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Market insight 21.06.2018

SNB, BoE and BCB meetings: no change

SNB, BoE and BCB meetings: no change

US: Philadelphia Fed. (June): 19.9 vs 29.0 expected (prior: 34.4)

  • The index fell sharply to its lowest level since November 2016 but remains well above long-term average.
  • The escalation of trade tensions with China probably weighed on sentiment.
  • On the positive side, 58% of firms expect the pace of growth in production to accelerate in Q3 from Q2 and corporates increased their future capex plans.

US: House price Index MoM (FHFA) (April): 0.1% m/m vs 0.5% expected (prior: 0.2% revised from 0.1%)

  • The y/y increase edged lower to 6.4% from 6.7%.

US: Initial jobless claims (June 16th): 218k vs 220k expected (prior: 221k revised from 218k)

  • Down to a six-week low.

 

Eurozone: Consumer confidence (June A.): -0.5 vs 0.0 expected (prior: 0.2)

  • Slight decline to a 7-month low as households may have become a bit more pessimistic given the rise in inflation, signs of a modest slowdown in economic growth, and escalating trade tensions.
  • Despite this month's weakness, consumer confidence remains close to all-time highs.

 

France: Business confidence (June): 106 as expected (prior: 106)

  • Manufacturing confidence: 110 vs 108 expected (prior: 110 revised from 109)
  • Unchanged from May.

 

Switzerland: SNB: no change, as widely expected

  • The press release was little changed. The policy makers continue to characterize the CHF as highly valued and the situation on the currency market as fragile. Uncertainties in Italy were mentionned.
  • The new inflation forecasts show an upward revision of the 2018 forecast to 0.9% (up from 0.6%) reflecting higher oil prices. The 2019 forecast was unchanged at 0.9% while the 2020 forecast has been lowered to 1.6% (from 1.9%), reflecting a "muted outlook in the euro" area according to the SNB.
  • The SNB left its real GDP forecast unchanged at "around 2%".
  • President Jordan remained cautious overall, noting that policy normalization had not been discussed, that uncertainty had increased and the lower medium-term inflation forecasts.

 

UK: BoE: no change, as expected

  • The surprise was the 6:3 split on rates, with Andy Haldane (the chief economist) joining the dissenters.
  • The statement highlights the view that the MPC is confident that soft data in Q1 is likely to be temporary and that the economy will pick up over time. Moreover, the MPC sees evidence of growing cost pressures in the labour market.
  • A rate hike in August has become more likely (roughly 70% according to market expectations post meeting, vs 50% before).

 

Brazil: central bank kept the Selic rate unchanged at 6.50% (yesterday evening), as widely expected

  • The BCB's statement showed that the policy makers do not see any urgency to move on the rate front, despite the bank's upward revisions to inflation forecasts. The BCB reiterated that the "economic conditions prescribe accommodative monetary policy, i.e. interest rates below the structural level".

 


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Market insight 22.06.2018

Decreasing business sentiment in manufacturing reflects rising concerns on trade

US: Markit Manufacturing PMI (June): 54.6 vs 56.1 expected (prior: 56.4)

  • A sharp fall in new orders has driven the index lower than expected; as seen in the eurozone, this could reflect rising concerns from the trade policy and the risks of protectionism.

 

US: Markit Services PMI (June): 56.5 as expected (prior: 56.8)

  • Sentiment has eroded from past month, but was in line with expectations.

 

Eurozone: PMI Manufacturing (June): 55 as expected (prior: 55.5)

  • Flash estimate index has weakened further from the prior month; this fall probably reflects rising concerns over trade dispute and related lower prospects on exports.

 

Eurozone: PMI Services (June): 55 vs 53.8 expected (prior: 53.8)

  • Sentiment has rebounded in services from the prior month.
  • Combined services and manufacturing index has slightly rebounded from the prior month, offering hopes of a stabilization of the eurozone activity during Q2 if concerns on trade ease somewhat.

 

Poland: M3 (May): 1.3% m/m vs 0.7% expected (prior: 0.2%)

  • M3 was up by 6.6% y/y from 5.7% y/y the prior month.
Market insight 20.06.2018

Late cycle signals in US housing

US: Existing home sales (May): 5.43M vs 5.42M expected (prior: 5.45M revised from 5.46M)

  • Sales of single family houses have moderated over the past two months and inventories have increased; prices remain on a high pace (5.2% y/y median prices).
  • The various recently published indicators on housing were all mixed and, besides some volatility on a monthly basis, they point towards a late cycle in housing.

 

Sweden: Consumer confidence (June): 96.8 vs 100 expected (prior: 97.9 revised from 98.5)

  • A weakening sentiment on present and future economic situation mainly explains the lower trend seen on confidence over the past two months.

 

Sweden: Manufacturing confidence (June): 116.1 vs 116 expected (prior: 118.5 revised from 118.6)

  • After a rebound in April, sentiment is weakening again.

 

Germany: PPI (May): 0.5% m/m vs 0.4% expected (prior: 0.5%)

  • Energy and core prices have rebounded over the month.
  • Yearly trend was up from 1.9% y/y to 2.8% y/y (prices less energy up from 1.5% y/y to 1.8% y/y).

 

Russia: Retail sales (May): 2.4% y/y vs 2.3% expected (prior: 2.7% revised from 2.4%)

  • A rebound in sales in May; a stable trend in yearly figures.

 

Russia: Real wages (May): 7.3% y/y vs 7.5% expected (prior: 7.6% revised from 7.8%)

  • Real disposable income was weak, up only by 0.3% y/y.

