Daily Insight Euro Crisis Summit
Group Economics Macro & Financial Markets Research Nick Kounis, Aline Schuiling & Maritza Cabezas, +31 20 343 5616 ,
19 June 2015
Greek crisis Summit on Monday, while Eurogroup to be scheduled before that Eurozone banks took up EUR 74bn in the ECB’s fourth TLTRO Higher energy prices, lift US consumer prices, while a stronger dollar pushes down core prices
Europe to increase efforts to reach Greece deal
EZ bank lending to private sector rises
Thursday’s Eurogroup made little progress towards a deal on Greece, though there will now be an emergency Euro Summit on Monday. In addition, a Eurogroup meeting will be planned before then, in order to lay the groundwork for a deal. All this
EUR bn
30 20
shows that despite the heated rhetoric a strong push is being
10
made to reach an agreement before the end of the month,
0
when IMF payments fall due. The pressure to reach a deal was
-10
also underlined by reports that in the first four days of this week, Greek deposit outflows accelerated to EUR 3bn. Apparently the Bank of Greece will request an increase in the ELA limit today.
-20 Jan-10
Jan-11
Jan-12
Jan-13
Jan-14
Jan-15
Monthly flow in bank loans to households and non-financial corporations, adjusted for sales and securitization Source: Thomson Reuters Datastream
Fourth ECB TLTRO sees high demand again … The ECB allotted EUR 73.8bn in its fourth TLTRO, following EUR 97.8bn in the third operation in March. As in the first three TLTROs, it was mainly Spanish and Italian banks that took up the loans. In the four TLTROs that have been allotted so far, banks have borrowed a total amount of EUR 385bn, which is equal to almost 4% of eurozone GDP. The borrowing allowance of the first two TLTROs (in Sep and Dec 2014) was based on the outstanding amounts of bank loans to nonfinancial corporations and households (ex. mortgages) at the end of April 2014. In contrast, the allowance for the third and fourth operations was based on the increase in lending
US consumer prices rise in May
US headline consumer prices recorded the largest increase in two years in May, rising 0.4%, up from 0.1% the previous month, boosted by a 4.3% increase in energy prices. The core CPI showed some softness, rising just 0.1%, down from 0.3% in April. Mainly apparel and used cars declined in May. Import prices for non-oil imports continue to fall and this could be pushing down core inflation a bit. This impact should diminish in time. Compared to a year earlier, prices were unchanged, while core CPI was up 1.7%.
between the end of April 2014 and the reference month of the relevant TLTRO, versus a certain threshold. Therefore, the positive take-up in TLTROs 3-4 indicates that bank lending to the private sector is picking up.
Fed remains confident about inflation reaching 2% target We don’t think that the somewhat weaker core CPI will change the view of the Fed on a rate hike, as early as September. Wednesday’s FOMC press statement suggests the Fed
… as bank lending increases Indeed, ECB data shows that the monthly flow in loans to households and non-financial corporations (adjusted for sales
remains confident that inflation will gradually move to its 2% target and that it does not have to wait for inflation to reach this target to hike rates.
and securitization) turned positive in August 2014, after having contracted almost non-stop during the previous two years. It has accelerated markedly since the start of this year. In April, the monthly flow came out at EUR 15bn, up from EUR 9bn in March. This rise in bank lending has also been signalled by the last couple of quarterly ECB Bank Lending Surveys, which have shown that banks are easing lending conditions, while demand for bank loans is rising.
US labour market remains solid Meanwhile, initial jobless claims declined to 267k in the week ended June 13 from 279K last week. This is the week which the government surveys employers for the June nonfarm payrolls, suggesting that this job report will be strong.
