down a notch in June to 5.4% and for payrolls to have risen by more than 200,000. If so, we’ll feel even more secure in our view that the Fed will act in September.

These two main market events, Greece and the US jobs report, should offset each other. Hence we see the yield on a 10-year U.S. Treasury bond ending June and quarter 2 at 2.45%. This is just two basis points down from today’s closing rate of 2.47%. For more details on our rate outlooks, see our fixed income edition of La Carpeta Negra here.

Al publicar esta entrada de blog, Grecia se encuentra en una encrucijada. Su gobierno ha convocado a lo que podría considerarse un referéndum inconstitucional sobre el acuerdo ofrecido por sus acreedores. Pero ahora hay rumores de que esos mismos acreedores han retirado la oferta. Esperen turbulencias en el mercado hasta que esto se resuelva. Seguimos pensando que se alcanzará un acuerdo, pero no uno definitivo. Creemos que Grecia necesitará un tercer rescate, uno con reducción de deuda. También percibimos un creciente riesgo de que Grecia abandone la zona euro.

Además de la evolución de la crisis griega, el principal evento que afectará el mercado la próxima semana será el reporte laboral de EE UU. El consenso general, con el que concordamos, es que el desempleo bajó un punto en junio a 5.4% y que las nóminas aumentaron en más de 200,000. Si fuese así, nos sentiríamos más seguros con nuestra perspectiva de que la Fed tomará medidas en septiembre.

Estos dos eventos principales del mercado, Grecia y el reporte laboral de EE UU, debieran compensarse mutuamente. Por consiguiente, prevemos que el rendimiento de los bonos del Tesoro de EE UU a 10 años que vencen en junio y el segundo trimestre será de 2.45%. Ello es sólo dos puntos base menos que la tasa de cierre actual de 2.47%. Para mayor información sobre nuestras perspectivas de tasas, vean nuestra edición de renta fija de La Carpeta Negra aquí.

Las próximas cuatro semanas

Events in red are those most likely to shake markets.

Monday 29 

  • Japan: Industrial production (flash).
  • UK: Money supply (May), commercial bank lending (May).
  • Germany: Consumer prices (Jun). 
  • Spain: Consumer prices (Jun, flash).

Tuesday 30

  • Korea: Industrial production (May). Consensus:-3.69%
  • Turkey: Foreign trade (May).
  • Euro Area: Greece’s bailout expires, loan to IMF due, consumer prices (Jun), unemployment (May).
  • UK: Real GDP (1Q, 3rd estimate), balance of payments (1Q). Consensus 6.4%
  • Germany: Unemployment (Jun).
  • Italy: Consumer prices (Jun, flash).
  • PS + 1 and Iran: Deadline for nuclear deal between Iran and world powers.
  • USA: Consumer confidence (Jun), S&P Case-Shiller House Prices Index (Apr). Consensus for the house price index: 5.61% y/y.
  • Brazil: Primary budget balance (May).

Wednesday 1 July

  • Japan: Bank of Japan Tankan (2Q). Consensus: 13, last quarter 12.  Markit manufacturing PMI (Jun, final).
  • Russia: Markit manufacturing PMI (Jun). Consensus: 50.3, last month 50.2. 
  • Turkey: Markit PMI (Jun).
  • Euro Area: Markit manufacturing (Jun, final)
  • UK: Markit manufacturing PMI (Jun).
  • Germany: Markit manufacturing PMI (Jun, final). Consensus: 51.9, last 51.9.
  • France: Markit manufacturing PMI (Jun, final). Consensus: 50.5, last 50.5.
  • Italy: Markit manufacturing PMI (Jun).
  • Spain: Markit manufacturing PMI (Jun).
  • USA: ISM manufacturing (Jun), Light vehicles sales (Jun). Consensus: $17.8 Mn, last $17.71.
  • Brazil: Markit manufacturing PMI (Jun), foreign trade (Jun).
  • Mexico: Remittances (May), IMEF manufacturing PMI (Jun), Consensus: 52, last 52.4. IMEF nonmanufacturing PMI (Jun). Consensus: 51.4, last 51.1.

