Group Economics
Daily Insight
Macro & Financial Markets Research Aline Schuiling, Maritza Cabezas & Nick
Clock is ticking for Greece
Kounis, + 31 20 343 5606
19 May 2015
Greece needs a deal before the end of this month given government and bank liquidity crunch… …which increases risks, but also puts more pressure on Syriza party to make concessions US home builder confidence slips, but home sales expectations continue rising
Greek government scraping the barrel…
US home builders to lift residential investment
In an internal memo leaked to the press, the IMF apparently
Index
expressed concern that Greece has little chance of making its next payment to the institution and that the IMF would not be pushed into a “quick and dirty” review to disburse further bailout funds. The next payment due by Greece to the IMF is EUR 300mln on 5 June, followed by another EUR 335mln on 12 June. Indeed, it seems unlikely that Greece will be able to make these payments as it had to use its emergency account at the IMF to make last week’s payment of EUR 750mln. According to a Greek government spokesman, the government
80 70 60 50 40 30 20 10 0 Q1 2005
money after that. Indeed, Greece’s government has said that it needs a deal by the end of this month. The matter will be discussed at an EU Summit on Thursday and Friday. …while bank ELA could be stretched a little longer In the meantime, the ECB’s Governing Council meeting on 20 May (non-monetary policy agenda) will discuss Emergency Lending Assistance to Greece’s banks and the collateral used by Greek banks. So far, the central bank has raised ELA in small steps (last week by EUR 1.1bn to EUR 80bn). We expect the central bank to continue to gradually raise ELA. In any case, there has to be a two-thirds majority in the government council to stop ELA. A report by Bloomberg mentions that a person familiar with the matter said that according to the current terms ELA could be stretched to around EUR 95bn, implying there is sufficient room until a deal is struck between Greece and its creditors around the end of this month. Negative news flow undermines peripherals The negative news flow about the worsening liquidity crunch for Greece’s government and banks hurt not only Greece’s government bonds but was also negative for peripheral bonds. Indeed, as we get closer to the point of payment difficulties, the risks increase. On the other hand, the pressure on the Syriza party to make concessions to reach a deal is also rising. Our base case remains that Greece and the institutions will reach an agreement, although it will probably be an eleventh hour event.
900 800 700 600 500 400 300 Q1 2008 NAHB survey
will pay public-sectors wages and pensions at the end of this month. We think the country will probably have run out of
USD billions
Q1 2011
Q1 2014
Residential Investment
Source: Thomson Reuters Datastream
US builder confidence slips, but sales expectations rising The National Home Builder confidence (NAHB) indicator dropped two points to a level of 54 in April, but it is still at a good level (a year ago it stood at 45).The component recording sales expectations remains high at 64, while current sales conditions decreased slightly to 59. We expect stronger housing demand moving forward and residential investment to pick up moderately in the coming time. More favourable mortgage lending conditions The US housing market should start benefiting from improving financing conditions and increasing demand. Indeed, in the last few months, lending conditions have been improving. Indeed, the April 2015 Senior Loan Officer Opinion Survey on Bank Lending Practices, released some days ago, showed that some large banks had eased standards on construction and that more banks are reporting stronger mortgage demand across most categories of home-purchase loans. Moderate pick up in residential investment In the coming quarters we expect US residential investment to improve. The increasing demand for homes has resulted in lower inventories of existing home sales. As a result of these lower inventories, house prices have been increasing steadily. This should support housing construction in the coming quarters.
