Research in English
Euro-area growth forecast update – slow for longer
We revise down our GDP forecasts from -0.4% to -0.8% for 2013 and from 1.4% to 1% for next year. We don’t surrender to those forecasting no growth at all also for next year. We maintain our view that the balance of risk is for ECB to keep rates unchanged.
Bernanke: no cuts to QE yet
Fed chairman Bernanke's highly expected testimony suggested that the Fed still has little appetite for a slowing of the central bank’s bond purchases. Nevertheless, we still believe tapering could start by the September FOMC meeting.
Is Bank of Japan already failing?
After being characterized by a lack of potential and passion for years, the Japanese markets have definitely been reinvigorated by the actions taken by the new government and the central bank. However, is the more than doubling in government bond yields undermining the stimulus of the Bank of Japan?
Nitty Gritty on Sweden: The upward trend in the labour supply remains intact
Attached are some charts on the April Labour Force Survey. A key question is how to look at the very strong upturn in the labour supply. The employment rate is stable, but absence has remained high in recent months.
May
Inflation picked up, budget deficit can widen
Inflation again showed noteworthy pick up last week, CPI increased by 0.2%, comparing with 0.1% week earlier. Thus inflation pressure remains high. Poor 2012 harvest still effects the market as food component is continuing to increase with higher pace. High …
China: Growth outlook remains subdued
The HSBC/Markit manufacturing PMI for China was a disappointment. Industrial production looks set to remain subdued over the coming months, and it is hard to expect a significant pick-up in growth in Q2 from the disappointing Q1.
Central Bank Watch: New Governors at the Riksbank
Today Cecilia Skingsley (b. 1968) and Martin Flodén (b. 1970) were appointed as new governors at the Riksbank. Premature to do the bird-classification. We regard both candidates as skilled with judicious minds and integrity. Both will be voting already in …
Hawkish comments and demand for RUB offset oil market dynamics
RUB retreated yesterday as oil market turned around and declined slightly. Brent futures dropped below $104 /bbl., as data showed a surprise jump in U.S. gasoline stockpiles. However Russian currency has strong support these days given robust RUB purchases ahead …
Shipping Essentials Weekly
Macro and Events in Brief The Norwegian GDP figures came in more or less as Norges Bank expected and we therefore see no reason to change our view on Norges Bank. In the Eurozone GDP shrank by 0,2 % in …
New financial forecasts
With Fed appearing somewhat more inclined towards QE-tapering than previously signaled, we bring down our 3 month EURUSD forecast to 1.32. We also adjust our Brent Q2 forecast down to USD 105/bbl.
Sweden: Unemployment stays above the Riksbank’s forecast
It is a close call whether the Riksbank will cut rates or not in July. That is the bottom line of today’s figures from the Labour Force Survey.
Government is sitting on the fence, RUB has support
Oil market underpinned RUB, which closed up yesterday. Brent futures have approached two-week high on Tuesday, holding around $105 per barrel today in the morning on East tensions. And of course exporters provided the best support for the rouble as …
Russia’s economy expanded, though adding arguments for CBR to cut rates
Russia’s economy expanded by an annual 1.6 percent in the first quarter, faster than initially expected, – still at its slowest pace since 4Q2009, Federal Statistics Service showed on Friday. The Economy Ministry revised in April its GDP growth forecast …
FX Comment: V for Volatility
EUR gave up to the rallying USD...but this week's PMIs are a chance. Bernanke will deliver the final verdict for USD. Long GBPUSD, upside risks to AUDUSD and downside to USDJPY.
Swedish Week Ahead No 21
Temporary lower unemployment in April NSI: CPI significantly lower than forecasts
The fight against TRY strengthening continues
The credit rating upgrade by Moody's to investment grade is of course good news and a significant step for Turkey. However, a credit rating upgrade raises expectations of further capital inflows. This puts further strengthening pressure on the TRY and more pressure on the CBRT to control it, until the economic outlook brightens.