Thursday 2

  • Korea: Current account balance (Jun).
  • USA: Unemployment rate (Jun) and nonfarm payrolls. Consensus: unemployment rate 5.4% (May: 5.5%); nonfarm payrolls 228k (May: 280K). Factory orders (May). Consensus: -0.2% m/m
  • Brazil: Industrial Production (May).

Friday 3

  • Japan: Markit PMI services (Jun).
  • Turkey: Consumer prices (Jun). Consensus: 8% y/y.
  • Euro Area: MFI Interest rates (May), Markit services and composite PMIs (Jun, final), retail sales (May).
  • UK: Markit PMI services (Jun).
  • Germany: Markit services and composite PMIs (Jun, final).
  • France: Markit services and composite PMIs (Jun, final).
  • Italy: Markit services and composite PMIs (Jun, final).
  • Spain: Markit services and composite PMIs (Jun, final).
  • Mexico: Gross fixed investment (Apr). Consensus: 5% y/y. Banxico economic survey, Banamex survey.

Monday 6

  • Japan: Bank of Japan governors meeting.
  • Germany: Manufacturing orders (May)
  • USA: Markit services PMI (Jun, final), ISM nonmanufacturing (Jun).

Tuesday 7

  • Euro Area: Markit services PMI (Jun, flash).
  • Turkey: Central Bank Report.
  • UK: Industrial production (May).
  • Germany: Industrial production (May).
  • France: Foreign trade (May).
  • USA: Foreign trade (May), commercial bank lending (May).
  • Mexico: Consumer confidence (Jun)

Wednesday 8

  • Japan: Commercial bank lending (Jun), current account (May).
  • Korea: Money supply (May).
  • USA: Federal Open Market Committee minutes.
  • Brazil: Consumer prices.

Thursday 9

  • China: Consumer prices (Jun).
  • Japan: Money supply (Jun), private machinery orders (May).
  • Korea: Monetary policy decision.
  • UK: Monetary policy decision: Consensus: 0.5%, last 0.5%. 
  • Germany: Foreign trade (May).
  • USA: Unemployment claims.
  • Mexico: Consumers prices (Jun).

Friday 10

  • Turkey: Current account (May).
  • UK: Foreign trade (May).
  • France: Industrial production (May).
  • Italy: Industrial production (May).
  • USA: Fed Janet Yellen speaks. 
  • Mexico: Industrial production (May).

Monday 13

  • China: Foreign trade (Jun).
  • Japan: Industrial production (May, final).
  • India: Consumer prices (Jun).
  • Mexico: Formal Job creation (Jun).

Tuesday 14

  • Japan: Bank of Japan Monetary Policy Meeting.
  • Euro Area: European Central Bank lending survey (2Q), industrial production (May)
  • Turkey: Central Bank Report.
  • UK: Consumer prices (Jun).
  • Germany: Consumer prices (May), ZEW business survey (Jul).
  • Italy: Consumer prices (May)
  • Spain: Consumer prices (May)
  • USA: Retail sales (Jun).

Wednesday 15

  • China: Industrial production (Jun), retail sales (Jun), GDP (2Q).
  • Japan: Bank of Japan Monetary Policy Meeting and statement, Governor Kuroda’s press conference. 
  • Turkey: Unemployment (Apr).
  • UK: Employment report (Jun).
  • France: Consumer prices (May)
  • USA: Industrial production (Jun), Beige book.

Thursday 16

  • Japan: Bank of Japan monthly economic report.
  • Euro Area: Foreign trade (May), Consumer prices (Jun, final),  monetary policy decision. 
  • France: Foreign trade (May)
  • USA: Unemployment claims.

Friday 17

  • Russia: Retails sales (Jun), Unemployment (Jun), Investment (Jun).
  • USA: Consumer prices (Jun), U. Michigan consumer sentiment and inflation expectations (Jun, final).

