Group Economics
Daily Insight
Macro & Financial Markets Research Nick Kounis & Maritza Cabezas
On hold until after the referendum
+31 20 343 5616
2 July 2015
Eurogroup will not enter talks with Greece until after the referendum result… …despite Greek concessions, trust is low following Prime Minister Tsipras’ speech All eyes on Greece, but positive job market and manufacturing data signal US recovery
Eurogroup looks to have lost confidence in Greek
All eyes on Greece, while US job growth strong
government The Eurogroup met on Wednesday evening, and decided to hold off talks with the Greek government until after the referendum decision on Sunday. This was despite Greece’s efforts to reach a last ditch deal with its creditors. There appears to be a lack of confidence in the Greek government’s intentions. The referendum will go ahead and the outcome will be crucial. A YES vote could revive talks, likely with a new government in place, while a NO vote would further increase the chances of an eventual Greek euro exit.
000s
600 400 200 0 -200 -400 -600 -800 -1000 06
07
08
09
10
Private nonfarm payrolls
Tsipras ‘agrees’ to creditor plan… The Eurogroup decision followed an extraordinary series of events earlier in the day. To start with, Mr Tsipras sent a letter to the European authorities and the IMF, accepting almost all the conditions set out in last week’s creditor proposal that would have extended the now expired programme. Given that the referendum is asking the Greek people whether they are in
11
12
13
14
15
ADP employment
Source: Thomson Reuters Datastream
US job market remains strong While all eyes are on the Greek economy, a ‘somewhat’ more important economy for the global outlook is turning convincingly. US ADP employment rose 237K in June, higher
favour of this exact proposal, it might have been expected that
than the consensus of 218K. This bodes well for Thursday’s
the Prime Minister would call off the referendum, or at the least
nonfarm payrolls. Looking at the details of the ADP report,
urge the public to vote YES.
professional and business services posted the largest gains (+61K). This is a positive sign since this is a cyclical area.
…then tells public to vote against it
Meanwhile, manufacturing employment picked up only 7K.
Instead, Mr Tsipras made a speech later in the day where he
Weak job gains in the manufacturing sector have been the
confirmed that the referendum was going ahead and also
trend in the past months as a result of strong dollar which has
argued that the public should vote NO in the referendum and
affected exports.
hence against the plan. This triggered doubts about how sincere his government was in reaching and implementing any agreement. In addition, given the old plan has expired, the way forward will be to negotiate a new ESM programme, which could require other measures.
US manufacturers leaving soft patch behind However, US manufacturing activity now looks to be reviving. The ISM manufacturing index rose to 53.5 in June from 52.8 the previous month. Almost in line with consensus. The recent
ECB maintains ELA, despite missed IMF payment
pickup in the forward looking components of the survey
Not long after the Eurogroup meeting, the ECB decided to
suggests a modest improvement of output and employment
keep the ELA limit for the Greek banks unchanged. This was
going forward. Finally, another report released Wednesday
despite the Greek government missing its IMF payment on
showed that US construction beat expectations with non-
Tuesday night and being declared ‘in arrears’ to the Fund. The
residential spending surging. This is good news since this adds
ECB is likely also waiting for the referendum result, knowing
to the positive picture that after a weak first quarter the
that a decision to restrict ELA will make the situation for the
recovery in the US is broad-based.
Greek economy and people even worse.
2
On hold until after the referendum – 2 July 2015
Financial markets Currency markets
Close
Change 1 day
Change 5 days
Change YTD
EUR/USD USD/JPY
1.1041
-0.1086
-1.4636
123.33
0.1299
-0.2427
-8.7370 2.9638
AUD/USD
0.7641
-0.0523
-1.2536
-6.5321
USD/CHF
0.9487
0.0316
1.2703
-4.5861
NZD/USD
0.6711
-0.3416
-2.8658
-13.9284 0.1990
GBP/USD
1.5608
-0.0576
-0.8827
USD/SGD
1.3528
-0.0148
0.6473
2.0596
USD/CAD
1.2592
0.0159
2.1415
8.3556
Bond markets
Close
Change 1 day
Change 5 days
Change YTD
2-year German Govt Bond yield
-0.2400
-0.0130
-0.0430
10-year German Govt Bond yield
0.8130
0.0490
-0.0310
-0.1420 0.2720
Yield curve Germany
1.0530
0.0620
0.0120
