Daily Insight
Group Economics Macro & Financial Markets Research Aline Schuiling & Nick Kounis
Early signs of more QE
+31 20 343 5616
9 June 2015 • • •
ECB weekly purchase data show tentative signs of firmer pace... …signalling QE likely to be stepped up in June, while net supply will fade Meanwhile, German economy starts Q2 on a strong note
ECB purchases on track to accelerate in June
Net supply of German government bonds
The ECB published its latest report on its asset purchases on
EUR bn
Monday. Although total weekly purchases slowed slightly compared to the week before, the ECB remains on track to
15 10
step up QE if it maintains the current pace of bond buys.
5
Public sector purchases up, ABS and covered bonds
-5
week. This means that over that week, purchases amounted to
Dec
Nov
Oct
Sept
Aug
July
June
amounted to EUR 159.6bn up from 146.8bn in the previous
May
-15
Apr
As of the 5 June, the ECB’s settled public sector purchases
March
-10
Jan
down
Feb
0
EUR 12.92bn, compared to 12.45bn previously. Meanwhile, total covered bond purchases (up to EUR 87.28 bn from 85.11)
Source: ABN AMRO Group Economics
and ABS (EUR 7.5 bn from 7.2) slowed over the week. This meant the total weekly purchase amount eased slightly to EUR
Germany starts Q2 on strong note, due to exports…
15.37bn from 15.74bn.
Following a weaker than expected first quarter, Germany’s economy seems to be heading for a stronger Q2. Industrial
Total purchases could reach EUR 68bn in June
production increased by 0.9% mom in April, bouncing back
If the same daily pace is kept up during the course of June, we
from a 0.4% contraction in March. Meanwhile, exports rose by
estimate that total monthly purchases this month will amount to
1.9% mom in April, building upon a 1.3% expansion the month
around EUR 68bn. This would be up from EUR 63bn in May
before. Both industrial production and exports were stronger
and the normal targeted monthly amount of EUR 60bn. As
than the consensus forecast. Although surveys for Germany’s
such, we are seeing some early signs of the frontloading of
manufacturing sector (PMI, Ifo) moved a bit lower in May, they
purchases that the ECB indicated would take place in May and
have remained at levels consistent with ongoing robust
June.
expansion in the coming months. Exports and industrial production will continue to benefit from a weak euro, low oil
Net supply of government bonds to dry up
prices and historically low interest rates.
At the same time, the net supply of government bonds is likely to become significantly negative again in the next few months.
… and domestic demand
Net supply of core government bonds jumped in May, but this
Although Germany’s industrial output is largely export-
is actually a rare phenomenon as the general trend for this
orientated, healthy growth in domestic demand is supporting
year is one of very weak net supply (see chart for the case of
production as well. Earlier reports showed that retail sales
Germany). In addition, once the ECB purchases are taken into
bounced back in April, gaining by 1.7% mom, up from -1.4% in
account, the available outstanding amount of core government
March. Meanwhile, consumer confidence is well above the
bonds will shrink considerably.
long-term average level and consistent with ongoing strong expenditure. All in all, we expect GDP growth in Germany to bounce back in Q2 after the weak 0.3% expansion in Q1. The German economy should also grow more strongly than the eurozone again.