Monday 20

  • Euro Area: Current account (May)

Tuesday 21 

  • Japan: Bank of Japan Monetary Policy Meeting minutes.

Wednesday 22

  • UK: Bank of England Monetary Policy Meeting minutes.
  • USA: FHFA house prices (May).
  • Mexico: Retails sales (May).

Thursday 23

  • Korea: GDP (2Q, flash). Consensus: 2.5% y/y.
  • USA: Unemployment claims.
  • Mexico: Banxico Monetary Policy Meeting.

Friday 24

  • China: Markit manufacturing PMI (July, flash).
  • Euro Area: Markit composite, manufacturing and services PMI (July, flash).
  • Germany: Markit manufacturing PMI (July, flash).
  • USA: New home sales (June)
  • Mexico: Economic activity index (Apr), unemployment (Jun).

Update History:

  • 29 June 2015: Added spanish translation. 
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Greece accord seems nigh

Genevieve Signoret

Macro Views

We seem to be on the verge of a Greece accord

As we put the final touches on this blog entry, the Wall Street Journal writes, “Greece and its creditors appear to have taken a step toward agreement in acrimonious negotiations aimed at preventing the European Central Bank and other international lenders from pulling the plug on funding that keeps the country’s financial system afloat.” If today’s meeting does not end in agreement, watch for capital controls in Greece and an eventual Greek exit from the euro area.

Even with an agreement, the story won’t end here. We anticipate a third bailout program for Greece, this time with debt reduction. For two simple reasons: no one wants a Grexit, and Greece won’t ever be able to pay its debt.

We revise down U.S. GDP for 2015; watch PMIs

We revise our 2015 forecast for U.S. GDP to 2.0% from 3.0%, because of weak first-half numbers. We continue to expect moderate growth on average in the USA over the next 18 months, with more moments of disappointment (sputtering).

We expect the slew of purchasing manager indices (PMIs) due out in the next few weeks to reinforce our view that global growth is picking up. Nonetheless, as for the USA, we expect the trend for global growth over the next 18 months to be slightly accelerating but not smooth. We think forecasters will again overshoot in their growth forecasts for 2016, then later again find themselves revising down.

Janet Yellen will now be obsessed

Last week’s FOMC statement and Janet Yellen’s subsequent press conference confirmed our view that the federal funds rate will rise to just 0.75% by the end of 2015 and 1.5% by the end of 2016. We are with the consensus in thinking that the first hike will come in September.

Janet Yellen’s burning obsession now will be to teach markets how to interpret the first Fed hike. To ward off market turbulence, she needs markets to believe her when she drops obvious hints that rates will remain low for long.

Remember! Normalization is merely moving away from a zero interest rate policy (ZIRP). It is perfectly compatible with maintaining a loose stance for a long time.

We revamp this research blog

Thank you for the patience you have showed while we’ve planned our revamping of this research blog. We think we’ve come up with a great plan!

The first change occurs today. As you know, besides this research blog, which covers macro fundamentals for global investors, we have a sister blog, La Carpeta Negra, where we share data and views on asset classes and update readers on our strategies for investors in global markets. Until this week, our popular annotated calendar of political and economic events apt to move markets called Macro Views appeared each week as an entry in La Carpeta Negra. Yet this calendar has a macro fundamental focus, not a market focus. So, this week, we’ve moved Macro Views over from La Carpeta Negra to Timón Económico.

This is just the (small) beginning of an ambitious overhaul of how we share our macro research with the global investment community and clients. Do stop back often over the next several weeks to watch the New Improved Timón Económico emerge.

Las próximas cuatro semanas

Events in red are those most likely to shake markets.

Monday 23 June

  • Japan: Bank of Japan monthly economic report.
  • Euro Area: Special Eurozone leaders meetign at Brussels.
  • USA:  Exisitng home sales (May)
  • Mexico: Retails sales (Apr).