 

Russia: Unemployment rate (May): 4.7% vs 4.9% expected (prior: 4.9%)

  • A declining trend from the 5.2% level in January.
Market insight 19.06.2018

US housing starts have reached a new high

US: Housing starts (May): 1350k vs 1311k expected (prior: 1286k revised from 1287k)

  • Building permits: 1301 k vs 1350 k expected (1364 k prior month).
  • A strong rebound in housing starts (concentrated in one region), but weak permits point towards some moderation in housing starts in the coming months.
  • Demand in housing remains strong but it could be limited by rising construction costs, higher mortgage rates and rising house prices.

 

Sweden: Unemployment rate (May): 6.1% vs 6.3% expected (prior: 6.3%)

  • Unemployed has decreased and rate is coming back to low levels.

 

Poland: Industrial production (May): 1.6% m/m vs 0% expected (prior: -6.8%)

  • All major sectors have rebounded except electricity and gas; manufacturing sector was up by 2.4% m/m.
  • The yearly trend has moderated from 9.3% y/y the prior month to 5.4% y/y.

 

Poland: PPI (May): 1.1%m/m vs 1% expected (prior: 0.3%)

  • Prices of mining were up by 2.1% m/m, up by 6.1% y/y.
  • Trend in prices has accelerated from 1% y/y to 2.8% y/y, mainly due to higher energy prices.

 

Russia: PPI (May): 3.9% m/m vs 1.3% expected (prior: 1.2%)

  • Rises in energy prices and changes in currency have fueled the rebound in PPIs.
  • Yearly trend was up by 12.5% y/y after 7.5% y/y prior month.

Altro da leggere

Market insight 22.06.2018

Decreasing business sentiment in manufacturing reflects rising concerns on trade

US: Markit Manufacturing PMI (June): 54.6 vs 56.1 expected (prior: 56.4)

  • A sharp fall in new orders has driven the index lower than expected; as seen in the eurozone, this could reflect rising concerns from the trade policy and the risks of protectionism.

 

US: Markit Services PMI (June): 56.5 as expected (prior: 56.8)

  • Sentiment has eroded from past month, but was in line with expectations.

 

Eurozone: PMI Manufacturing (June): 55 as expected (prior: 55.5)

  • Flash estimate index has weakened further from the prior month; this fall probably reflects rising concerns over trade dispute and related lower prospects on exports.

 

Eurozone: PMI Services (June): 55 vs 53.8 expected (prior: 53.8)

  • Sentiment has rebounded in services from the prior month.
  • Combined services and manufacturing index has slightly rebounded from the prior month, offering hopes of a stabilization of the eurozone activity during Q2 if concerns on trade ease somewhat.

 

Poland: M3 (May): 1.3% m/m vs 0.7% expected (prior: 0.2%)

  • M3 was up by 6.6% y/y from 5.7% y/y the prior month.
Market insight 20.06.2018

Late cycle signals in US housing

US: Existing home sales (May): 5.43M vs 5.42M expected (prior: 5.45M revised from 5.46M)

  • Sales of single family houses have moderated over the past two months and inventories have increased; prices remain on a high pace (5.2% y/y median prices).
  • The various recently published indicators on housing were all mixed and, besides some volatility on a monthly basis, they point towards a late cycle in housing.

 

Sweden: Consumer confidence (June): 96.8 vs 100 expected (prior: 97.9 revised from 98.5)

  • A weakening sentiment on present and future economic situation mainly explains the lower trend seen on confidence over the past two months.

 

Sweden: Manufacturing confidence (June): 116.1 vs 116 expected (prior: 118.5 revised from 118.6)

  • After a rebound in April, sentiment is weakening again.

 

Germany: PPI (May): 0.5% m/m vs 0.4% expected (prior: 0.5%)

  • Energy and core prices have rebounded over the month.
  • Yearly trend was up from 1.9% y/y to 2.8% y/y (prices less energy up from 1.5% y/y to 1.8% y/y).

 

Russia: Retail sales (May): 2.4% y/y vs 2.3% expected (prior: 2.7% revised from 2.4%)

  • A rebound in sales in May; a stable trend in yearly figures.

 

Russia: Real wages (May): 7.3% y/y vs 7.5% expected (prior: 7.6% revised from 7.8%)

  • Real disposable income was weak, up only by 0.3% y/y.

 

Russia: Unemployment rate (May): 4.7% vs 4.9% expected (prior: 4.9%)

  • A declining trend from the 5.2% level in January.
Market insight 19.06.2018

US housing starts have reached a new high

US: Housing starts (May): 1350k vs 1311k expected (prior: 1286k revised from 1287k)

  • Building permits: 1301 k vs 1350 k expected (1364 k prior month).
  • A strong rebound in housing starts (concentrated in one region), but weak permits point towards some moderation in housing starts in the coming months.
  • Demand in housing remains strong but it could be limited by rising construction costs, higher mortgage rates and rising house prices.

 

Sweden: Unemployment rate (May): 6.1% vs 6.3% expected (prior: 6.3%)

  • Unemployed has decreased and rate is coming back to low levels.

 

Poland: Industrial production (May): 1.6% m/m vs 0% expected (prior: -6.8%)

  • All major sectors have rebounded except electricity and gas; manufacturing sector was up by 2.4% m/m.
  • The yearly trend has moderated from 9.3% y/y the prior month to 5.4% y/y.

 

Poland: PPI (May): 1.1%m/m vs 1% expected (prior: 0.3%)

  • Prices of mining were up by 2.1% m/m, up by 6.1% y/y.
  • Trend in prices has accelerated from 1% y/y to 2.8% y/y, mainly due to higher energy prices.

 

Russia: PPI (May): 3.9% m/m vs 1.3% expected (prior: 1.2%)

  • Rises in energy prices and changes in currency have fueled the rebound in PPIs.
  • Yearly trend was up by 12.5% y/y after 7.5% y/y prior month.