0.4140
2-year US Treasury Bond yield
0.6882
0.0000
0.0002
0.0237
10-year US Treasury Bond yield
2.4255
0.0036
0.0167
0.2543
Yield curve US
1.7373
0.0036
0.0165
0.2306
US 2-year sw ap rates
0.9455
0.0138
0.0167
0.0512
US 10-year sw ap rates
2.5291
0.0121
0.0164
0.2430
US sw ap curve
1.5836
-0.0017
-0.0003
0.1918
EU 2-year sw ap rates
0.1205
-0.0015
-0.0075
-0.0545
EU 10-year sw ap rates
1.1980
0.0480
0.0260
0.3860
EU sw ap curve
1.0775
0.0495
0.0335
0.4405
-0.0140
0.0000
0.0000
-0.0920
0.2832
-0.0005
0.0025
0.0276
JPMorgan EMBI Plus Sovereign S
385.0500
-8.6300
5.7000
-2.3900
Equity markets
Close
Euribor 3 Month ACT/360 ICE LIBOR USD 3 Month
Change 1 day % Change 5 days %Change YTD%
Nikkei 225
20,329
0.46
-2.13
16.50
Hang Seng Index
26,250
1.09
-3.96
11.21
Hang Seng China Enterprises Index
12,981
2.26
-4.62
8.32
Australian Stock Exchange S&P/ASX 200 Index
5,529
0.24
-1.84
2.18
Singapore Straits Times Index
3,331
0.42
-0.60
-1.01
Euro Stoxx 50 Index
3,496
2.10
-3.18
11.12
S&P 500 Index
2,077
0.69
-1.48
0.90
MSCI World Daily Total Return Gross USD
795
0.61
-2.07
3.59
AEX Index
483
2.17
-1.99
13.75
-11.74
21.34
-16.20
Chicago Board Options Exchange Volatility Index
Commodity markets Reuters/Jefferies CRB Total Return
16
Close
Change 1 day % Change 5 days %Change YTD%
225
-1.37
0.01
-2.55
1,168
-0.04
-0.42
-1.40
Generic first NYMEX Crude Light future
57
0.00
-4.59
6.93
Generic first Brent Crude Oil future
62
0.15
-1.74
8.32
5,775
0.17
0.63
-8.33
588
-4.43
13.42
-0.38
Gold spot USD/Oz
LME Copper 3 Months Rolling Forw ard Generic first Wheat future Chicago Board of Trade Source Bloomberg
3
On hold until after the referendum – 2 July 2015
Day
Date
Time
Country
Monday Monday Monday Monday Monday Monday
29/06/2015 29/06/2015 29/06/2015 29/06/2015 29/06/2015 29/06/2015
01:50:00 11:00:00 14:00:00 15:45:00 16:00:00
JP EC DE EC US BE
Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday
30/06/2015 30/06/2015 30/06/2015 30/06/2015 30/06/2015 30/06/2015 30/06/2015 30/06/2015 30/06/2015
09:55:00 09:55:00 10:30:00 11:00:00 11:00:00 11:00:00 15:00:00 15:45:00 16:00:00
Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday
01/07/2015 01/07/2015 01/07/2015 01/07/2015 01/07/2015 01/07/2015 01/07/2015 01/07/2015 01/07/2015 01/07/2015 01/07/2015
Thursday Thursday Thursday Thursday Thursday Thursday Thursday Friday Friday Friday Friday Friday
Key Economic Indicators and Events
Period
Latest outcome
Consensus
ABN AMRO
Industrial production - % mom Economic sentiment monitor - index CPI - % yoy ECB announces weekly QE details Pending home sales - % mom CPI - % yoy
May P Jun Jun P
-2.2 103.5 0.3
-0.8 103.8 0.5
103.5 0.6
May Jun
0.9 0.6
1.0
1.5
DE DE GB EC EC EC US US US
Unemployment - % Unemployment change - thousands GDP - % qoq Core inflation - % yoy CPI - % yoy Unemployment - % S&P/Case Shiller house price index Chicago Fed - business confidence - index Conference Board cons. confidence - index
Jun Jun 1Q F Jun A Jun May Apr Jun Jun
6.4 -1 0.4 0.8 0.2 11.1 0.3 49.4 101.4
6.4 -5 0.4 0.8 0.2 11.1 1.0 50.5 97.2
6.4
01:50:00 03:00:00 03:45:00 03:45:00 09:30:00 10:00:00 10:30:00 14:15:00 15:45:00 16:00:00
JP CN CN CN NL EC GB US US US RU
Tankan business conditions large enterprises PMI manufacturing - index (official) PMI non-manufacturing - index (official) PMI manufacturing - index (HSBC) PMI manufacturing - index PMI manufacturing - index PMI manufacturing - index ADP nat. employment report - thousands Markit - Flash PMI ISM manufacturing - index GDP - % yoy
2Q Jun Jun Jun F Jun Jun F Jun Jun Jun F Jun 1Q F
15.0 50.2 53.8 49.4 56.2 52.5 51.4 237.0 53.6 53.5 -2.2
12.0 50.4
02/07/2015 02/07/2015 02/07/2015 02/07/2015 02/07/2015 02/07/2015 02/07/2015
09:30:00 14:30:00 14:30:00 14:30:00 14:30:00 14:30:00 14:30:00
SE US US US US US US
Policy rate - % Initial jobless claims - thousands Hourly earnings - % mom Hourly earnings - % yoy Change in employment private employment - thousands Change in employment total - thousands Unemployment - %
Jul 2 Jun 27 Jun Jun Jun Jun Jun
-0.3 271.0 0.3 2.3 262 280 5.5
0.2 2.3 222 226 5.4
03/07/2015 03/07/2015 03/07/2015 03/07/2015 03/07/2015
03:45:00 10:00:00 10:00:00 10:30:00 11:00:00
CN EC EC GB EC
PMI services - index (HSBC) PMI services - index Composite PMI output PMI services - index Retail sales - % mom
Jun Jun F Jun F Jun May
53.5 54.4 54.1 56.5 0.7
54.4 54.1 57.5 0.1
0.8 0.3 11.0 1.0 98.0
49.6 55.5 52.5 52.5 210.3
220
53.2 -2.1
53 -2.1
-0.3 0.2 2.3 220 230 5.4
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)
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