Tuesday 23 

  • China: Markit manufacturing PMI (Jun, flash).
  • Japan: Markit manufacturing PMI (Jun, flash).
  • Euro Area: Markit services PMI (Jun, flash), Markit manufacturing PMI (Jun, flash), Markit composite PMI (Jun, flash).
  • USA: Durable goods orders (May), FHFA house prices (Apr), Markit manufacturing PMI (Jun, flash)new home sales (May), Fed Governor Powell speaks on monetary policy in Washington.

Wednesday 24

  • Japan: Monetary policy meeting minutes, small firms survey (Jun), service producers prices (May).
  • Germany: IFO Business Survey (Jun).
  • France: GDP (1Q, final).
  • USA: GDP (1Q, final). Consensus -0.7% q/q sa.
  • Mexico: Consumers prices (fortnightly), economic activity index (Apr).

Thursday 25

  • USA: Unemployment claims, personal income (May), Markit services PMI (Jun).
  • Brazil: Unemployment rate report (May).

Friday 26

  • Japan: Consumer prices (May), unemployment rate report (May).
  • Euro Area: Money supply (May), EU heads of state and government meet in Brussels.
  • UK: Bank of England’s Carney speaks in London.
  • USA: U. Michigan consumer sentiment and inflation expectations (Jun, final).
  • Mexico: Foreign trade (May), unemployment rate (May).

Monday 29 

  • Japan: Industrial production (flash).
  • UK: Money supply (May), commercial bank lending (May).
  • Germany: Consumer prices (Jun). Although Eurostat will publish full euro zone inflation rates based a unified methodology the next day, because of the weight that Germany has in the euro area and in ECB decision making, the release of Germany’s rate has a stronger likelihood to move markets (through inflation and rate expectations).
  • Spain: Consumer prices (Jun, flash).

Tuesday 30

  • Korea: Industrial production (May).
  • Turkey: Foreign trade (May).
  • Euro Area: Consumer Prices (Jun), Unemployment (May).
  • UK: Real GDP (1Q, third estimate), balance of payments (1Q).
  • Germany: Unemployment (Jun).
  • Italy: Consumer prices (Jun, flash).
  • USA: Consumer confidence (Jun), S&P Case-Shiller House Prices Index (Apr).
  • Brazil: Primary budget balance (May).
  • Mexico: Public sector budget balance (May).

Wednesday 1 July

  • Japan: Bank of Japan Tankan (2Q), Markit manufacturing PMI (Jun, final).
  • Russia: Markit manufacturing PMI (Jun).
  • Turkey: Markit PMI (Jun).
  • Euro Area: Markit manufacturing (Jun, final)
  • UK: Markit manufacturing PMI (Jun).
  • Germany: Markit manufacturing PMI (Jun, final).
  • France: Markit manufacturing PMI (Jun, final).
  • Italy: Markit manufacturing PMI (Jun).
  • Spain: Markit manufacturing PMI (Jun).
  • USA: ISM manufacturing (Jun), Markit manufacturing PMI (Jun, final), light vehicles sales (Jun).
  • Brazil: Markit manufacturing PMI (Jun), foreign trade (Jun).
  • Mexico: Remittances (May), IMEF manufacturing PMI (Jun), IMEF nonmanufacturing PMI (Jun).

Thursday 2

  • Korea: Current account balance (Jun).
  • USA: Employment (Jun), unemployment claims, factory orders (May).
  • Brazil: Industrial Production (May).

Friday 3

  • Japan: Markit PMI services (Jun).
  • Turkey: Consumer prices (Jun).
  • Euro Area: MFI interest rates (May), Markit services PMI (Jun, final), Markit composite PMI (Jun, final), Retail sales (May).
  • UK: Markit PMI services (Jun).
  • Germany: Markit services PMI (Jun, final), Markit composite PMI (Jun, final).
  • France: Markit services PMI (Jun, final), Markit composite PMI (Jun, final).
  • Italy: Markit services PMI (Jun, final), Markit composite PMI (Jun, final).
  • Spain: Markit services PMI (Jun, final), Markit composite PMI (Jun, final).
  • Mexico: Gross fixed investment (Apr), Banxico economic survey, Banamex survey (Fortnightly)

Monday 6

  • Japan: Bank of Japan governors meeting.
  • Germany: Manufacturing orders (May)
  • USA: Markit services PMI (Jun, final), ISM nonmanufacturing (Jun).

