Daily Insight
Group Economics Macro & Financial Markets Research
Mario to fight QExit talk
Nick Kounis & Aline Schuiling + 31 20 343 5616
3 June 2015 • • •
Jump in eurozone core inflation pushed up government bond yields and the euro We expect the ECB to cool exit talk on Wednesday, but tone could change early in 2016 Eurozone SMEs see rising availability of external finance adding strengthening outlook
Core inflation jumps
ECB to fight QExit talk, but tone could change in 2016
Easing Grexit fears and rising ECB QExit fears pushed up
We think the ECB will be unwavering in its commitment to
government bond yields and the euro on Tuesday. The latter
continue QE this year and will dismiss QExit speculation. We
reflected higher than expected eurozone inflation. It turned
have only just seen signs of a more convincing recovery, while
positive in May, rising to 0.3% yoy (consensus: 0.2%) from 0%
core inflation remains low, despite the rise. In addition, we
in April. The period of negative inflation looks to be behind us,
think the ECB will want to fight against any early tightening of
having lasted only four months. So much for Japan scenarios.
financial conditions due to higher bond yields and a stronger
There was an upward effect from food and energy prices, but
euro, as it could nip the economic recovery in the bud.
the really big story in the report was the rise in underlying
However, early next year, the tone could change. By then we
inflation. Core inflation jumped to 0.9% yoy from 0.6% in April.
would have seen a number of quarters of better economic growth. Core inflation will have shown clearer signs of turning
A blip?
the corner, while inflation expectations will have risen further.
Within the core, both goods and services prices rose. Given
The ECB’s confidence that it will meet its inflation target over
this is a flash estimate, we do not have further details. The
the medium term should be stronger. It will be clearer that
states data in Germany did not provide clear evidence that the
September 2016 is very likely the end point for QE.
rise in the core is an aberration. On the one hand, volatile package holidays had an upward effect, on the other, this was
More bank loans available for eurozone SMEs
cancelled out by falling clothing and shoes prices, which can
The ECB published its bi-annual report Survey of the Access
also have transient effects.
to Finance of Enterprises in the eurozone. It showed that SMEs reported an marked improvement in the availability of
We expect core inflation to rise next year
bank loans. For instance, for small firms the survey balance
Looking more fundamentally, our base case sees core inflation
increased to +9 from +3, while for medium-sized firms it rose to
rising from around the turn of next year. This reflects that we
+23 from +14. This improvement adds to the evidence that the
expect spare capacity to fade and this will put upward pressure
monetary transmission mechanism has started working again,
on service sector inflation. In addition, the fall in the euro
implying that the ECBs expansionary policy is working its way
should feed through into higher goods prices. Crucially, both
through to the real economy. Indeed, SMEs account for 70% of
these effects tend to work with long lags, hence our view that it
all eurozone employment.
will be more of a trend for next year than this year.
SMEs have more access to bank loans Headline inflation will rise in coming months Headline inflation is likely to continue to rise in the coming months. Inflation remains unusually depressed by week food price inflation and sharply declining energy prices. As these
Change in availability of external finance (+ = more available)
30 20 10
components return to more normal rates, headline inflation will
0
likely jump towards the 2% target by early next year. Of course
-10
that would be a relatively transient effect and where it settles
-20
beyond that will depend on the path of the core. Nevertheless,
-30
higher headline inflation is important, as it helps to shape
-40
inflation expectations.
