Group Economics
Daily Insight
Macro & Financial Markets Research Nick Kounis,& Aline Schuiling
Down…but no Grexit panic
+31 20 343 5616 ,
30 June 2015
Markets dropped sharply, but there was no real panic, with spreads not at stress levels Investors may not expect Grexit and may not think it will have a disastrous impact in any case Meanwhile , the Greek economy moves further into recession, as signalled by a drop in sentiment
Markets: down but no panic
Greece: economic sentiment and GDP growth
Predictably, financial markets weakened sharply after the
Index
weekend’s events in Greece, which increased the risk of default and euro exit. However, there was no real panic. Perhaps, the most pronounced weakness was in equity markets. Eurozone equities were down by more than 4%, but this only really reversed gains seen a week ago, when markets
% qoq
4 3 2 1 0 -1 -2 -3 -4 -5 -6
120 110 100 90
rallied on hopes of an imminent deal. Peripheral equities and
80
banks led the declines.
70 60 04 05 06 07 08 09 10 11 12 13 14 15
Peripheral spreads widen, but still far from stress levels
GDP (lhs)
Similarly, peripheral government bond spreads over Germany widened sharply. Portuguese, Italian and Spanish bond yields jumped, while German government bonds benefited. Having
Economic sentiment (rhs)
Source: Thomson Reuters Datastream
said that, the level of spreads remains well below the levels
The ‘Greferendum’ campaign begins
seen at the height of the euro crisis.
Meanwhile, the focus of Europe is turning to shaping the outcome of Greece’s referendum. Greek PM Tsipras, said in a
Euro recovers to end higher against the dollar
speech on Monday evening that a NO vote would put Greece
The euro fell against the US dollar at open, but it remained
in a strong position to negotiate. On the other hand, the
relatively resilient and eventually recovered to finish the day
leaders of France, Italy and the European Commission made it
up. The euro’s resilience partly reflects the general lack of
clear that they equated a NO vote in the referendum to a vote
panic in euro assets, however there other factors. The US
for euro exit (even though officially the question is about the
dollar is behaving as a cyclical currency, so market weakness
institutions’ plan). The logic being that the pro-euro Greek
is not a particularly favourable background for it despite it
public would – having understood this - be more likely to vote
emanating from the eurozone. In addition, the SNB’s
YES.
intervention was also supportive. Economic sentiment in Greece drops, eurozone resilient Investors may not buy into Grexit scenario…
Meanwhile, economic sentiment in the eurozone as measured
What explains the lack of a market meltdown? One possibility
by the European Commission edged lower in June, declining
is that investors still do not think that a Greek euro exit is the
to 103.5, down from 103.8 in May. The long-term average
most likely scenario. That is also our judgement. We think that
value of the series is 100, and at the current level it remains
a YES vote is most likely in the referendum, which would open
consistent with economic growth having picked up somewhat
up the prospect of a deal between Greece and its creditors,
after Q1, when GDP expanded by 0.4% qoq. That said, as
possibly with a new government in place.
expected, sentiment in Greece continued to drop. It fell to 90.7 in June, down from 91.4 in May, moving further into recession
…while also not expecting it to be a disaster
territory. Indeed, we expect the recession in Greece to have
In addition, investors may judge that the negative fall-out from
deepened significantly on the back of rising uncertainty and the
a possible Greek exit would be much less than in 2011-2012.
capital and deposit controls that were imposed by the Greek
Indeed, exposures of the eurozone private sector to Greece
government. The indicator is therefore likely to drop
have come down sharply. At the same time, the ECB’s OMT
significantly further going forward.
programme can be activated to calm markets.
2
Down…but no Grexit panic – 30 June 2015
Financial markets Currency markets
Close
Change 1 day
Change 5 days
Change YTD
EUR/USD USD/JPY
1.1214
-0.1958
0.4209
122.60
0.0490
-1.0812
-7.3070 2.3543
AUD/USD
0.7676
-0.0391
-0.7756
-6.1040
USD/CHF
0.9261
0.1297
-0.8564
-6.8591
NZD/USD
0.6844
-0.1022
-0.1459
-12.2226
GBP/USD
1.5733
-0.0318
0.0254
1.0015
USD/SGD
1.3465
0.0297
0.4101
1.5843
USD/CAD
1.2411
0.0645
0.6814
6.7980
Bond markets
Close
Change 1 day
Change 5 days
Change YTD
2-year German Govt Bond yield
-0.2140
-0.0230
-0.0250
10-year German Govt Bond yield
0.7960
-0.1260
-0.0880
-0.1160 0.2550
Yield curve Germany
1.0100
-0.1030
-0.0630
0.3710
2-year US Treasury Bond yield
0.6329
0.0000
-0.0450
-0.0316
10-year US Treasury Bond yield
2.3224
-0.0018
-0.0863
0.1512
Yield curve US
1.6895
-0.0018
-0.0413
0.1828
US 2-year sw ap rates
0.8880
-0.0065
-0.0250
-0.0063
US 10-year sw ap rates
2.4309
-0.0266
-0.0464
0.1448
US sw ap curve
1.5429
-0.0201
-0.0214
0.1511
EU 2-year sw ap rates
0.1190
0.0000
-0.0140
-0.0560
EU 10-year sw ap rates
1.1293
-0.0037
-0.1077
0.3173
EU sw ap curve
1.0103
-0.0037
-0.0937
0.3733
-0.0160
-0.0010
-0.0020
-0.0940
0.2818
-0.0003
0.0005
0.0262
JPMorgan EMBI Plus Sovereign S
397.1500
19.7000
15.3100
9.7100
Equity markets
Close
Euribor 3 Month ACT/360 ICE LIBOR USD 3 Month
Change 1 day % Change 5 days %Change YTD%
Nikkei 225
20,110
-2.88
-3.36
15.24
Hang Seng Index
25,967
-2.61
-4.11
10.01
Hang Seng China Enterprises Index
12,695
-3.01
-5.15
5.92
Australian Stock Exchange S&P/ASX 200 Index
5,401
-0.39
-4.98
-0.18
Singapore Straits Times Index
3,280
-1.23
-1.05
-2.52
Euro Stoxx 50 Index
3,469
-4.21
-3.54
10.25
S&P 500 Index
2,058
-2.09
-3.07
-0.06
MSCI World Daily Total Return Gross USD
790
-2.15
-3.13
2.92
AEX Index
477
-3.50
-2.57
12.41
34.45
47.96
-1.82
Chicago Board Options Exchange Volatility Index
Commodity markets Reuters/Jefferies CRB Total Return
19
Close
Change 1 day % Change 5 days %Change YTD%
224
-0.58
0.16
-2.76
1,179
-0.07
0.04
-0.49
Generic first NYMEX Crude Light future
58
-0.15
-4.54
9.33
Generic first Brent Crude Oil future
62
-0.10
-3.88
8.06
5,790
0.61
2.41
-8.10
582
0.17
11.51
-1.40
Gold spot USD/Oz
LME Copper 3 Months Rolling Forw ard Generic first Wheat future Chicago Board of Trade Source Bloomberg
3
Down…but no Grexit panic – 30 June 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 -6 0.3 0.9 0.3 11.1 1.0 46.2 95.4
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
12.0 50.2 53.2 49.6 55.5 52.5 52.0 201.0 53.4 52.8 -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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