Economic and Market Monitor – Chart Book

86 Pages·2016·2.39 MB·English

Economic and Market Monitor – Chart Book
April 2016
Commerzbank Research | April 2016 Chief Economist: Dr. Jörg Krämer
Editor: Bernd Weidensteiner([email protected])
I. Editorial Page 2
II. Economics Page 3-30
USA Page 3-7
China Page 8-11
Euro area Page 13-21
Germany Page 24-31
Japan Page 32-33
III. Bond markets Page 34-39
IV. Foreign-exchange markets Page 40-59
V. Equity markets Page 60-65
VI. Commodity markets Page 66-69
VII. Cross Asset Strategy Page 70-73
VIII. Forecast overview Page 74-79
IX. Research Contacts Page 80-81
X. Access to Commerzbank Research Page 82-83
XI. Disclaimer Page 84-85
Commerzbank Research | April 2016 1
I Editorial
(cid:1) The outlook for the global economy remains subdued. World economic growth is likely to remain below
3% in 2016.
(cid:1) China's economy still gives cause for major concern. The economic data have been disappointing
recently. Growth is likely to decline even more than most economists expect. It is worrying to note that
companies' debts have increased sharply of late. This is particularly true of state-owned companies
from industries suffering from overcapacity. Admittedly, the state-owned banks are likely to keep many
of these companies afloat and so prevent a recession. However, businesses kept on artificial life
support take away resources from healthy companies and weaken the overall economy for years.
(cid:1) The hoped-for pick-up in the US economy has also failed to materialise so far. First-quarter growth is
unlikely to have reached even the meagre increase of 1.4% recorded in the 4th quarter of 2015. This will
make the Fed wait before hiking interest rates any further. However, the rate tightening process has
Dr JörgKrämer been interrupted, not ended. The US labour market is still robust, business sentiment has brightened,
Chief Economist
and inflation shows signs of accelerating. We expect the Fed to increase key interest rates in two steps
[phone]
by a total of 50 basis points by the end of the year. The markets have not yet priced in even a single
rate rise.
(cid:1) The ECB dramatically relaxed monetary policy at its March meeting. But if in doubt the ECB may well
add more fuel to the fire later in the year, perhaps by increasing the volume of bond purchases again. In
the end, the relaxed monetary policy is unlikely to have much effect on the real economy. Economic
growth will remain low in 2016 at an estimated 1.3%, and inflation will not rise as the ECB hopes.
(cid:1) Equity markets are likely to recover from the slump at the beginning of the year – especially since a
dividend yield of just over 3% makes the DAX appear attractive compared with government bonds.
Corporate bonds with good credit quality should continue to benefit from the ECB's decision to buy euro
denominated corporate bonds of issuers from the euro zone. The EUR/USD exchange rate will ease
only slightly in the medium term, now that ECB has dampened the prospect of further interest rate cuts.
Commerzbank Research | April 2016 2
II Economics - USA
Commerzbank Research | April 2016 3
USA: Economy defies headwind
Better growth ahead (cid:1) In the fourth quarter the US economy grew by an
Real GDP, seasonally-adjusted quarterly data. Q/Q rates are annualized. annualised1.4% – somewhat stronger than initially
calculated.
6
4 (cid:1) Growth was held back by weak exports and a
decline in private investment. The latter is due in
2
large part to drastically reduced investment in oil
0
and gas production. However, housing investment
-2 rose sharply again, growing by 10%.
-4 (cid:1) The US economy recorded overall growth of 2.4% in
-6 2015, exactly the same as the previous year. This is
2009 2010 2011 2012 2013 2014 2015 2016 2017
above the potential growth rate, which is 1¾% at
Q/Q Y/Y
best.
Sources: Global Insight, Commerzbank Research
(cid:1) Growth in the 1st quarter of 2016 will probably be
Housing market: a long dig out of the hole
Housing starts, annualized data, centered three-month averages. similar to that recorded in the previous quarter.
Weaker consumer growth and stronger investment
2000 500
should more or less cancel each other out.
1600 400
(cid:1) Over the next few quarters growth of around 2% is
1200 300 expected, which should lead to a further decline in
the unemployment rate.
800 200
400 100
0 0
20002001200220032004200520062007200820092010201120122013201420152016
Single family (lhs) Multi-family (rhs)
Source: Global Insight. Commerzbank Research
Commerzbank Research | April 2016 4
USA: “Missing” workers are coming back
(cid:1) The unemployment rate reached a high point of 10%
Strong labour market drives up participation rate
in October 2009, since when it has fallen
Participation rate (employed plus unemployed in % of the population
considerably. In March it was 5%.
over 16 years of age) in %. Dashed line: trend based on the data
from December 2007 to December 2015 (cid:1) There has often been criticism that the
unemployment rate paints too positive a picture,
since many job-seekers have withdrawn from the
66
labour market due to the lack of prospects and so
have dropped out of the statistics.
65
(cid:1) This was based largely on the declining participation
rate (employees and active job seekers as a
64 percentage of the population). Between the end of
2007 and mid-2015 this figure fell by over 3
percentage points.
63
(cid:1) In the last six months the participation rate has risen
considerably by 0.6 percentage points (see chart).