2009
2010
2011
Small firms
2012
2013
Medium-size firms
Source: ECB Access to Finance of Enterprises
2014
2
Mario to fight QExit talk – 3 June 2015
Financial markets Currency markets
Close
Change 1 day
Change 5 days
Change YTD
EUR/USD USD/JPY
1.1143
-0.2864
2.3985
124.16
0.1129
0.2260
3.6048
AUD/USD
0.7769
-0.1029
0.7652
-4.8500
USD/CHF
0.9333
0.0429
-1.8199
-6.0972
NZD/USD
0.7177
-0.1391
-0.5956
-7.9282
GBP/USD
1.5339
-0.1302
0.0979
-1.5532
USD/SGD
1.3488
0.1411
-0.2662
1.8270
USD/CAD
1.2408
0.1776
-0.6486
Bond markets
Close
Change 1 day
Change 5 days
-7.9091
6.8274
Change YTD
2-year German Govt Bond yield
-0.1940
0.0210
0.0320
-0.0960
10-year German Govt Bond yield
0.7140
0.1730
0.1670
0.1730
Yield curve Germany
0.9080
0.1520
0.1350
0.2690
2-year US Treasury Bond yield
0.6527
0.0080
0.0404
-0.0118
10-year US Treasury Bond yield
2.2624
0.0830
0.1234
0.0912
Yield curve US
1.6097
0.0750
0.0830
0.1030
US 2-year sw ap rate
0.8910
-0.0040
-0.0050
-0.0033
US 10-year sw ap rate
2.3381
-0.0011
0.0961
0.0520
US sw ap curve
1.4471
0.0029
0.1011
0.0553
EU 2-year sw ap rate
0.1120
0.0000
0.0145
-0.0630
EU 10-year sw ap rate
1.0245
0.0055
0.1105
0.2125
EU sw ap curve
0.9125
0.0055
0.0960
0.2755
-0.0130
0.0000
0.0000
-0.0910
Euribor 3 Month ACT/360 ICE LIBOR USD 3 Month
0.2825
-0.0013
-0.0020
0.0269
JPMorgan EMBI Plus Sovereign S
380.5700
-2.1700
17.4400
-6.8700
Equity markets
Close
Change 1 day %Change 5 days %Change YTD%
Nikkei 225
20,543
-0.13
0.52
17.72
Hang Seng Index
27,467
-0.47
-2.77
16.36
Hang Seng China Enterprises Index
14,202
-0.68
-4.06
18.50
Australian Stock Exchange S&P/ASX 200 Index
5,636
-1.73
-2.38
4.16
Singapore Straits Times Index
3,341
-1.51
-3.47
-0.73
Euro Stoxx 50 Index
3,562
-0.37
-1.59
13.20
S&P 500 Index
2,110
-0.11
0.25
2.46
MSCI World Daily Total Return Gross USD
809
-0.06
-1.55
5.34
AEX Index
487
-1.17
-1.98
14.61
2.51
1.85
-25.42
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
14
Close
Change 1 day %Change 5 days %Change YTD%
224
0.14
0.79
1,193
0.35
0.50
-2.81 0.71
61
1.88
5.69
15.13 14.46
66
1.14
2.98
6,040
0.27
-1.09
-4.13
513
3.80
3.85
-13.10
3
Mario to fight QExit talk – 3 June 2015
Financial markets Currency markets
Close
Change 1 day
Change 5 days
Change YTD
EUR/USD USD/JPY
1.0928
0.0824
0.3397
124.83
-0.0320
1.5539
4.1639
AUD/USD
0.7607
0.0526
-1.7691
-6.8340
USD/CHF
0.9460
-0.0634
-0.3896
-4.8194
NZD/USD
0.7087
0.0000
-2.0727
-9.0827
GBP/USD
1.5199
0.0790
-1.2731
-2.4517
USD/SGD
1.3565
0.0590
0.5709
2.4083
USD/CAD
1.2527
-0.1912
0.7723
Bond markets 2-year German Govt Bond yield
Close
Change 1 day
Change 5 days
-9.6860
7.8519
Change YTD
-0.2150
0.0100
-0.0040
-0.1170
10-year German Govt Bond yield
0.5410
0.0540
-0.0650
0.0000
Yield curve Germany
0.7560
0.0440
-0.0610
0.1170
2-year US Treasury Bond yield
0.6487
0.0434
0.0345
-0.0158
10-year US Treasury Bond yield
2.1917
0.0703
-0.0175
0.0205
Yield curve US
1.5430
0.0269
-0.0520
0.0363
US 2-year sw ap rate
0.8890
0.0097
0.0092
-0.0053
US 10-year sw ap rate
2.2735
0.0100
0.0524
-0.0126
US sw ap curve
1.3845
0.0003
0.0432
-0.0073
EU 2-year sw ap rate
0.1030
-0.0020
0.0000
-0.0720
EU 10-year sw ap rate
0.8870
-0.0132
-0.0090
0.0750
EU sw ap curve
0.7840
-0.0112
-0.0090
0.1470
-0.0130
-0.0010
-0.0010
-0.0910
Euribor 3 Month ACT/360 ICE LIBOR USD 3 Month
0.2838
0.0010
-0.0008
0.0282
JPMorgan EMBI Plus Sovereign S
382.7400
1.8600
19.6100
-4.7000
Equity markets
Close
Change 1 day % Change 5 days %Change YTD%
Nikkei 225
20,570
0.03
0.76
17.87
Hang Seng Index
27,597
0.63
-1.41
16.91
Hang Seng China Enterprises Index
14,299
1.39
-0.93
19.31
Australian Stock Exchange S&P/ASX 200 Index
5,735
-0.72
0.24
5.99
Singapore Straits Times Index
3,392
-0.75
-1.68
0.80