The end of May will be very tough for the market participants
Exporters will be in the focus on the next week as tax payments are coming. RUB will get extra support and thus it will help to resist external risks which are increasing. US economic data continued to disappoint -the Philadelphia …
Too early to make the bear market call on US yields
We expect rates to remain within the trading ranges that we have seen since the end of last year
Norway: Mainland GDP rebounded – as expected
• Q4 was a soft spot and mainland growth in Q1 is about as expected • No need for Norges Bank to change view based on today’s figures. GDP growth in Mainland Norway was 0.7% q/q in Q1. Our forecast …
CBR held its main policy rates
CBR again kept all key rates unchanged but cut longer term REPO and other rates. Market was waiting for more dovish decision and thus RUB behaved quite strongly yesterday taking into account oil market poor dynamics. CBR again put an …
Japan: konnichiwa growth
The Q1 GDP growth from Japan surprised on the upside, reflecting the psychological ef-fects of the government stimulus. The readings are positive news for the LDP govern-ment ahead of the upper house election in July.
Euro area: Less recession but still recession
As expected, Euro-area GDP shrank by less in Q1 (-0.2%) than in Q4 of last year, but it still shrank and the weakness was widespread through the common currency area (see table below for data on the larger countries): German …
Norway: Rebound in mainland growth
There is no reason to change view on Norges Bank if we are right, but if growth ends up say below 0.5% we will start thinking about a June cut again.
The CBR decision is in the focus
Currency basket priced almost unchanged, dropped by 3 kop (till 35.52). Despite the oil market correction and USD strengthening, exporters’ sales still provide RUB with some support. The situation will remain calm – at least till the CBR decision re …
Sweden: Mixed indicators for GDP
Today’s indicators for Q1 GDP were a bit mixed but suggest that growth was sluggish and probably weaker than the Riksbank’s forecast. It also raises some concerns that Q2 GDP growth could be weaker than previously expected.
German GDP in Q1: Weaker than expected, not only due to cold weather
The message in today’s numbers on German GDP is very clear: Europe’s largest economy is by no means immune to the euro crisis despite very low interest rates and a seemingly robust labour market. The data: German GDP increased by just …
Buy, buy, buy
Going for carry continues to be the name of the game, while the consideration of the credit risks involved seems once again to be a secondary concern. The risks of a bond bubble are no doubt in the air, but this trend has not run its course.
Poland: Rate cut hopes rise as GDP growth slows down to 4-year low
Poland’s GDP figures for Q1 came in on the weak side of expectations. What does it imply for the PLN and next actions of the Polish central bank?
Sweden Update: SEK in a hundred years
Current value of the SEK close to 1913-2013 average. Competitiveness and purchasing power at normal levels in a historical perspective. Thus, no major need for the SEK to correct. But history suggests that the SEK is undervalued vs the EUR …
Sweden: CPIF inflation 0.5% in April, well below forecasts
Instant view The CPI fell by 0.2% m/m in April, 0.3% point below forecasts. The main surprises were prices for clothing and footwear as well as package travelling that came out approximately 0.1% point below our forecast, respectively. Also, ticket …
Market is waiting for rate cut, but the timing is a point at issue
RUB is trading without significant changes, increasing versus basket by several kopecks. Rouble basket is trading at 35.50, USD – at RUB31.27, EUR is hovering around RUB40.69. Today president holds a meeting with economic bloc of the government and the …
Danish interest rate forecast: All doors are kept open
The ECB responds to the persistent economic slowdown The Danish central bank “only” trims its lending rate slightly Risks are skewed towards yet another rate cut … but we expect the bank to keep rates steady this year and adapt …
Shipping Essentials Weekly
Macro and Events in Brief Norges Bank kept, as expected, the key police rate unchanged at last week’s monetary policy meeting and did not signal any rate cut at the meeting in June. In addition we received fairly strong CPI …
Estonia GDP growth decelerated in Q1
According to the flash estimate of Statistics Estonia, Estonian GDP growth decelerated to 1% y/y in Q1 2013 (Nordea forecast of 2,3% y/y versus Analysts expectation of 3,6% y/y). This follows robust 3,5% y/y growth in Q4. Compared to the …
The major theme of the week – CBR meeting
Russia’s inflation rate rose in April, heating up uncertainty over CBR decision. Central bank is under pressure to cut interest rates. Economy is doing not so well and the question of economic growth is in the focus. From the other …
Sweden: CPI preview and index-linked bonds
CPI We expect CPI to increase 0.1% m/m in April with downside risks. Prices on clothing and footwear have been relatively elevated so far this year, and might correct downward. Prices on international flights rose sharply in March, probably due …
FX Comment: another false start?