62
Job growth remains strong and opens up new
possibilities for many potential job-seekers.
61
(cid:1) The increase in the participation rate is certainly an
2010 2011 2012 2013 2014 2015 2016
encouraging sign. A sustained rise is not expected,
however. The rate has been declining since 2000,
due above all to the ageing of the population.
Commerzbank Research | April 2016 5
USA: Fed will raise interest rates only slightly in 2016
Inflation is below the Fed’s target (cid:1) On 16 December 2015, the Federal Reserve raised
PCE deflator, annual rate of change in %. key interest rates by 25 basis points (see chart
below left).
5
4 (cid:1) What will happen next remains to be seen. It is
3 difficult for the Fed to hike interest rates in an
2 environment where other central banks are
1 becoming more expansionary.
0 (cid:1) Recently in a major speech Janet Yellen highlighted
-1 the many risks, mentioning global economic
-2 problems in particular. The Fed will hold fire at its
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
April meeting.
Inflation Core Inflation Fed Target
(cid:1) The rate tightening process has been interrupted,
not ended. After all, the US labour market is still
Fed: first rate hike after seven years of ZIRP
Real rate: Fed funds target minus PCE inflation robust, the industrial mood has brightened, and
8 inflation shows signs of accelerating.
6 (cid:1) If the Fed is satisfied that the economic recovery is
4 continuing, interest-rate increases are likely to be
back on the agenda.
2
(cid:1) We still expect two rate hikes in 2016 – one in June
0
and one in the second half of the year
-2
-4
20002001200220032004200520062007200820092010201120122013201420152016
FF Target Rate Real Target Rate
Sources: Global Insight, Commerzbank Research
Commerzbank Research | April 2016 6
USA: Economic forecasts 2016/17
Indicator 2014 2015 2016 2017 2015 2016 2017
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Consumer spending 1)2) yoy/qoq 2.7 3.1 2.6 2.5 1.7 3.6 3.0 2.4 2.0 2.8 2.7 2.5 2.4 2.4 2.4 2.4
Capital investment 1)2) yoy/qoq 5.4 4.9 1.9 3.6 8.6 5.0 -0.7 -1.0 2.1 3.8 3.6 3.7 3.5 3.5 3.5 3.5
Domestic demand 1)2) yoy/qoq 2.5 3.0 2.2 2.4 2.5 3.6 2.2 1.5 1.7 2.7 2.6 2.4 2.4 2.4 2.4 2.4
Exports 3.4 1.1 1.3 2.4 -6.0 5.1 0.7 -2.0 1.2 2.8 2.4 2.4 2.4 2.4 2.4 2.4
Imports % 3.8 4.9 3.0 4.1 7.1 3.0 2.3 -0.7 4.1 4.5 4.5 4.1 4.1 4.1 3.9 3.9
GDP 1)2) yoy 2.4 2.4 2.0 2.2 2.9 2.7 2.1 2.0 2.1 1.8 1.9 2.1 2.2 2.1 2.1 2.1
qoq 0.6 3.9 2.0 1.4 1.3 2.5 2.3 2.2 2.1 2.1 2.1 2.1
Unemployment rate 2) 6.2 5.3 4.8 4.6 5.5 5.4 5.1 5.0 4.9 4.9 4.8 4.7 4.7 4.6 4.5 4.5
Consumer prices yoy 1.6 0.1 1.2 2.4 -0.1 0.0 0.1 0.4 1.1 1.0 1.2 1.6 2.2 2.4 2.5 2.5
- Core rate yoy 1.7 1.8 2.3 2.3 1.7 1.8 1.8 2.0 2.3 2.3 2.4 2.4 2.3 2.3 2.4 2.4
Current-account balance $bn -401 -455 -419 -462 - - - - - - - - - - - -
1) In constant prices; 2) quarterly figures seasonally adjusted; forceasts shaded; 3) excl. food and energy
Commerzbank Research | April 2016 7
II Economics – China
Commerzbank Research | April 2016 8
China: A bumpy landing in 2016
China’s growth dipped below 7.0% In 2015, China’s economy grew 6.9% (upper left-
GDP growth in % yoyand in % qoq hand chart) , in line with market consensus and a
13 notch higher than our expectation of 6.8%. For Q4,
average 1993 -2012
12 the economy gained 6.8% y/y, down from 6.9% in
11 Q3. On a seasonally adjusted basis, the economy
10 expanded by 1.6% q/q in the last quarter, down
9 from 1.8% in Q3, illustrating a slowing growth
8
momentum.
7
6 In 2016, we even expect only +6.3% as excess
5 forecast: average 2014 -2022 supply on the property market and high corporate
4 debt will keep dampening growth. We envisage
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
further interest rate cuts.
Source: Global Insight, Commerzbank Research
Poor inflation offers scope for the central bank to
Inflation profile remains soft
Consumer price index in % yoy conduct further monetary policy easing. The CPI
inflation was 1.4% y/y in 2015, versus 1.9% in
10
2014. In addition, PPI deflation has been
8
persisting for almost four years, and PPI declined
6 5.2% in 2015. (lower left-hand chart)
4
2
0
-2
-4
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: Bloomberg, Commerzbank Research
Commerzbank Research | April 2016 9