Daily Insight Doom and gloom
Group Economics Macro & Financial Markets Research Maritza Cabezas, Aline Schuiling, Georgette Boele +31 20 6297789
25 September 2015
US durable goods orders and Germany’s Ifo both turned out better than expected … … but mood in markets remains risk averse, with emerging market currencies in the weak spot … … especially the Brazilian real
US durable goods better than expected…
Emerging market currencies lower again
After two strong months, US durable goods orders declined by
In % with USD as basis
2% mom in August. This was slightly better than consensus
BRL UAH MXN COP KRW SGD CLP PLN MXN CLP CZK PEN CNH PEN RUB THB PHP HUF INR CNY TWD
expected (-2.3%) and was mainly the result of a fall in nondefense aircraft orders, which fell by 5.9%. Excluding transportation, core orders were unchanged. Vehicles fell 1.6% from a sharp increase of 4.9% the previous month, while there was also some slowdown in demand for computers and electrical equipment. The 3-month annualized growth rate of durable orders increased 8.5%, up from 4.1% in July. …trend in US investment to remain stable in third quarter Meanwhile non-defense capital goods shipments ex. aircrafts, which are used by the BEA to estimate investment in durable
-65 -60 -55 -50 -45 -40 -35 -30 -25 -20 -15 -10 -5
equipment in the National Accounts, declined by 0.2%, while
year-to-date
0
5
5-days
the three month annualized growth rate remained high, at 4.2%. Although the durable goods report is volatile, the
Source: Bloomberg
manufacturing sector is having a bumpy recovery, partly as a result of a strong dollar. All in all, we expect the trend in capital goods orders and shipments to remain stable in Q3.
Volatile ride in Brazilian real The Brazilian real fell sharply this week; close to 6% and set a new all-time low versus the US dollar. At some point USD/BRL
Germany’s Ifo business climate positive Germany’s Ifo business climate indicator unexpectedly rose in September. It increased to 108.5, up from 108.4 in August. The expectations component rose to 103.2 from 102.2, reaching its highest level since April. The current conditions component declined to 114.0 from 114.8, partly reversing its
almost reached 4.25. Afterwards the real recovered, but the situation remains very fluid. This steep decline further increases inflationary pressures. As a result, the central bank is between a rock (deep recession) and a hard place (inflation) in an environment of political turmoil and risk of further downgrades.
jump in August. The details of the report underline that the German economy is in healthy shape and relatively resilient against the slowdown in China and other EM.
The central bank will probably continue to intervene in FX markets to dampen the slide in the real, but this will unlikely be very aggressive. In the near-term, it is likely that weakness in
Markets turn more risk averse Despite the better than expected data for the US and Germany, investor sentiment in financial markets deteriorated sharply on Thursday. Assets that have safe-haven characteristics such as US Treasuries, German bonds, the Japanese yen, the US dollar and to a lesser extent gold all benefitted. Meanwhile, equities and commodity prices have declined and emerging market currencies were aggressively sold off; most the South African rand and the Brazilian real (more on this below).
the real will persist. In the current environment USD/BRL may overshoot to 4.5. Meanwhile, CDS spreads of Brazil have risen sharply. They have surpassed the levels seen at the height of the global financial crisis, but they are still far away from the 2002 crisis levels.