QE-exit fears lifted the USD yet again. Are we putting the cart ahead of the horse here? Soft US data
Swedish Week Ahead No 20
* Risks on the downside of April CPI * NSI: Industrial production weak as expected
Norway: Not that high inflation
We usually do not comment on the release of CPIXE Norges Banks favourite measure for core inflation. But this time it’s necessary. CPIX came out at 1.2% (published on http://www.norges-bank.no/en/price-stability/inflation/table-cpi-cpi-ate-cpi-trimmed-mean-cpi-weighted-median/ at 14.00) compared to 0.9% last month. That is only …
Sweden Update: April CPI preview: bottom reached?
We expect inflation to be up 0.1% m/m in April. Risks are on the downside. Year-on-year figures may have reached bottom this time round.
Norway: Inflation strongly up – food prices
Needless to say the chance of a June cut fell strongly on today’s figure. However a rate hike is not agenda, remember Norges Bank rate forecast was biased to the downside. NOK will probably also strengthen on the reduced chances of a cut.
Even more bond issuance
Government bond issuance in Norway is set to increase further after the government presented a revised budget with a significantly higher financing requirement.
Poland: Central bank tries to revive the spluttering economy
The Polish central bank cut interest rates by 25 bps today, with the key policy rate now at fresh record low of 3%. The move was in line with our latest prediction, but against market consensus pointing to no policy change. What next?
Norway: April inflation back on track
If we are right and core inflation is back on Norges Bank’s forecast the chance of a June cut will be reduced and we should see somewhat stronger NOK
Norges Bank: No rate change and no change in outlook
This was as we had expected and we see no reason to change our view of unchanged rates also in June.
Good news from German industry
There clearly was more good news than bad in today’s and yesterday’s numbers for orders and production in German industry. As it accounts for a third of the Euro-area’s industry and for almost half when only looking at capital goods production, it is also good news …
Norway: Fragile housing market – prices about to peak
There are now several signs of a weaker housing market compared with the last couple of years. While we cannot rule out further house price rises, we expect prices to level out later this year and possibly drop in 2014. However, what we believe we can rule out is a market collapse.
New forecasts for ECB, market rates and the EUR/USD
We now expect the ECB to keep rates unchanged at the current level until the beginning of 2015. Risks are clearly skewed towards another rate cut in the near term. Speculation in a deposit rate cut could take market rates to new lows in the near term and we have revised the market rates forecasts lower on all horizons. Lower EUR rates have implications for the EUR/USD forecast in the longer run, and we have decided to lower the end-2014.
Norway: Risk of lower FX purchases from Norges Bank
Based on new information in the revised national budget we expect Norges Bank’s FX purchases to the Government Pension Fund Global (GPFG) to decrease throughout the year.
Norway: More expansionary budget
It will be hard for Norges Bank to avoid the conclusion that fiscal policy is slightly more expansionary than expected. But the difference is too small to have any strong impact on rates going forward
Norges bank will not cut rates
• Weaker NOK counteract lower wage growth • Could say it considered a cut – but will probably not • Stronger NOK and higher forward rates if we are right. • Leakages from revised budget strengthen our belief in unchanged …
Sweden: Upsurge in new order to the defense industry
Instant view The dramatic upsurge in new orders from the domestic market (+20% m/m!) is due to the government’s orders of SEK 10.7bn for new aero plans (JAS). These orders lifted the order figure by 14% points y/y. Total orders …
Shipping Essentials Weekly
Macro and Events in Brief Mario Draghi cut the refi-rate with 25 bp to 0,5 % last week. We expect the effects of the cut to be limited. Market rates in the Eurozone are already close to zero and the …
China trip notes part 3 – Growth is not enough
Social matters, such as corruption, income inequality, heavy social burden and pollution, should not be neglected, as they pose serious risks in terms of China being able to shift to a balanced and sustainable economic growth model. Unfortunately, no easy solution exist.
Sweden Update: Fewer Swedes go to work
In our Update “Fewer Swedes go to work” we provide an overview of the latest labour market data. We argue that high unemployment is not the only thing to worry about in the labour market. The pressure on the Riksbank to cut rates is intense.