2
Clock is ticking for Greece – 19 May 2015
Financial markets Currency markets
Close
Change 1 day
Change 5 days
Change YTD
EUR/USD USD/JPY
1.1318
0.0265
0.9364
119.95
-0.0333
0.0667
-6.4473 0.1419
AUD/USD
0.7988
-0.0375
0.1505
-2.2875
USD/CHF
0.9263
0.0000
-0.3121
-6.8390
NZD/USD
0.7372
-0.2301
0.1222
-5.4508
GBP/USD
1.5656
0.0192
-0.0957
0.5072
USD/SGD
1.3278
-0.0677
-0.5244
0.1735
USD/CAD
Bond markets
1.2159
Close
-0.0082
Change 1 day
1.1648
Change 5 days
4.6295
Change YTD
2-year German Govt Bond yield
-0.1950
0.0020
0.0100
10-year German Govt Bond yield
0.6490
0.0250
0.0390
-0.0970 0.1080
Yield curve Germany
0.8440
0.0230
0.0290
0.2050
2-year US Treasury Bond yield
0.5727
-0.0040
-0.0234
-0.0918
10-year US Treasury Bond yield
2.2249
-0.0088
-0.0240
0.0537
Yield curve US
1.6522
-0.0048
-0.0006
0.1455
US 2-year sw ap rates
0.8341
0.0109
-0.0397
-0.0602
US 10-year sw ap rates
2.2825
0.0095
-0.0381
-0.0036
US sw ap curve
1.4484
-0.0014
0.0016
0.0566
EU 2-year sw ap rates
0.1145
0.0015
0.0082
-0.0605
EU 10-year sw ap rates
0.9502
-0.0008
-0.0048
0.1382
EU sw ap curve
0.8357
-0.0023
-0.0130
0.1987
-0.0110
-0.0010
-0.0020
-0.0890
0.2765
0.0005
-0.0034
0.0209
JPMorgan EMBI Plus Sovereign S
362.9500
-8.3600
4.2800
-24.4900
Equity markets
Close
Euribor 3 Month ACT/360 ICE LIBOR USD 3 Month
Change 1 day % Change 5 days %Change YTD%
Nikkei 225
19,981
0.45
1.81
14.50
Hang Seng Index
27,591
-0.83
-0.46
16.89
Hang Seng China Enterprises Index
13,926
-0.60
-1.81
16.20
Australian Stock Exchange S&P/ASX 200 Index
5,631
-0.50
-0.77
4.07
Singapore Straits Times Index
3,460
-0.10
-0.32
2.81
Euro Stoxx 50 Index
3,589
0.45
-0.97
14.07
S&P 500 Index
2,129
0.30
1.13
3.41
MSCI World Daily Total Return Gross USD
823
0.08
1.14
7.26
AEX Index
490
-0.16
-0.53
15.47
13
2.83
-8.09
-33.70
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
Close
Change 1 day % Change 5 days %Change YTD%
231
-0.34
1.06
1,224
-0.13
2.51
0.32 3.30
60
0.13
-2.04
11.71
66
0.03
-0.85
15.63
6,380
-0.55
0.24
1.27
524
0.34
9.23
-11.23
3
Clock is ticking for Greece – 19 May 2015
Day
Date
Time
Country
Monday Monday Monday
18/05/2015 18/05/2015 18/05/2015
01:50:00 06:30:00 16:00:00
JP JP US
Tuesday Tuesday Tuesday Tuesday Tuesday
19/05/2015 19/05/2015 19/05/2015 19/05/2015 19/05/2015
10:30:00 11:00:00 11:00:00 11:00:00 14:30:00
Wednesday Wednesday Wednesday
20/05/2015 20/05/2015 20/05/2015
Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday
21/05/2015 21/05/2015 21/05/2015 21/05/2015 21/05/2015 21/05/2015 21/05/2015 21/05/2015 21/05/2015
Friday Friday Friday Friday Friday Friday Friday Friday Friday
Period
Latest outcome
Machinery orders private sector - % mom Industrial production - % mom NAHB home builders' confidence index
Mar Mar F May
2.9 -0.8 54.0
GB EC EC DE US
CPI - % yoy Core inflation - % yoy Trade balance external EU - EUR bn ZEW index (expectation economic growth) Housing starts - % mom
Apr Apr F Mar May Apr
0.0 1 22003.3 53.3 2.0
01:50:00 13:00:00 20:00:00
JP TR US
GDP - % qoq Repo rate - % Federal Reserve releases Minutes April FOMC meeting
1Q P May 20
0.4 7.5
03:45:00 09:30:00 10:00:00 10:00:00 10:00:00 10:00:00 10:30:00 16:00:00 16:00:00
CN NL EC EC EC EC GB US US
PMI manufacturing - index (HSBC) - flash Unemployment rate PMI manufacturing - index PMI services - index Composite PMI output BOP Current account - EUR bn Retail sales - % mom Philadelphia Fed - business confidence - index Existing home sales - % mom
May P Apr May P May P May P Mar Apr May Apr
48.9 7.0 52 54.1 53.9 13.8 -0.5 7.5 6.1
FR NL DE US US US US US JP
Business confidence manuf. - index Consumer confidence - index Ifo - business climate - index Inflation excl food and energy - % mom Inflation excl food and energy - % yoy Inflation (CPI) - % mom Inflation (CPI) - % yoy Markit - Flash PMI Policy rate - %
May May May Apr Apr Apr Apr May P May 22
101.0 0 108.6 0.2 1.8 0.2 -0.1 54.1 80.0
22/05/2015 08:45:00 22/05/2015 09:30:00 22/05/2015 10:00:00 22/05/2015 14:30:00 22/05/2015 14:30:00 22/05/2015 14:30:00 22/05/2015 14:30:00 22/05/2015 15:45:00 22/05/2015 Field Not Appl
Key Economic Indicators and Events
Consensus
ABN AMRO
0.4
7.0
2 0.1 1.7 0.2 0.0 0.0
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)
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