Group Economics
Daily Insight
Macro & Financial Markets Research Maritza Cabezas & Nick Kounis
US housing building steam
+31 20 343 5616
19 August 2015
US housing market data paint picture of recovery… …which should increasingly support economic growth Greece deal can be almost fully-financed by ESM programme
US housing market picking up momentum
US residential investment to pick up
Housing market data releases are painting an encouraging
index
picture. The NAHB housing market index edged up to 61 in August from 60 the previous month. This took this indicator of homebuilder confidence to its highest level since November 2005. The increase was driven by an improvement in current sales and prospective buyers in almost all regions of the country, except the Northeast region which had showed a solid print in the past two months. This supports our expectation for further improvement in the coming months. Meanwhile, housing starts rose to a near eight-year high in
%qoq saar
80 70 60 50 40 30 20 10 0
40 30 20 10 0 -10 -20 -30 -40 05
06
07
08
09
10
Residential investment (rhs)
11
12
13
14
15
NAHB home builder survey (lhs)
Source: Thomson Reuters Datastream
July as builders ramped up construction. Housing starts increased 0.2%, which is very impressive following the 12.3%
ESM to provide up to EUR 86bn for Greece
surge seen in June. Admittedly housing permits were much
The ESM is set to take care of most of Greece’s financing
weaker (-16.3%) though, but that came on the back of three
needs over the next three years if necessary. This removes
months of strong increases.
one of the key problems in previous proposals, where Greece would have had to rely to a large extent on a combination of
Housing matters for economic growth
the IMF, large asset sales and a return to markets to top up the
US housing is getting support from the strong labour market,
ESM’s contribution.
which is driving home demand. Furthermore, there is likely considerable pent up demand for housing. These factors
A draft proposal leaked to the press, shows the ESM is
should remain supportive in the coming months despite a
planning to provide up to EUR 86bn for Greece. This would
likely gradual rise in mortgage rates on the back of moderate
cover most of the EUR 94 bn financing needs of the
Fed rate hikes.
programme according to the base line of the institutions. This is made up of EUR 25bn for bank re-capitalisation, EUR 54 bn
In turn, the recovery of the housing market will continue to
to service loans and EUR 15bn to clear arrears and build cash
have positive effects for the economy. Directly, the housing
buffers. The rest of the financing need will be made up from
recovery will support construction and employment. In times of
EUR 2bn from Greece running a primary surplus and EUR 6bn
economic expansion, it is an important contributor to GDP
from privatization proceeds.
growth. In addition, as home prices increase, households will see their wealth rise, which should lead them to spend more. A
In previous proposals the ESM would have provided only EUR
firm recovery in the housing market will likely help economic
50bn, which could have exposed Greece to a large financing
growth to remain at above trend rates in the coming quarters.
gap in the future. The IMF could still participate in the financing of the programme (EUR 10 – 15bn), reducing the ESM contribution. That depends on an agreement on debt relief.
2
US housing building steam – 19 August 2015
Financial markets Currency markets
Close
Change 1 day
Change 5 days
Change YTD
EUR/USD USD/JPY
1.1029
0.0454
-1.1650
124.41
0.0000
0.1610
3.8654
AUD/USD
0.7337
-0.0545
-0.5692
-10.2508
USD/CHF
0.9776
0.0409
0.2255
-1.6796
NZD/USD
0.6589
-0.1818
-0.4683
-15.4931
