Macroview

Euro area: Bank credit standards eased slightly in Q2

  The July Bank Lending Survey (BLS), released by the ECB today, showed that bank credit standards for loans to enterprises eased slightly in Q2 2017, following a net easing in the previous quarter. This came despite expectations in the previous survey round that these standards would tighten slightly. Competitive pressure remained the main factor […]

Major currencies’ outlook

Our latest forecasts for major currencies over the coming months can be summarised as follows: US dollar. In terms of duration and valuation, the USD up-cycle is likely close to ending. However, the USD is likely to remain strong on the back of robust US growth and the outlook for inflation. It should also benefit […]

Monthly Investment Strategy Highlights, July 2017

Asset allocation As central bank support starts to be withdrawn, volatility could well rise. We are still slightly long equities, since fundamentals are supportive, but have bought put options on the S&P 500 to guard against downside risks. A rise in volatility will create opportunities for tactical trading and especially hedge funds. Commodities Oil prices […]

US job market remains strong, but wage growth still disappoints

All in all, today’s employment report was healthy. In the end, job creation was actually quite robust overall in Q2, ‘aggregate weekly payrolls’ rose strongly q-o-q, and if unemployment rebounded a little in June, it was only because of higher participation, not a lack of employment growth. However, once again, wage data brought some disappointment, […]

Upbeat PMIs in China point to solid growth momentum in Q2

China’s official manufacturing PMI rose to 51.7 in June, the second highest reading in 2017. The Markit manufacturing PMI also rebounded to 50.4 in June after having dropped below the 50 threshold in the previous month. The rise in both indices in June suggests that China’s growth momentum in the second quarter was likely still […]

U.S. consumer spending picks up, but inflation is still soft

Real consumer spending increased by just 0.1% month-on-month in May. However, Q1 and April consumption figures were revised higher. The overall result was that between Q1 and April-May, US personal consumption grew by a strong 3.2% annualised. The strong bounce back in consumption growth expected has been confirmed, so that our forecast of 2.7% growth […]

Rebound in euro area core inflation

Euro area ‘flash’ HICP inflation eased to 1.3% y-o-y in June (down from 1.4% in May) while core inflation increased to 1.1% (up from 0.9% in May). Both figures were slightly above consensus expectations, but our overall assessment is unchanged. The bottom line from the June inflation report is that the broad picture remains unchanged […]

Risks for high-yield bonds are rising

US and euro high yield have performed strongly between Donald Trump’s election as US president and the end of June. However, our analysis of fair value suggests there is potential for a widening of spreads and a rise in default rates ahead. Our multi-factor model of high-yield corporate spreads enables us to forecast US and euro […]

The dollar should rebound in the coming months

The euro appreciated significantly against the US dollar (by as much as 1.4% at one stage) on 27 June, reaching a 10-month high. The main reaon was a speech by ECB President Mario Draghi at the ECB forum on central banking at Sintra. To a lesser extent, the ongoing struggle to find legislative consensus among […]

EA: Bank credit flows rose again in May

Euro area credit flows to non-financial corporations increased again in May, by EUR10 bn in adjusted terms, following a gain of EUR11 bn in April. Broad money growth (M3) rose marginally from 4.9% to 5.0% y-o-y. Bank lending growth to the private sector was broadly unchanged at 2.6% y-o-y, in line with leading indicators. Overall, […]

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