Euro Stoxx 50 Index
3,575
0.12
-2.20
13.62
S&P 500 Index
2.86
2,118
0.50
-0.39
MSCI World Daily Total Return Gross USD
809
-0.66
-1.50
5.40
AEX Index
492
-0.27
-1.77
15.97
-1.30
12.61
-28.85
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
14
Close
Change 1 day % Change 5 days %Change YTD%
224
1.02
-1.06
-2.94
1,190
-0.09
-1.10
0.39
60
-0.12
0.85
13.07 13.20
65
-1.01
-0.95
6,024
0.15
-2.23
-4.38
494
3.51
-4.17
-16.28
4
Mario to fight QExit talk – 3 June 2015
Day
Date
Time
Country
Monday Monday Monday Monday Monday Monday Monday Monday Monday Monday
01/06/2015 01/06/2015 01/06/2015 01/06/2015 01/06/2015 01/06/2015 01/06/2015 01/06/2015 01/06/2015 01/06/2015
03:00:00 03:45:00 09:30:00 10:00:00 10:30:00 14:00:00 14:30:00 14:30:00 15:45:00 16:00:00
CN CN NL EC GB DE US US US US
Tuesday Tuesday Tuesday Tuesday Tuesday
02/06/2015 02/06/2015 02/06/2015 02/06/2015 02/06/2015
07:30:00 09:55:00 09:55:00 11:00:00 11:00:00
Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday Wednesday
01/07/2015 03/06/2015 03/06/2015 03/06/2015 03/06/2015 03/06/2015 03/06/2015 03/06/2015 03/06/2015 03/06/2015 03/06/2015 03/06/2015 03/06/2015
01:50:00
Thursday Thursday Thursday Thursday Thursday Thursday Thursday Friday Friday Friday Friday Friday Friday Friday
Key Economic Indicators and Events
Period
Latest outcome
Consensus
PMI manufacturing - index (official) PMI manufacturing - index (HSBC) - flash PMI manufacturing - index PMI manufacturing - index PMI manufacturing - index CPI - % yoy PCE deflator core - % mom PCE deflator core - % yoy Markit - Flash PMI ISM manufacturing - index
May May F May May F May May P Apr Apr May F May
50.1 49.1 54.0 52.3 51.9 0.5 0.2 1.3 53.8 51.5
50.2 49.2
IN DE DE EC EC
Repo rate - % Unemployment - % Unemployment change - thousands Core inflation - % yoy CPI - % yoy
Jun 2 May May May A May
7.50 6.4 -8.0 0.6 0.0
7.29 6.4 -9.9 0.7 0.2
10:00:00 10:00:00 10:30:00 11:00:00 11:00:00 13:45:00 13:45:00 14:15:00 14:30:00 16:00:00
JP PL BR EC EC GB EC EC EC EC US US US
Tankan business conditions large enterprises Reference rate - % Policy rate - % PMI services - index Composite PMI output PMI services - index Unemployment - % Retail sales - % mom Policy rate - % ECB Deposit rate - % ADP nat. employment report - thousands Trade balance - USD bn ISM non-manufacturing, index
2Q Jun 3 Jun 3 May F May F May Apr Apr Jun 3 Jun 3 May Apr May
12 1.5 13.25 53.3 53.4 59.5 11.3 -0.8 0.05 -0.20 169.0 -51.4 57.8
1.5 13.75 53.3 53.4 59.1 11.2 0.5 0.05 -0.20 188.1 -43.7 57.2
02/07/2015 04/06/2015 04/06/2015 04/06/2015 04/06/2015 04/06/2015 04/06/2015
09:30:00 09:30:00 13:00:00 13:00:00 14:30:00 14:30:00 20:00:00
SE NL GB GB US US MX
Policy rate - % CPI - % yoy Policy rate - % BoE size of asset purchase programme - GBP bn Initial jobless claims - thousands Output per hour nonfarm business sector - % qoq Policy rate - %
Jul 2 May Jun 4 Jun May 30 1Q F Jun 4
-0.25 0.6 0.5 375 282 -1.9 3.0
05/06/2015 05/06/2015 05/06/2015 05/06/2015 05/06/2015 05/06/2015 05/06/2015
08:00:00 09:00:00 11:00:00 14:30:00 14:30:00 14:30:00 21:00:00
DE CH EC US US US US
Manufacturing orders - % mom Foreign currency reserves - CHF mln GDP - % qoq Change in employment private employment - thousands Change in employment total - thousands Unemployment - % Fed Reserve consumer credit - USD bn
Apr May 1Q F May May May Apr
0.9 521.9 0.4 213 223 5.4 20.5
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected key variables and events)
ABN AMRO
54.0 52.3 52.7 0.7 0.2 1.4
0.7
51.9
52.0
6.4 0.7 0.2
1.5
11.2 0.05 -0.20 190.0
0.8 0.5 375 -2.8 3.0 0.3 524.5 0.4 212 222 5.4 16.9
0.5 0.4 225 235 5.4
5
Mario to fight QExit talk – 3 June 2015
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