Daily Insight US strong despite turmoil
Group Economics Macro & Financial Markets Research Maritza Cabezas & Aline Schuiling, +31 20 343 5618
16 September 2015
US retail sales show signs of sustained economic growth… …despite turmoil in financial markets ZEW sentiment drops, while eurozone labour market continues to improve
Low gasoline prices continue to boost US consumption…
ZEW economic sentiment and DAX %mom
US retail sales growth was quite healthy in August, rising by 0.2% after 0.7% the previous month. Lower gasoline prices
1,500
had a depressing effect on retail sales values. Car sales
1,000
remained strong, rising 0.7%, after a 1.3% gain previously. This is a sign that consumers have the confidence to purchase big items. Core retail sales which strip out gasoline and autos, rose by 0.4%, after an upwardly revised 0.6% the previous month. This measure corresponds closely to the consumption component of GDP, suggesting strong growth ahead.
15
500 0
0
-500
-15
-1,000 -1,500
-30
-2,000 1/3/2011 1/3/2012 1/3/2013 1/3/2014 1/3/2015
-45
DAX (lhs)
…despite volatility in equity markets August was a month in which the US stock market faced rising
30
ZEW economic sentiment (rhs)
Source: Thomson Reuters Datastream
volatility, but this did not lead consumers to postpone purchases. A stronger dollar, seems to be having a larger effect in supporting consumers to buy more imported goods, while low gasoline prices are also giving households more purchasing power.
ZEW sentiment hit by worries about China, … Germany’s ZEW economic sentiment dropped to 12.1 in September, down from 25 in August. The survey is held amongst financial analysts and economists and is largely
Manufacturing sector the weak spot in the US economy Other reports released Tuesday showed that the US manufacturing sector continues to struggle. The Empire State manufacturing index was nearly unchanged at -14.7 in September. New orders and the employment index were weak. Still, official US industrial production numbers for August painted a somewhat more positive picture. Industrial production fell 0.4%, but that followed a 0.9% jump the previous month. Although both reports tend to be volatile,
driven by sentiment in financial markets. Therefore, the drop in September has to be seen in the light of the nervousness about China and emerging markets in general and in anticipation of the first rate hike by the Fed. Although the risks to German GDP growth are to the downside, we expect ongoing solid growth in the coming quarters. Growth will be supported by strong domestic demand in the main developed economies, as well as further monetary policy stimulus in the eurozone.
manufacturing has been weak. A strong dollar is likely to continue to weigh on manufacturing exports.
… while the eurozone’s labour market recovery continues Employment growth in the eurozone picked up to 0.3% qoq in
Fed to remain on hold this week The relatively small size of manufacturing compared to consumption, suggests that growth will remain robust in the coming quarters. Still, we think the Fed will keep rates on hold this week given the volatility in financial markets and downside risks emanating from the external environment, especially emerging markets. We see the first rate hike in December.
Q2, from 0.2% in Q1 and 0.1% in 2014Q4. Annual employment growth stabilised at 0.8%. We expect employment, which tends to lag behind changes in GDP by around two quarters, to gather momentum in the coming quarters. This was already pre-signalled by surveys such as the employment expectations in the EC economic sentiment indicator and the employment component of the composite PMI.
2
US strong de espite turmoil – 16 Septembe er 2015
Financial markkets urrency markkets Cu
Cllose
Cha ange 1 day
Change 5 days d
Chang ge YTD
EU UR/USD US SD/JPY
1.1267
0.9588
1..3493
-6.8843
120.59
-0.4047
0..4917
0.6258
AU UD/USD
0.7069
0.6693
0..6263
-13.4231
US SD/CHF
0.9721
-0.5219
-0..3077
-2.1934
NZ ZD/USD
0.6294
-1.6563
-1..7023
-19.2559
GB BP/USD
1.5442
0.5077
1..2258
-0.8921
US SD/SGD
1.4147
-0.0495
-0..2116
6.8021
US SD/CAD
1.3225
-0.0076
0..2502
13.8614
Bo ond markets
Cllose
Cha ange 1 day
Change 5 days d
Chang ge YTD
2-yyear German Govt Bond yie eld
-0.2240
0.0010
0..0150
-0.1260
10 0-year German n Govt Bond y ield
0.6950
-0.0030
-0..0290
0.1540
Yie eld curve Germany
0.9190
-0.0040
-0..0440
0.2800
2-yyear US Treassury Bond yielld
0.7330
-0.0079
0..0407
0.0685
10 0-year US Trea asury Bond yie eld
2.2220
0.0214
0..0624
0.0508
Yie eld curve US
1.4890
0.0293
0..0217
-0.0177
US S 2-year sw ap p rate
0.8654
-0.0085
0..0322
-0.0289
US S 10-year sw ap a rate