Tuesday 7

  • Euro Area: Markit services PMI (Jun, flash).
  • Turkey: Central Bank Report.
  • UK: Industrial production (May).
  • Germany: Industrial production (May).
  • France: Foreign trade (May).
  • USA: Foreign trade (May), commercial bank lending (May).
  • Mexico: Consumer confidence (Jun)

Wednesday 8

  • Japan: Commercial bank lending (Jun), current account (May).
  • Korea: Money supply (May).
  • UK: Record of the 24th Financial Policy Committee meeting.
  • USA: Federal Open Market Committee minutes.
  • Brazil: Consumer prices.

Thursday 9

  • China: Consumer prices (Jun).
  • Japan: Money supply (Jun), private machinery orders (May).
  • Korea: Bank of Korea monetary policy decision.
  • UK: Monetary Policy Committee decision: target interest rate and assets purchase target. TransEconomics: no change.
  • Germany: Foreign trade (May).
  • USA: Unemployment claims.
  • Mexico: Consumers prices (Jun).

Friday 10

  • Turkey: Current account (May).
  • UK: Foreign trade (May).
  • France: Industrial production (May).
  • Italy: Industrial production (May).
  • USA: Fed Janet Yellen speaks in Cleveland. Her main job now is to train markets not to overreact to the first Fed hike by emphasizing that rate will likely remain low for long.
  • Mexico: Industrial production (May).

Monday 13

  • China: Foreign trade (Jun).
  • Japan: Industrial production (May, final).
  • India: Consumer prices (Jun).
  • Mexico: Formal Job creation (Jun).

Tuesday 14

  • Japan: Bank of Japan Monetary Policy Meeting.
  • Euro Area: European Central Bank lending survey (2Q), industrial production (May)
  • Turkey: Central Bank Report.
  • UK: Consumer prices (Jun).
  • Germany: Consumer prices (May), ZEW business survey (Jul).
  • Italy: Consumer prices (May)
  • Spain: Consumer prices (May)
  • USA: Retail sales (Jun).

Wednesday 15

  • China: Industrial production (Jun), retail sales (Jun), GDP (2Q).
  • Japan: Bank of Japan Monetary Policy Meeting and statement, Governor Kuroda’s press conference. We expect further quantitative easing over the next 18 months, though probably not at this meeting.
  • Turkey: Unemployment (Apr).
  • UK: Employment report (Jun).
  • France: Consumer prices (May)
  • USA: Industrial production (Jun), Beige book.

Thursday 16

  • Japan: Bank of Japan monthly economic report.
  • Euro Area: Foreign trade (May), Consumer prices (Jun, final), European Central Bank rate announcement. TransEconomics: no change this time, but, just as for Japan, we expect an increase in quantitative easing in the euro area over the next 18 months.
  • France: Foreign trade (May)
  • USA: Unemployment claims.

Friday 17

    • Russia: Retails sales (Jun), Unemployment (Jun), Investment (Jun).
    • USA: Consumer prices (Jun), U. Michigan consumer sentiment and inflation expectations (Jun, final).

Update History:

    • 23 June 2015: Added four-week calendar of events most likely to shake markets
Comentarios: No hay comentarios.

Revamping

Genevieve Signoret & Moisés Arizpe

We’re revamping our macro research reporting process. Meanwhile, Timón Económico is on pause.

We’ll resume publication on June 15.

Comentarios: No hay comentarios.

Euro area money supply’s recovering, Mexico business credit too

Genevieve Signoret & Moisés Arizpe

Financial conditions

Money supply growth in the euro area continued to accelerate in January.

M3, a broad measure of money supply, swelled by 4.1% from the previous year, marking an accelerating trend from year-on-year growth rates of 3.8% in December and 3.1% the month before. Credit continued to contract but at a slower pace than previously.