RUB remains stable
RUB gained slightly vs. USD and EUR in last trading session due to global sentiment and strong US job data. Basket edged up 9 kopecks to RUB 35.41 and stays at “do noting zone”. Today USD and EUR are gaining …
Poland: ECB action pushing the Polish central bank back to easing
Against the background of light calendar of market-sensitive events on the global markets, the key focus of attention in the Polish market will be on the MPC meeting with decision announcement due on Wednesday. We have changed our view and now we expect the Polish central bank to resume interest rate cuts.
Norway with inflation target no one wants to pursue
Monetary policy target slipping Lars Svensson would have resigned also if he had been at Norges Bank Norges Bank emphasis financial stability more than the Riksbank Norwegian 2 ½ % inflation target is incompatible with other economic goals Norges Bank …
Sweden: Strong Q1 for the service sector
Production in the service sector dropped in March after the upturn in February, as forecast.
Swedish Services PMI suggests falling production
Even though the services PMI increased in April we read today’s figures as overall weak. The indicator edged up to a modest 48.6, which is a level that suggests declining production.
Chief Economist’s Corner: We’re still stuck in the swamp
Like Baron Von Münchhausen, Europe will have to pull itself out of the swap by its hair. That was the opening salvo from Werner Hoyer, the German president of the European Investment Bank, at an international financial conference which I …
FX Comment: follow down?
A lean data week ahead. With soft FOMC and ECB messages last week, will other central banks follow suit?
Swedish Week Ahead
* Data to indicate subdued Q1 GDP growth
* Surprisingly weak PMI
US employment data – takeaways
Decent job gains and lower unemployment Today’s US employment numbers came in better than anticipated as payrolls expanded by 165k in April (consensus: 140k). The increase was somewhat split as private payrolls increased by 176k whereas the number of government …
Malaysia election watch
Malaysia general election is on Friday. One of the world's longest-serving governments, the BN coalition government, may face the tightest race ever. We expect it to win the election but fail to secure a two-third majority. It will other things equal support the ringgit, as political certainty returns to the market.
Nordea Norwegian Bond Index – April
NNBI Aggregated Index The Nordea Norwegian Bond Index did well in April, as swap yield declined notably. Spread levels where fairly stable throughout the month, making April the third month in a row where the performance of the index is …
Norway: Registered unemployment slightly up
Unemployment figures in line with Norges Bank forecast.
China trip notes part 2 – The rise of consumers
The consumption boom has just started and is set to continue for many years. However, rising youth unemployment may pose downside risks to the scenario of a consumption-driven economy. The future is continually bright for manufacturing workers, especially those who returned to the west.
ECB cuts rates and has an open mind
The ECB cut its refi rate by 25 bp to 0.5% as most expected. With the interest rate cuts the ECB do seem to be delivering something when not being able to deliver what it actually wants to, ie support to SMEs. Still, Draghi also seems more open than previously to further easing steps even after today’s decision to cut interest rates, which will support risk appetite in financial markets.
Little new under the Czech sun
The Czech central bank unsurprisingly kept the policy rate unchanged at 0.05%. The risk of FX interventions was played down a little, as expected. Interventions will only be seriously on the table if the threat of deflation intensifies. A weak CZK is here to stay - for a while, at least.
Norway: Fading credit growth?
There was one interesting and surprising finding in today’s credit growth figures: a possible sign of weakness in the household credit.
Swedish manufacturing sector still struggles
In line with softer global survey data, also the Swedish manufacturing PMI turned down in April. The indicator came in at 49.6, which suggests that a recovery in the manufacturing sector is not imminent.
Fed prepared to alter pace of QE – slightly more dovish
The Fed left policy unchanged as widely expected, but said the pace of QE could be either increased or decreased. This marks a slightly dovish shift from earlier this year.
Low Euro-area inflation – good news or bad?
The Euro-area flash estimate for inflation in April fell to 1.2%! This follows a reading of 1.7% in March and we have looked a bit deeper into a few questions: Temporary or permanent? Good news or bad? ECB reaction or not?
Trip notes from India: A country with great potential
During two weeks’ study trip in India learning about business practices, I discovered that the India is a diverse country with huge growth potential. This is primarily due to a growing middle class and a young population in general. However, lack of fiscal discipline and reforms pose a threat to the bright prospects.
April
Fed unlikely to expand QE – FOMC preview
Despite the recent round of weak data we do not expect an overly dovish tone to the post-meeting statement tomorrow. Still, a potential surprise would be if the FOMC is worried about disinflation.