2
Doom and gloom – 24 September 2015
Financial markets Currency markets
Close
Change 1 day
Change 5 days
Change YTD
EUR/USD USD/JPY
1.1176
-0.4809
-1.0798
120.36
0.2415
0.3167
0.4842
AUD/USD
0.7020
-0.0569
-2.3508
-14.1284
USD/CHF
0.9789
0.3588
1.0217
-1.5488
NZD/USD
0.6339
-0.2518
-0.9376
-18.6995
GBP/USD
1.5224
-0.1181
-2.0082
-2.2662
USD/SGD
1.4247
0.2181
1.7861
7.4840
USD/CAD
1.3339
0.2555
0.8544
14.7836
Bond markets
Close
Change 1 day
Change 5 days
-7.6211
Change YTD
2-year German Govt Bond yield
-0.2460
0.0090
-0.0400
-0.1480
10-year German Govt Bond yield
0.6030
0.0060
-0.1780
0.0620
Yield curve Germany
0.8490
-0.0030
-0.1380
0.2100
2-year US Treasury Bond yield
0.7150
0.0352
0.0373
0.0505
10-year US Treasury Bond yield
2.1515
0.0249
0.0179
-0.0197
Yield curve US
1.4365
-0.0103
-0.0194
-0.0702
US 2-year sw ap rates
0.8258
0.0543
0.0150
-0.0685
US 10-year sw ap rates
2.1494
0.0576
-0.0274
-0.1367
US sw ap curve
1.3236
0.0033
-0.0424
-0.0682
EU 2-year sw ap rates
0.0605
-0.0005
-0.0095
-0.1145
EU 10-year sw ap rates
0.9985
0.0145
0.0015
0.1865
EU sw ap curve Euribor 3 Month ACT/360 ICE LIBOR USD 3 Month
0.9380
0.0150
0.0110
0.3010
-0.0400
-0.0010
-0.0030
-0.1180
0.3255
-0.0010
-0.0141
0.0699
JPMorgan EMBI Plus Sovereign S
440.0600
13.3300
36.7300
52.6200
Equity markets
Close
Change 1 day % Change 5 days %Change YTD%
Nikkei 225
17,572
-2.76
-2.52
0.69
Hang Seng Index
21,096
-0.97
-3.47
-10.63
Hang Seng China Enterprises Index
9,470
-1.05
-4.96
-20.98
Australian Stock Exchange S&P/ASX 200 Index
5,116
0.87
-1.06
-5.46
Singapore Straits Times Index
2,846
-0.79
-0.80
-15.43
Euro Stoxx 50 Index
3,019
-1.97
-7.26
-4.04
S&P 500 Index
1,932
-0.34
-2.91
-6.15
MSCI World Daily Total Return Gross USD
718
-0.60
-4.05
-6.52
AEX Index
410
-2.21
-6.35
-3.44
23
6.06
11.02
22.24
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%
194
0.63
-2.34
1,150
-0.36
0.94
-15.80 -2.96
45
0.07
0.58
-15.64
48
-0.10
1.37
-16.06
5,051
-0.12
-6.29
-19.83
498
0.15
2.31
-15.56
3
Doom and gloom – 24 September 2015
Day
Date
Time
Country
Monday Monday Monday
21/09/2015 21/09/2015 21/09/2015
15:45:00 16:00:00 20:00:00
EC US MX
Tuesday Tuesday Tuesday
22/09/2015 22/09/2015 22/09/2015
13:00:00 14:00:00 15:00:00
Wednesday Wednesday Wednesday Wednesday Wednesday
23/09/2015 23/09/2015 23/09/2015 23/09/2015 23/09/2015
Thursday Thursday Thursday Thursday Thursday Thursday Thursday Friday Friday Friday Friday
Key Economic Indicators and Events
Period
Latest outcome
Consensus
ABN AMRO
ECB announces weekly QE details Existing home sales - % mom Policy rate - %
Aug Sep 21
-4.8 3.0
-1.2 3.1
-0.8
TR HU US
Repo rate - % Base rate -% FHFA house price index - % mom
Sep 22 Sep 22 Jul
7.5 1.4 0.6
1.4 0.5
0.4
03:45:00 10:00:00 10:00:00 10:00:00 15:45:00
CN EC EC EC US
PMI manufacturing - index (Caixin) - flash PMI services - index Composite PMI output PMI manufacturing - index Markit - Flash PMI
Sep P Sep P Sep P Sep P Sep P
47.0 54.0 53.9 52.0 53.0
47.8 54.2 54.1 52.2
54.5 54.2 51.8
24/09/2015 24/09/2015 24/09/2015 24/09/2015 24/09/2015 24/09/2015 24/09/2015
06:30:00 10:00:00 10:00:00 11:10:00 13:00:00 14:30:00 16:00:00
NL DE NO EZ CZ US US
Producer confidence manufacturing - index Ifo - business climate - index Policy rate - % ECB allotment TLTRO-5 - EUR bn Repo rate - % New durable goods orders - % mom New homes sold - % mom
Sep Sep Sep 24
107.9
3.0 108.1
Sep 24 Aug Aug
3.5 108.5 0.8 73.8 0.1 -0.2 5.7
0.1 -2.2 1.5
-2.0 1.4
25/09/2015 25/09/2015 25/09/2015 25/09/2015
01:30:00 10:00:00 14:30:00 16:00:00
JP EC US US
CPI - % yoy M3 growth - % yoy GDP - % qoq annualised Univ. of Michigan cons. confidence - index
Aug Aug 2Q T Sep F
0.2 5.3 3.7 85.7
0.1 5.4 3.7 87.6
5.5 3.7 85.0
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)
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