2
Euro Crisis Summit – 19 June 2015
Financial markets Currency markets
Close
Change 1 day
Change 5 days
Change YTD
EUR/USD USD/JPY
1.1372
0.1144
0.9409
123.03
0.0569
-0.2918
-6.0010 2.7133
AUD/USD
0.7784
-0.2051
0.6856
-4.7829
USD/CHF
0.9212
-0.0542
-0.8183
-7.3519
NZD/USD
0.6917
-0.1444
-0.9593
-11.2864
GBP/USD
1.5881
0.0063
2.0564
1.9516
USD/SGD
1.3345
0.0225
-0.6921
0.6790
USD/CAD
Bond markets
1.2231
Close
0.0736
Change 1 day
-0.7385
Change 5 days
5.2491
Change YTD
2-year German Govt Bond yield
-0.1990
-0.0040
-0.0300
-0.1010
10-year German Govt Bond yield
0.8080
0.0000
-0.0760
0.2670
Yield curve Germany
1.0070
0.0040
-0.0460
0.3680
2-year US Treasury Bond yield
0.6310
-0.0021
-0.0946
-0.0335
10-year US Treasury Bond yield
2.3201
-0.0144
-0.0717
0.1489
Yield curve US
1.6891
-0.0123
0.0229
0.1824
US 2-year sw ap rates
0.8995
-0.0135
-0.0870
0.0052
US 10-year sw ap rates
2.4014
-0.0435
-0.0498
0.1153
US sw ap curve
1.5019
-0.0300
0.0372
0.1101
EU 2-year sw ap rates
0.1480
-0.0063
0.0035
-0.0270
EU 10-year sw ap rates
1.1579
-0.0271
-0.0331
0.3459
EU sw ap curve
1.0099
-0.0208
-0.0366
0.3729
-0.0140
0.0000
0.0000
-0.0920
Euribor 3 Month ACT/360 ICE LIBOR USD 3 Month
0.2857
-0.0006
-0.0022
0.0301
JPMorgan EMBI Plus Sovereign S
390.0500
-14.1400
-2.5500
2.6100
Equity markets
Close
Change 1 day % Change 5 days %Change YTD%
Nikkei 225
19,991
-1.13
-2.04
14.56
Hang Seng Index
26,695
-0.22
-0.79
13.09
Hang Seng China Enterprises Index
13,263
-1.13
-3.49
10.67
Australian Stock Exchange S&P/ASX 200 Index
5,570
0.82
0.45
2.94
Singapore Straits Times Index
3,300
-0.77
-1.41
-1.92
Euro Stoxx 50 Index
3,450
0.63
-2.86
9.66
S&P 500 Index
2,121
0.99
0.59
3.03
MSCI World Daily Total Return Gross USD
808
1.04
0.09
5.31
AEX Index
473
0.30
-2.46
11.43
-9.03
2.65
-31.30
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
13
Close
Change 1 day % Change 5 days %Change YTD%
225
0.27
-0.53
1,201
-0.08
1.63
-2.53 1.36
60
-0.10
0.72
13.37
64
-0.23
0.38
11.83
5,755
0.17
-2.13
-8.65
488
0.00
-3.13
-17.25
3
Euro Crisis Summit – 19 June 2015
Day
Date
Time
Country
Key Economic Indicators and Events
Period
Latest outcome
Consensus
Monday Monday Monday Monday Monday Monday Monday
15/06/2015 15/06/2015 15/06/2015 15/06/2015 15/06/2015 15/06/2015 15/06/2015
08:30:00 11:30:00 14:30:00 15:15:00 15:45:00 16:00:00
IN RU US US EC US RU
Wholesale price index - % yoy May Key rate % Jun 15 Empire State PMI - Manuf. general business conditions - index Jun Industrial production - % mom May ECB publishes weekly QE details NAHB home builders' confidence index Jun GDP - % yoy 1Q P
-2.4 11.5 -2.0 -0.2
-2.5 11.5 4.9 0.2
59.0 -2
55.0 -2
Tuesday Tuesday Tuesday Tuesday
16/06/2015 16/06/2015 16/06/2015 16/06/2015
08:00:00 10:30:00 11:00:00 14:30:00
DE GB DE US
CPI - % yoy CPI - % yoy ZEW index (expectation economic growth) Housing starts - % mom
May F May Jun May
0.7 0.1 32 -11.1
0.7
Wednesday Wednesday Wednesday Wednesday Wednesday
17/06/2015 17/06/2015 17/06/2015 17/06/2015 17/06/2015
01:50:00 10:30:00 10:30:00 11:00:00 20:00:00
JP GB GB EC US
Merchandise trade exports - % yoy Claimant count unemployment rate - % Change in claimant count - thousands Core inflation - % yoy Policy rate - %
May May May May F Jun 17
2.4 2.30 -6.5 0.9 0.25
Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday
18/06/2015 18/06/2015 18/06/2015 18/06/2015 18/06/2015 18/06/2015 18/06/2015 18/06/2015 18/06/2015 18/06/2015 18/06/2015 18/06/2015 18/06/2015
09:30:00 09:30:00 09:30:00 09:30:00 10:00:00 10:30:00 14:30:00 14:30:00 14:30:00 14:30:00 16:00:00 14:30:00
EZ NL CH CH CH NO GB US US US US US US
Eurogroup meeting about Greece Consumer confidence - index SNB 3-month ibor lower target SNB 3-month ibor upper target SNB Sight Deposit Interest rate Policy rate - % Retail sales - % mom Inflation excl food and energy - % mom Inflation excl food and energy - % yoy Inflation (CPI) - % mom Inflation (CPI) - % yoy Philadelphia Fed - business confidence - index Initial jobless claims
Jun Jun 18 Jun 18 Jun 18 Jun 18 May May May May May Jun
6.0 -1.25 -0.25 -0.75 1.0 0.2 0.1 1.7 0.4 0.0 15.2 267.0
Friday
19/06/2015
JP
Policy rate - %
Jun 19
80.0
39 -3.4
ABN AMRO
11.5
56.0
37 -2.5
2.6
0.9 0.25
0.25
-1.25 -0.25 -0.75 1.0
-1.25 -0.25 -0.75
0.2 1.8 0.4 0.0 7.5
0.2 1.8 0.4 0.0
80.0
80.0
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)
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