Growth vs. austerity in the German electoral debate – any difference between CDU and SPD?
Germany is often seen as the country most pushing Southern Europe into a highly restrictive fiscal policy, while at the same time denying any meaningful stimulus at home. Could that change under an SPD-led German government after the election on 22 September? Yes, but only under certain conditions.
China trip notes part 1 – Growth is going west
I just returned from a two-week trip to China. In my trip notes I will share some of my most interesting findings and impressions. This is the first part of the notes and here I argue that investment-driven growth miracles will continue in west China.
Negative interest rates – the Danish experience
The European Central Bank (ECB) faces mounting pressure to ease monetary policy in the Euro area. In our view, this leaves the ECB with four options: Keep the powder dry and hope for the best – unchanged rates (60%) The …
The oil price bottom is behind us
The odds have increased that the bottom for oil prices in the recent downturn is behind us.
Norway: Forget the signs of weakness
Lower retail sales than we had expected, but stronger labour market figures. What will be Norges Bank's conclusion?
Break out your sunglasses – the future is bright
The reason for our optimism is that private-sector deleveraging, which has been the most important factor holding back the US recovery over the past four years, seems to be over. Very importantly, the US consumer is back as Q4 2012 seems to mark an important economic turning with the end of household deleveraging.
Bad news is that exporters have finished RUB purchases, good news – holidays ahead
RUB gained yesterday as oil prices and high demand for ruble on the money market were very supportive. Basket has reached 2 week lows at RUB35.21. Today USD and EUR are gaining slightly, trading at 31.06 and 40.63 correspondingly versus …
Spain and Greece soon outpacing France and the Netherlands?
It is a well-known fact that the outlook for individual Euro-zone countries is far from uniform. However, it is a misperception that all the northern countries would be doing better than the southern European ones.
Shipping Essentials Weekly
Macro and Events in Brief Nine weeks after the Italian election a new government was finally sworn in this weekend. The government, led by the leader of the Democratic Party, Enrico Letta, is a grand coalition consisting of both technocrats …
Riksbank minutes: Households’ debt the focal point
Riksbank minutes from the 16 April monetary policy meeting didn’t come with any major surprises. We stick to our view that the Riksbank will not trim the repo rate from the current level of 1.0%.
Sweden: Temporary drop in retail sales
In March, retail sales increased by 1.8% over the year but decreased by 0.4% over the month, which was lower than consensus but in line with our call.
ECB preview: No rate cut
Markets have once again started pricing in some risk of a rate cut and a majority of analysts now expect a refi rate cut from the ECB already at the meeting this week. We stick to our call and find it most likely that the ECB will keep rates on hold and instead come up with new measures to support bank lending to Small and Medium-sized Enterprises (SMEs).
Tension on the money market increased, supporting ruble ahead of long holidays
RUB is hovering around upper edge of CBR do-nothing zone. On Friday CBR decreased intervention almost to zero as we expected. Today last series of tax payments will help RUB. Low liquidity on the money market will also be a …
FX Comment: oops…a soft patch?
A central ban week, full of important data from the US side. The latter showing weakness should keep USD under pressure.
Ray of light in Euro-zone credit numbers
If you torture the data long enough, it will confess. One can find hope in today’s Euro-zone credit numbers for March, though if you are pessimistic, the data offers a lot for you as well.
Swedish week ahead no 18
* Riksbank’s minutes, retail sales and PMI
* NSI: Surprisingly high unemployment
Nitty Gritty Sweden: Credit growth gears up but resource utilisation drops
The Riksbank’s RU-indicator falls back, almost at post-Lehman levels.
Sweden: Has foreign trade bottomed out now?
In March, exports were down by 14% y/y in current prices, while imports posted a drop by 16% y/y. That’s a pretty sharp contraction in trade over the last year.
Swedish NIER survey mixed
The NIER’s April Business Tendency Survey suggests that the soft patch seen in many countries has not yet fed through to the Swedish manufacturing industry. Confidence in the manufacturing industry rose somewhat in April.
Swedish consumers averagely happy
Consumer sentiment continued to improve in April. The CCI came in at 5.2, close to the historical average at 4.9. Households’ turned more optimistic both on their own financial situation and the overall Swedish economy.
