Global daily insight 2 september 2015

Page 1

Daily Insight

Group Economics Macro & Financial Markets Research Nick Kounis & Aline Schuiling

Global growth fears

+31 20 343 5616

2 September 2015 • • •

Markets weighed down by worries about global growth … …following a set of soft manufacturing PMIs, led by emerging markets Meanwhile, decline in eurozone unemployment gains pace

Global growth concerns hit financial markets Investor risk appetite took another blow on Tuesday as concerns about the global economic outlook intensified. Equity markets headed lower for the second successive session. This erased some of the gains made post Black Monday. US Treasuries and the Japanese yen were the main beneficiaries. Official China PMI dropped as well The concerns about the global economy were fueled by a set of weak manufacturing PMIs. China’s official manufacturing PMI dropped to 49.7 in August from 50 in July, taking it to its lowest level since August 2012. This followed in the footsteps

Global manufacturing continues to slow % 3mo3M annualised

Index

14 12 10 8 6 4 2 0 -2 -4

58 56 54 52 50 48 10

11

12

Industrial production (lhs)

13

14

15

Manufacturing PMI (rhs)

of the previously-released Caixin PMI for China. Source: Thomson Reuters Datastream, Markit, CPB

Emerging markets lead the way The weakness was mirrored in most emerging market

Decline in eurozone unemployment gains pace

economies, where the aggregate PMI dropped to the lowest

Meanwhile, the unemployment rate in the eurozone fell from

level seen since April 2009, at the start of the recovery from

11.1% in June to 10.9% in July, reaching its lowest level since

the financial crisis. There was also a more moderate slowdown

the start of 2012. The series has been on a modest downward

in growth in the advanced economy PMIs, with Markit indices

trend since the start of 2013, but the pace of the decline seems

for the eurozone and US slipping. This left the global

to have increased in recent months. This probably reflects the

manufacturing PMI slowing further (to 50.7 from 51 in July)

pick-up in GDP growth after 2014Q3, as changes in the labour

leaving it consistent with very modest growth.

market tend to follow changes in economic conditions with some delay. Given our scenario of the eurozone economy

Manufacturing not the whole story

recovery gaining some momentum in the second half of this

The overall global economy is not as weak as suggested by

year, we expect the unemployment rate to remain on a solid

the manufacturing sector, as services are generally stronger in

downward path. As a result, it should reach levels that will start

most big economies. However, manufacturing is the most

pushing wage growth in the eurozone significantly higher in the

cyclical part, and there is little doubt that global growth is

course of next year.

currently only moderate, while downside risks have increased. Looking at the individual countries, the unemployment rate has Firmer growth ahead

fallen the fastest in Spain and Portugal since the start of the

We see three positives going forward. First, domestic demand

year. That said, the unemployment rate in Spain (22.2%) still is

in the US and the eurozone has been firming. Second, oil

one of the highest in the eurozone, while Portugal (12.1%) also

prices have come down, and this could also facilitate an easier

still has a relatively high rate. On the other side of the

monetary policy stance globally. Third, the Chinese authorities

spectrum, unemployment in Finland and Austria has risen

continue to take a range of measures to support demand. We

since the start of the year, reflecting economic weakness in

therefore see firmer growth ahead.

both countries.