These excellent signs support of our central scenario view in which the euro area avoids deflation—by which we mean a downward trend in a broad range of prices, not just energy prices.

Money supply growth in the euro area continued to accelerate in January
fc image2

Credit continued to contract but at a slower pace than previously
fc image3

Mexico money supply accelerated sharply in January. The monetary aggregate M3 grew 13.7% year on year from 7.5% the previous month. Mexico’s M3 had slowed down during the second half of 2014. Commercial bank lending is accelerating for businesses and mortgages but consumption credit growth continued to be subdued.

Mexican money supply has accelerated since July 2014
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Bank lending to businesses is accelerating in Mexico, while growth in lending to consumers remains strong and stable
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We revise inflation numbers but not our monetary policy views on Fed or BoJ

Genevieve Signoret & Moisés Arizpe

Prices

We revised down our forecast for U.S. core PCE inflation in 2015 and 2016 and note falling inflation in Japan, while holding our monetary policy outlooks for both the Fed and the Bank of Japan unchanged.

U.S. core CPI inflation held firm

U.S. consumer prices in January were lower than a year earlier. The U.S. Consumer Price Index was down 0.1% y/y in January from 0.8% the previous month. Core inflation remained stable at 1.6%. PCE inflation showed a similar trend, the headline number slowed down to 0.2% while the core—the Fed’s favorite measure for inflation— remained steady at 1.3%. Core PCE inflation is gradually slowing down in trend: in October it was growing at 1.5% y/y.

To incorporate incoming data, we have revised down our outlook for the Core PCE inflation as follows:

Quarterly forecasts under central scenario
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Annual forecasts under central scenario
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This revision does not change our outlook for Fed policy:
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Inflation slowed in Japan

Japan’s CPI continued to slow down. Japan’s core CPI (which excludes energy and food) was down to 2.0% in January from 2.1% the month before. Despite the aggressive monetary policy stance of the Bank of Japan, inflation hasn’t sped up so far, and growth remains subdued.

U.S. headline inflation went negative in January
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Energy prices plunged even faster in January
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Core PCE inflation is gradually slowing down in trend: in October it was growing at 1.5% y/y
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Japan inflation continues to trend down
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This new data add support for our view on Bank of Japan monetary policy:
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U.S. Q4 2014 GDP was revised down

Genevieve Signoret & Moisés Arizpe

Activity

U.S. Q4 2014 GDP was revised down to 2.2% q/q saar from 2.6%, mostly because inventory investment was revised and the trade deficit was revised wider.

Not all the news was bad. All international trade figures (exports and imports both) were revised up,

To incorporate incoming data, we have revised up our outlook for Q1 2015 quarterly GDP growth and 2015 annual growth as follows:

Quarterly forecasts under central scenario

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Annual forecasts under central scenario

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The USA GDP downward revision was mainly driven by a downward revision in inventory investment
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It’s not over for Greece

Genevieve Signoret & Moisés Arizpe

Policy

The deal reached by Greece with the Troika last week is a stopgap measure only.

A deal for Greece

Greece reached a temporary deal last Monday 23 February with the Eurogroup, the IMF and the ECB to extend the current bailout program by four months. The deal commits the Greek government to complete the reform program previously agreed while giving Greece flexibility over its primary surplus target.

The primary surplus is the difference between government revenues and government expenditures not counting interest on the debt.

Now Tsipras has to sell it

In Athens, on 26 February several hundreds of people protested the deal and the new government. On Friday night, Mr. Tsipras­—the Greek prime minister—announced new legislation to be presented at the Eurogroup meeting on Monday 9. The legislation will include some of the agreed reforms but also some laws aimed at providing the Greek populace some relief. “The country has come out of this difficult and hard process of real negotiation stronger and more proud,” said the Prime Minister.

It’s not over for Greece

The Troika (the Eurogroup, the IMF and the ECB) must approve Greece’s reform plans before April for funding to start to flow into Greece. They and Greece will need to reach a permanent agreement before July.

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