Tight liquidity conditions and tax payments push rates higher, ruble gained
RUB increased on Thursday on the back of exporters demand and oil market support. Brent showed its biggest weekly gain since late autumn 2012 and could climb higher but first quarter GDP growth data will be in the focus. Exporters …
Sweden: Producer prices record low
Instant view: Producer prices fell further in March. The year-on-year figure was as low as -4.4%, the lowest reading in 30 years! This reflects the downturn in manufacturing industry globally as well as SEK strength. Indicators for the manufacturing industry …
Robust demand on treasury bonds auction – reassuring signal
External markets pave the way for the rouble as even poor macro data didn’t spoil positive sentiment. Weak durable goods orders in US and squalid PMI in Eurozone were perceived as another argument for continuation of monetary stimulus program. Thus …
Rate cut is NOKed out
Weak NOK makes a rate cut in May unlikely. But what about June?
Can negative be positive?
The concept of negative nominal interest rates has usually been considered something possible only as a short-term market aberration. Not anymore. Could negative interest rates really save us?
RUB may take advantage of supporting factors till the end of the month
Volatility decreased on the local currency market. Currency basket (45% EUR + 55% USD) had marginal changes yesterday; RUB retreated slightly versus USD and gained versus EUR on Tuesday. Today the opening was without significant shifts thanks to stabilized Brent …
Gold bubble pricked?
Sentiment towards gold as a hedge against currency debasement and inflation has waned faster than expected. Has the gold bubble been pricked?
Chief Economist’s Corner: Bubbles give you a hangover
In a recent report the International Monetary Fund (IMF) warned that we could be entering a new bubble economy. Share prices have seen strong rises, capital is again flowing at a steady pace to the high-yield countries and some property markets …
Hungary tilted towards further rate cuts
The Hungarian central bank cut its policy rate for the ninth consecutive meeting in line with expectations. The risks remain tilted towards further cuts, but it all depends on the HUF and inflation developments.
Today’s PMIs will not prompt an ECB rate cut
We believe the ECB sees additional interest rate cuts beyond the current level as more or less ineffective. That is the reason, in our view, that interest rates were not cut already in December.
However, key figures have surprised to the downside and we believe the ECB will have to act if the bank believes the economic outlook has weakened further or if it is unable to come up with an SME “support package” even if it believes the effect will be limited.
An unchanged PMI reading today does not make a big difference in our opinion.
Swedish Labour Force Survey: Sharp rise in labour supply
The March Labour Forces Survey was weaker than expected as unemployment came out at 8.4% (seasonally adjusted). Our and the consensus call was 8.2%. Unemployment was also higher than the Riksbank’s forecast. For Q1, unemployment averaged 8.2%, 0.1% point above the Riksbank’s view.
No way to escape rate cut, the only question is timing
Ruble gained slightly yesterday on the back of exporters’ support and higher oil prices. Brent futures temporarily showed above $100 /bbl. on Monday. Exporters also were active ahead of mineral extraction tax payments on Thursday. Thus USD retreated yesterday by …
China: Q2 opens on a weak note
The preliminary HSBC/Markit manufacturing PMI for China was a disappointment, falling from 51.6 to 50.5 in April. This does not change our expectations of a gradually recovering Chinese economy, but is a sign of China adapting to a lower growth environment.
Nordea index tells the real story of the opaque bond market
Strong Performance in Q1: Performance in Q1 was mainly driven by decreasing swap yields. Outperformance NNBI exposed to interest rates, compared to a hedged version of the index. Risk, well compensated: Adding on risk was well compensated in Q1, …
Shipping Essentials Weekly
Macro and Events in Brief Markets fell last week as weaker than expected Chinese GDP and US key figures spurred concerns of a spring slowdown in growth. The drop in risk appetite hit commodities particularly hard and prices fell across …
Central Bank Watch Sweden: A dove leaving the Riksbank
• Deputy Governor Lars EO Svensson to leave Executive Board
• July rate cut somewhat less likely
And again – it is all about exporters, liquidity can deteriorate
Ruble currency basket added on Friday and as we expected pressure on the RUB retained. This week exporters will be the major players on the local currency market as companies will have to pay taxes (~350 bn. rubles), which will …
FX Comment: in Europe we trust
Growth trumps everything. European PMIs this week is a "fingers crossed". More upside for EURUSD, GBPUSD, USDJPY.