2

Global growth fears – 2 September 2015

Financial markets Currency markets

Close

Change 1 day % Change 5 days %Change YTD%

EUR/USD USD/JPY

1.1289

0.1597

119.71

-0.0668

0.3016

-0.1085

AUD/USD

0.7031

-0.0711

-0.7762

-13.8885

USD/CHF

0.9617

-0.0935

1.4238

-3.2398

NZD/USD

0.6336

-0.0789

-1.3852

-18.7171

GBP/USD

1.5314

-0.0392

-1.1171

-1.7136

USD/SGD

1.4125

-0.0212

0.3054

6.6360

USD/CAD

Bond markets

1.3193

Close

0.1290

Change 1 day

-0.8432

-0.9014

Change 5 days

-6.7025

13.5859

Change YTD

2-year German Govt Bond yield

-0.2130

-0.0100

0.0250

-0.1150

10-year German Govt Bond yield

0.7970

-0.0010

0.0670

0.2560

Yield curve Germany

1.0100

0.0090

0.0420

0.3710

2-year US Treasury Bond yield

0.7159

-0.0216

0.1154

0.0514

10-year US Treasury Bond yield

2.1807

-0.0372

0.1093

0.0095

Yield curve US

1.4648

-0.0156

-0.0061

-0.0419

US 2-year sw ap rate

0.8494

-0.0012

0.0544

-0.0449

US 10-year sw ap rate

2.2240

0.0031

0.0399

-0.0621

US sw ap curve

1.3746

0.0043

-0.0145

-0.0172

EU 2-year sw ap rate

0.0930

-0.0010

0.0030

-0.0820

EU 10-year sw ap rate

1.1160

0.0000

0.0770

0.3040

EU sw ap curve

1.0230

0.0010

0.0740

0.3860

-0.0330

0.0000

0.0000

-0.1110

0.3290

0.0046

-0.0001

0.0734

-8.4000

-55.5300

23.8100

Euribor 3 Month ACT/360 ICE LIBOR USD 3 Month JPMorgan EMBI Plus Sovereign S

411.2500

Equity markets

Close

Change 1 day % Change 5 days %Change YTD%

Nikkei 225

18,166

-3.84

2.02

4.10

Hang Seng Index

21,185

-2.24

-1.03

-10.25

Hang Seng China Enterprises Index

9,454

-2.95

-0.63

-21.12

Australian Stock Exchange S&P/ASX 200 Index

5,096

-2.12

-0.80

-5.81

Singapore Straits Times Index

2,883

-1.32

-0.12

-14.33

Euro Stoxx 50 Index

3,189

-2.47

-0.91

1.34

S&P 500 Index

1,921

-2.57

2.89

-6.67

MSCI World Daily Total Return Gross USD

743

-0.70

3.80

-3.18

AEX Index

434

-2.58

-0.72

2.13

32

12.56

-11.16

66.67

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%

203

2.53

7.69

-12.10

1,141

0.52

0.02

-3.73

46

-6.87

16.56

-13.99

50

-7.20

16.25

-12.35

5,069

-1.29

2.38

-19.54

486

0.05

-1.97

-17.68


3

Global growth fears – 2 September 2015

Day

Date

Time

Country

Key Economic Indicators and Events

Period

Latest outcome

Consensus

Monday Monday Monday Monday Monday Monday Monday Monday

31/08/2015 31/08/2015 31/08/2015 31/08/2015 31/08/2015 31/08/2015 31/08/2015 31/08/2015

01:50:00 09:00:00 11:00:00 11:00:00 14:00:00 15:00:00 15:45:00 15:45:00

JP CH EC EC IN BE US EC

Industrial production - % mom Total sight deposits in bn CHF Core inflation - % yoy CPI - % yoy GDP - % yoy GDP - % qoq Chicago Fed - business confidence - index ECB announces weekly QE details

Jul P 21-Aug Aug A Aug P 2Q 2Q F Aug

1.1 463 1.0 0.2 6.1 0.4 54.7

-0.1

Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday Tuesday

01/09/2015 01/09/2015 01/09/2015 01/09/2015 01/09/2015 01/09/2015 01/09/2015 01/09/2015 01/09/2015 01/09/2015 01/09/2015 01/09/2015

03:00:00 00:00:00 03:45:00 03:45:00 09:30:00 09:55:00 09:55:00 10:00:00 10:30:00 11:00:00 15:45:00 16:00:00

CN CN CN CN NL DE DE EC GB EC US US

PMI manufacturing - index (official) PMI non-manufacturing - index (official) PMI manufacturing - index (Caixin) PMI services - index (Caixin) PMI manufacturing - index Unemployment - % Unemployment change - thousands PMI manufacturing - index PMI manufacturing - index Unemployment - % Markit - Flash PMI ISM manufacturing - index

Aug Aug Aug F Aug Aug Aug Aug Aug F Aug Jul Aug F Aug

50.0 53.9 47.1 53.8 56.0 6.4 9.0 52.4 51.9 11.1 52.9 52.7

49.7

Wednesday Wednesday Wednesday Wednesday

02/09/2015 02/09/2015 02/09/2015 02/09/2015

14:15:00 14:30:00

US US BR PL

ADP nat. employment report - thousands Output per hour nonfarm business sector - % qoq Policy rate - % Reference rate - %

Aug 2Q F Sep 2 Sep 2

Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday Thursday

03/09/2015 03/09/2015 03/09/2015 03/09/2015 03/09/2015 03/09/2015 03/09/2015 03/09/2015 03/09/2015 03/09/2015

07:30:00 09:30:00 10:00:00 10:00:00 10:30:00 11:00:00 13:45:00 13:45:00 14:30:00 16:00:00

FR SE EC EC GB EC EC EC US US

Unemployment (mainland France) - % Policy rate - % PMI services - index Composite PMI output PMI services - index Retail sales - % mom ECB refi rate - % ECB deposit rate - % Trade balance - USD bn ISM non-manufacturing, index

Friday Friday Friday Friday

04/09/2015 04/09/2015 04/09/2015 04/09/2015

08:00:00 14:30:00 14:30:00 14:30:00

DE US US US

Manufacturing orders - % mom Change in employment private employment - thousands Change in employment total - thousands Unemployment - %

0.1 7.0

ABN AMRO

0.1

54.0

47.2 55.8

52.4 51.9 11.0

52.5 11.0

52.7

53.0

185.4 1.3 14.3 1.5

196.2 2.4 14.3 1.5

195

2Q Sep 3 Aug F Aug F Aug Jul Sep 3 Sep 3 Jul Aug

10.0 -0.4 54.3 54.1 57.4 -0.6 0.05 -0.20 -43.8 60.3

54.3 54.0 57.4 0.6 0.05 -0.20 -44.2 58.5

58.0 0.5 0.05 -0.20

Jul Aug Aug Aug

2.0 210 215 5.3

-0.6 186 203 5.3

-0.4 200 210 5.3

1.5

Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)

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