GBP/USD
1.5665
0.0255
0.3331
0.5649
USD/SGD
1.4043
0.0427
0.3932
5.9449
USD/CAD
Bond markets
1.3058
Close
-0.0077
Change 1 day
0.6242
Change 5 days
-8.8362
12.3655
Change YTD
2-year German Govt Bond yield
-0.2540
0.0030
0.0220
10-year German Govt Bond yield
0.6420
0.0150
0.0100
-0.1560 0.1010
Yield curve Germany
0.8960
0.0120
-0.0120
0.2570
2-year US Treasury Bond yield
0.7180
0.0000
0.0529
0.0535
10-year US Treasury Bond yield
2.1925
0.0000
0.0445
0.0213 -0.0322
Yield curve US
1.4745
0.0000
-0.0084
US 2-year sw ap rates
0.9574
0.0104
0.0757
0.0631
US 10-year sw ap rates
2.2660
0.0190
0.0757
-0.0201
US sw ap curve
1.3086
0.0086
0.0000
-0.0832
EU 2-year sw ap rates
0.0875
0.0010
0.0035
-0.0875
EU 10-year sw ap rates
1.0012
0.0002
0.0472
0.1892
0.9137
-0.0008
0.0437
0.2767
-0.0280
-0.0010
-0.0040
-0.1060
EU sw ap curve Euribor 3 Month ACT/360 ICE LIBOR USD 3 Month
0.3329
0.0084
0.0187
0.0773
JPMorgan EMBI Plus Sovereign S
421.4300
-0.2700
-0.8600
33.9900
Equity markets
Close
Change 1 day % Change 5 days %Change YTD%
Nikkei 225
20,554
-0.32
0.79
Hang Seng Index
23,475
-1.43
-4.18
-0.55
Hang Seng China Enterprises Index
10,770
-1.75
-4.39
-10.13
17.79
Australian Stock Exchange S&P/ASX 200 Index
5,314
0.21
-1.26
-1.79
Singapore Straits Times Index
3,050
-0.58
-3.28
-9.38
Euro Stoxx 50 Index
3,495
-0.07
-3.05
11.09
S&P 500 Index
2,097
-0.26
0.62
1.85
MSCI World Daily Total Return Gross USD
786
-0.31
-0.51
2.34
AEX Index
479
0.99
-3.11
12.85
5.91
0.58
-28.18
Chicago Board Options Exchange Volatility Index
Commodity markets Reuters/Jefferies CRB Total Return Gold spot USD/Oz Generic first NYMEX Crude Light future Generic first Brent Crude Oil future LME Copper 3 Months Rolling Forw ard Generic first Wheat future Chicago Board of Trade Source Bloomberg
14
Close
Change 1 day % Change 5 days %Change YTD%
197
0.12
-1.27
1,117
-0.05
-0.64
-14.42 -5.70
42
-0.56
-2.12
-20.44
49
0.14
-0.75
-14.86
5,035
-1.56
-1.76
-20.08
494
-1.25
-2.56
-16.19
3
US housing building steam – 19 August 2015
Day
Date
Time
Country
Key Economic Indicators and Events
Period
Latest outcome
Consensus
ABN AMRO
Monday Monday Monday Monday
17/08/2015 17/08/2015 17/08/2015 17/08/2015
01:50:00 14:30:00 16:00:00 15:45:00
JP US US EC
GDP - % qoq Empire State PMI - Manuf. general business conditions - index NAHB home builders' confidence index ECB announces weekly QE details
2Q P Aug Aug
-0.4 -14.9 61.0
-0.6 4.7 61.0
62.0
Tuesday Tuesday Tuesday
18/08/2015 18/08/2015 18/08/2015
10:30:00 13:00:00 14:30:00
GB TR US
CPI - % yoy Repo rate - % Housing starts - % mom
Jul Aug 18 Jul
0.1 7.5 0.2
0.0 7.7 0.4
Wednesday Wednesday Wednesday Wednesday Wednesday
19/08/2015 19/08/2015 19/08/2015 19/08/2015 19/08/2015
01:50:00 14:30:00 14:30:00 14:30:00 14:30:00
JP US US US US
Merchandise trade exports - % yoy Inflation excl food and energy - % mom Inflation excl food and energy - % yoy Inflation (CPI) - % mom Inflation (CPI) - % yoy
Jul Jul Jul Jul Jul
7.6 0.2 1.8 0.3 0.1
5.7 0.2 1.8 0.1 0.2
Thursday Thursday Thursday Thursday Thursday
20/08/2015 20/08/2015 20/08/2015 20/08/2015 20/08/2015
09:30:00 09:30:00 10:30:00 16:00:00 16:00:00
NL NL GB US US
Consumer confidence - index Unemployment rate Retail sales - % mom Existing home sales - % mom Philadelphia Fed - business confidence - index
Aug Jul Jul Jul Aug
4 6.9 -0.2 3.2 5.7
0.6 -1.4 6.5
Friday Friday Friday Friday
21/08/2015 21/08/2016 21/08/2017 21/08/2017
15:45:00 10:00:00 10:00:00 10:00:00
US EC EC EC
Markit Manufacturing PMI Manufacturing PMI Services PMI Composite PMI
Aug P Aug P Aug P Aug P
53.8 52.4 54.0 53.9
0.0
0.2 1.8 0.1 0.2 5 6.9
55.0 53.0 54.5 54.5
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)
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