Swedish week ahead no 17
* Employment flat over the year
* Soft Riksbank despite unchanged repo rate
Mid-term pressure will turn into long-term investment opportuninies
Volatility on the local currency market is high. Yesterday rouble earned back half of Wednesday’s losses as oil market seem to find local bottom and exporters increased activity, selling USD and EUR versus RUB ahead of next week tax payments. …
Poland: No recession again
Output figures for March confirm that the worst for the Polish economy is over and it has escaped recession again. The data are not a factor, which could help to build majority in the MPC for another rate cut already at the next meeting in early May. However, given uncertainty regarding the economic recovery later this year, one cannot exclude some fine-tuning policy easing in June-July.
Nordea WebTV: Oil prices about to bottom out
Oil prices have come under pressure from weak macroeconomic data from large oil consuming countries such as the US and particularly Chinese GDP figures for Q1 surprised on the downside. Financial players seems to be losing confidence in either economic …
Unfortunately or hopefully rouble executes targets very fast
Unfortunately or hopefully rouble executes our targets much faster than expected. We wrote yesterday that Russian currency is going to renew its lows versus USD and RUB did it without hesitation in the end of the session. Yesterday RUB finished …
Central Bank Watch Sweden: Riksbank softening
Unchanged repo rate of 1.0%, but rate path lowered sharply
Focus back to inflation
Downside risks to our forecast of a repo rate of 1.00% at end-2013 and 1.50% at end-2014
Soft Riksbank stays on hold
The Riksbank today sent a soft tone to markets, despite leaving the rate unchanged at 1.00% as widely expected. The reason is that the repo rate path was revised down quite substantially for 2014.
Time to think positively as CBR helps to tame volatility
Central Bank sold $52 mn. yesterday as basket went above RUB35.65 – the border of zone of interventions. Today CBR can continue to support rouble but it will be a more light task given stabilized above $100 /bbl. oil prices. …
Turkish central bank: Avoiding a stronger lira
The Turkish central bank surprised with a 50bp interest rate cut (consensus -25bp). The interest rate action today is a clear sign that the central bank continues to prefer a weaker/stable TRY at the moment, and is more worried about modest growth than accelerating inflation.
Welcome to the world of wild mood swings
Big market moves have caught a lot of attention in the past few days. Where is the world going?
Get ready for interventions, salvor is on the way
Central Bank is getting ready to buy roubles as currency basket (55% USD, 45% EUR) entered zone of interventions higher 35.65. The major purpose not to target the basket but to mitigate increased volatility. USD and EUR have approached local …
Poland: Inflation the lowest in nearly 7 years, record high trade surplus
Poland's CPI inflation reached the lowest level since June 2006, which may put a pressure on central bankers to continue monetary policy easing. However, we think other data than CPI numbers will be more important for future policy actions. Negative impact on the PLN related to low inflation was offset by much narrower than expected C/A gap and record high trade gap.
Shipping Essentials Weekly
Macro and Events in Brief Last week’s minutes to the March 19-20 Federal Open Market Committee (FOMC) confirmed that the scaling down of the QE3 program may begin already during Q3, earlier than expected. Only a few FOMC members thought …
New financial forecasts
We have made a number of adjustments to our financial forecasts including US rates, EUR/USD, GBP, CHF, JPY and base metals. The big story is unchanged!
Sweden: Production recovers in February
Statistics Sweden’s indicator for production in the business sector came in just as expected. Production increased by 1.1% y/y in calendar adjusted terms.
Risks are increasing as macro outlook is worsening
Rouble had no chances to stabilize as oil market pulled Russian currency lower. China GDP and oil consumption statistics disappointed market participants. China’s economic recovery decelerated in 1Q2013, annual rate of growth eased to 7.7% from 7.9% in the final …
Sweden: Budget Bill with no signs of spring
The government today presented a rather pessimistic outlook for the Swedish economy. Both growth and unemployment were substantially revised to the worse. Also, finance minister Borg in an op-ed today claimed that risks are tilted downwards.
Chinese growth disappoints in Q1
China’s sluggish Q1 GDP growth weakens expectations that the global recovery had gained strength at the beginning of the year. Nevertheless, credit growth picked up steam in March, which raises expectations of accelerating growth in Q2.
