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
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