2
Early signs of more QE – 9 June 2015
Financial markets Currency markets
Close
Change 1 day
Change 5 days
Change YTD
EUR/USD USD/JPY
1.1284
0.4540
0.9754
-6.7438
124.45
-0.4878
0.3467
3.8468
AUD/USD
0.7703
0.7060
-0.9515
-5.6583
USD/CHF
0.9290
-0.3753
-0.4181
-6.5298
NZD/USD
0.7146
0.7614
-0.5705
-8.3258
GBP/USD
1.5344
0.2417
-0.0977
-1.5211
USD/SGD
1.3537
-0.2285
0.5049
2.1969
USD/CAD
1.2400
-0.2975
0.1130
6.7585
Bond markets
Close
Change 1 day
Change 5 days
Change YTD
2-year German Govt Bond yield
-0.1680
0.0100
0.0470
-0.0700
10-year German Govt Bond yield
0.8790
0.0350
0.3380
0.3380
Yield curve Germany
1.0470
0.0250
0.2910
0.4080
2-year US Treasury Bond yield
0.6848
-0.0239
0.0401
0.0203
10-year US Treasury Bond yield
2.3878
-0.0198
0.2084
0.2166
Yield curve US
1.7030
0.0041
0.1683
0.1963
US 2-year sw ap rate
0.9385
-0.0085
0.0440
0.0442
US 10-year sw ap rate
2.4683
-0.0017
0.1291
0.1822
US sw ap curve
1.5298
0.0068
0.0851
0.1380
EU 2-year sw ap rate
0.1460
0.0005
0.0340
-0.0290
EU 10-year sw ap rate
1.1850
0.0030
0.1660
0.3730
1.0390
0.0025
0.1320
0.4020
-0.0130
0.0000
0.0000
-0.0910
EU sw ap curve Euribor 3 Month ACT/360 ICE LIBOR USD 3 Month
0.2812
0.0023
-0.0026
0.0256
JPMorgan EMBI Plus Sovereign S
378.5900
-2.1300
-4.1500
-8.8500
Equity markets
Close
Change 1 day % Change 5 days %Change YTD%
Nikkei 225
20,457
-0.02
-0.55
17.23
Hang Seng Index
27,316
0.21
-1.02
15.72
Hang Seng China Enterprises Index
14,114
1.43
-1.30
17.77
Australian Stock Exchange S&P/ASX 200 Index
5,498
-0.11
-4.82
1.62
Singapore Straits Times Index
3,320
-0.40
-2.12
-1.33
Euro Stoxx 50 Index
3,468
-1.19
-2.99
10.23
S&P 500 Index
2,085
-0.40
-1.29
1.25
MSCI World Daily Total Return Gross USD
800
-0.82
-1.13
4.21
AEX Index
475
-0.89
-3.48
11.93
5.49
7.30
-21.93
Chicago Board Options Exchange Volatility Index
Commodity markets Reuters/Jefferies CRB Total Return
15
Close
Change 1 day % Change 5 days %Change YTD%
223
0.39
-0.42
-3.22
1,174
0.20
-1.25
-0.89
Generic first NYMEX Crude Light future
58
-1.47
-3.22
9.37
Generic first Brent Crude Oil future
63
-0.87
-3.27
9.47
5,948
0.19
-1.26
-5.59
528
2.13
6.94
-10.47
Gold spot USD/Oz
LME Copper 3 Months Rolling Forw ard Generic first Wheat future Chicago Board of Trade Source Bloomberg
3
Early signs of more QE – 9 June 2015
Day
Date
Time
Country
Key Economic Indicators and Events
Period
Latest outcome
Consensus
Monday Monday Monday Monday
08/06/2015 08/06/2015 08/06/2015 08/06/2015
01:50:00 08:00:00
JP DE CN CN
GDP - % qoq Industrial production - % mom Exports Imports
1Q F Apr May May
0.6 -0.5 -6.4 -16.2
0.7 0.6 -4.0 -10.0
Tuesday Tuesday Tuesday Tuesday Tuesday
09/06/2015 09/06/2015 09/06/2015 09/06/2015 09/06/2015
03:30:00 10:30:00 11:00:00 15:00:00 16:00:00
CN GB EC US US
CPI - % yoy Trade balance - GDP mln GDP - % qoq NFIB small business optimisme - index US Job Openings by Industry
May Apr 1Q final May Apr
1.5 -2817 0.4 96.9 4994
1.3 -2533 0.4
Wednesday Wednesday Wednesday
10/06/2015 10/06/2015 10/06/2015
01:50:00 23:00:00
JP NZ CN
Machinery orders private sector - % mom Policy rate - % M2 money growth - % yoy
Apr Jun 11 May
2.9 3.50 10.1
-2.4 3.39 10.5
Thursday Thursday Thursday Thursday Thursday
11/06/2015 11/06/2015 11/06/2015 11/06/2015 11/06/2015
07:30:00 07:30:00 07:30:00 14:30:00 16:00:00
CN CN CN US US
Fixed investments - % yoy Retail sales Industrial production Retail sales - % mom Business inventories - % mom
May May May May Apr
12.0 10.1 5.9 0.00 0.1
11.9 10.0 6.0 0.90 0.1
Friday Friday Friday Friday Friday
12/06/2015 12/06/2015 12/06/2015 12/06/2015 12/06/2015
06:30:00 11:00:00 14:30:00 14:30:00 16:00:00
JP EC US US US
Industrial production - % mom Industrial production - % mom Prod. prices index - % mom Prod. prices index excl food and energy - % mom Univ. of Michigan cons. confidence - index
Apr F Apr May May Jun P
1.0 -0.3 -0.40 -0.20 90.7
0.3 0.40 0.10 91.2
ABN AMRO
0.8
3.50
1.0
0.5
92.0
Source: Bloomberg, Reuters, ABN AMRO Group Economics (we provide own forecasts only for selected k ey variables and events)
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