2.2290
-0.0202
0..0041
-0.0571
US S sw ap curve
1.3636
-0.0117
-0..0281
-0.0282
EU U 2-year sw ap p rate
0.0800
0.0010
0..0060
-0.0950
EU U 10-year sw ap a rate
1.0205
-0.0125
-0..0245
0.2085
EU U sw ap curve
0.9405
-0.0135
-0..0305
0.3035
-0.0360
-0.0010
-0..0030
-0.1140
0.3330
0.0010
0..0005
0.0774
-4.8900
-9..4700
26.2300
Eu uribor 3 Month ACT/360 ICE E LIBOR USD 3 Month JP PMorgan EMBI Plus Sovereign S
41 13.6700
Eq quity marketss
Cllose
Chan nge 1 day % Change C 5 da ays %Change e YTD%
Nikkkei 225
18,300
-2.51
0.64
4.86
Ha ang Seng Indexx
21,563
-2.57
3.00
-8.65
Ha ang Seng China Enterprises Index
9,780
-1.96
5.15
-18.39
Au ustralian Stockk Exchange S& &P/ASX 200 In ndex
5,095
-2.42
1.34
-5.84
Sin ngapore Straitts Times Indexx
2,888
-1.37
-0.63
-14.18
Eu uro Stoxx 50 In ndex
3,221
-1.49
-1.50
2.37
S& &P 500 Index
1,950
0.40
0.05
-5.30
MS SCI World Dailyy Total Return Gross USD
736
0.30
0.90
-4.14
AE EX Index
436
-1.81
-1.88
2.77
-0.42
0.11
36.04
Ch hicago Board Options O Excha ange Volatility Index
Co ommodity m arkets Re euters/Jefferie es CRB Total Return R
26
Cllose
Chan nge 1 day % Change C 5 da ays %Change e YTD%
196
-1.31
-0.50
-14.84
1,111
0.32
-1.25
-6.20
Ge eneric first NY YMEX Crude Lig ght future
45
2.65
-2.01
-14.92
Ge eneric first Bre ent Crude Oil future f
48
1.60
-4.62
-15.68
5,387
0.41
2.69
-14.49
478
1.27
-0.16
-18.91
Go old spot USD/O Oz
LM ME Copper 3 Months M Rolling Forw ard Ge eneric first Wh heat future Chicago Board of o Trade Sou urce: Bloomberg
3
US strong de espite turmoil – 16 Septembe er 2015
Day
Da ate
Time
Country
Sunday Sunday Sunday
13/09 9/2015 13/09 9/2015 13/09 9/2015
07:30:00 07:30:00 07:30:00
CN CN CN
Monday Monday Monday Monday Monday
14/09 9/2015 14/09 9/2015 14/09 9/2015 14/09 9/2015 14/09 9/2015
06:30:00 09:00:00 11:00:00 14:00:00 15:45:00
Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday
15/09 9/2015 15/09 9/2015 15/09 9/2015 15/09 9/2015 15/09 9/2015 15/09 9/2015 15/09 9/2015 15/09 9/2015
Wednesday W W Wednesday W Wednesday W Wednesday W Wednesday W Wednesday W Wednesday W Wednesday
Key Economic Indicators and Eve ents
P Period
Latest outccome
Consensuss
Retail sales - % yoy y Industtrial production - % yoy Fixed asset a investment - % yoy
Aug Aug Aug
10.5 6.0 11.2
10.6 6.5 11.2
JP CH EC IN EC
Industtrial production - % mom m Foreign currency reservess - CHF mln Industtrial production - % mom m CPI - % yoy ECB announces a weekly QE Q details
Jul F Aug Jul Aug
-0.6 531820 -0.4 3.8
#N/A N/A 0.3 3.6
0.4
10:30:00 11:00:00 14:30:00 14:30:00 15:15:00 16:00:00
NL GB DE US US US US JP
Govern nment presents Bud dget 2016 Aug CPI - % yoy Sep ZEW in ndex (expectation ecconomic growth) Aug Retail sales - % mom Empire e State PMI - Manuf. general business conditions c - index Sep Aug Industtrial production - % mom m Jul Busine ess inventories - % mom Annua al rise in monetary ba ase Sep 15 S
0.1 25.0 0.6 -14.9 0.6 0.8 80.0
0.0 17.7 0.3 -0.5 -0.2 0.2 80.6
0.0 10.0 0.4
16/09 9/2015 16/09 9/2015 16/09 9/2015 16/09 9/2015 16/09 9/2015 16/09 9/2015 16/09 9/2015 16/09 9/2015
10:30:00 10:30:00 11:00:00 14:30:00 14:30:00 14:30:00 14:30:00 16:00:00
GB GB EC US US US US US
Claima ant count unemployyment rate - % Chang ge in claimant countt - thousands Core in nflation - % yoy Inflatio on excl food and ene ergy - % mom Inflatio on excl food and ene ergy - % yoy Inflatio on (CPI) - % mom Inflatio on (CPI) - % yoy NAHB home builders' confidence index
Aug Aug A F Aug Aug Aug Aug Aug Sep
2.3 -4.9 1.0 0.1 1.8 0.1 0.2 61.0
2.3 -5.0 1.0 0.1 1.9 0.0 0.2 61.0
Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday
17/09 9/2015 17/09 9/2015 17/09 9/2015 17/09 9/2015 17/09 9/2015 17/09 9/2015 17/09 9/2015 17/09 9/2015 17/09 9/2015 17/09 9/2015
01:50:00 09:30:00 09:30:00 09:30:00 09:30:00 10:30:00 14:30:00 16:00:00 20:00:00 20:30:00
JP NL CH CH CH GB US US US US
Mercha andise trade exportss - % yoy Unem ployment rate SNB 3-month ibor lower ta arget SNB 3-month ibor upper ta arget SNB Sight S Deposit Interesst rate Retail sales - % mom ng starts - % mom Housin Philadelphia Fed - busine ess confidence - inde ex Targe range for fed funds rate Fed Ch hair Yellen holds pre ess conference
Aug Aug S 17 Sep S 17 Sep S 17 Sep Aug Aug Sep S 17 Sep S Sep-17
7.6 6.8 -1.3 0 -0.75 0.1 0.2 8.3 0-0.25% %
Friday
18/09 9/2015
09:30:00
NL
Consu umer confidence - in ndex
Sep
6
ABN AMRO
0.1 1.9 -0.1 0.2
6.8 -1.3 0 -0.75 -4.5 5.9 0.25-0.50% %
-4.0 7.0 0-0.25%
7
So ource: Bloomberg, Reuters, ABN AMR MRO Group Econom mics (we provide ow wn forecasts only fo or selected k ey varriables and events))
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