Swedish week ahead no 16
Spring Budget with few sharp measures
The Riksbank to stay on hold
Central Bank Watch Sweden: The Riksbank on hold
We expect the repo rate to be left unchanged next week as well as the rest of the year. Risks to our repo rate forecast are clearly on the downside
Economy ministry has cut its economic growth forecast, can RUB renew local bottom?
Rouble stabilized after 3-day rally and today opened slightly lower versus USD and EUR. Emotional decrease was followed by rebounding and some fundamental factors were lost behind this volatility. Yesterday oil market again approached local bottom and this may become …
Sweden: March CPI just above forecasts
Instant view The March CPI came out at +0.4% m/m, above our forecast but in line with consensus. The main surprises were prices for clothing/footwear as well as for ticket prices for international flights, which added almost 0.1% point respectively …
CBR finished to intervene, government debt market stays in the focus
Rouble continued to extend gains yesterday as commodity market was stable, government rouble-nominated bonds (OFZ) continued to attract investors and some exporters began to buy rouble well in advance of tax payments. Finally rouble has reached the point of just …
Poland: MPC does not want to resort to unconventional policy
The Polish MPC kept rates on hold at record low level. Wording of the post-meeting statement and comments at the press conference was not as dovish as some market participants expected, which provided a lift for the PLN.
Norway: We still believe in unchanged rates at MPC meeting in May, but rate cut looms
A likely scenario is that Norges Bank keeps rates unchanged at the May MPC meeting, but states that a rate cut was considered.
Deflation and the ECB
That the inflation rate in Greece fell below zero in March for the first time in 45 years gets quite a lot of media attention. The deflation ghost is out of the bottle again – is it really? Or has it …
Norway: Inflation down – weakness all over
We have to think. Cut or not cut in May?
Sweden: industrial production has leveled out
The figures for February and revised data for the previous months show that production has leveled out after the previous downturn. With the revisions, the figures were a bit better than expected as the old data showed a falling trend up to and including January.
Russia’s next central bank chief gave a lot of food for thought
Rouble continued to gain back the losses of the previous week. The major factor is that market participants were closing short positions on stabilized oil prices and high demand on the OFZ market. Government rouble-nominated bonds (OFZ) met huge demand …
Nordea Risk Perception Index – Week 15
Return to more comfortable levels, but low-for-long is acknowledged
New Finnish 10-year benchmark looking attractive
State Treasury Finland is launching a new 10-year benchmark, RFGB April 2023, at flat area vs mid-swaps, attractive pricing. We see value in maturity extensions from 5-7-year Finnish, German, Dutch, Austrian and French bonds into the new benchmark.
Norway: March inflation not a trigger, but perhaps wage growth
We forecast core inflation (CPI-ATE) at 1.2%, up from 1.1% last month. Consensus is 1.1% 0.1% points higher inflation than consensus will probably not provoke stronger NOK and higher forward rates.
Taking the pulse of the German economy
The German economy seems on track for slow growth in GDP of around ¼% q/q in Q1. While that is not too bad compared to many other Euro-area countries, it’s not what one could call a locomotive for Europe.
Fast rebound – is what the rouble need?
Rouble bounced back from the local bottom on profit taking and stabilized oil prices. Besides CBR continued to intervene, slightly increasing the support for the rouble. Yesterday Central Bank has sold ~$70 mn. USD stepped back to 31.19 versus RUB …
Finland: Exports down less than expected
The preliminary foreign trade data released today by the Finnish Customs shows that in February the value of goods exports decreased by just over 3 per cent and the value of goods imports by almost 14 per cent from the year earlier.
Shipping Essentials Weekly
Macro and Events in Brief Last week ended with extremely week non-farm payrolls (consensus: 190k, actual: 88k). The employment report supports our expectation of a spring slowdown in growth, due to the recent sequestration. We continue to expect US key …
Norway: Household debt burden is still increasing
The main picture continues to be that household credit growth is higher than income growth, which implies that household debt burden increases further from a high level. This is a worry to Norges Bank and will be one of the arguments for turning on the countercyclical capital buffer requirement later this year.
Sweden: CPI preview and index-linked bonds
We see March CPI at -0.2 % y/y (0.3 % m/m). Clothing prices are currently influenced by a number of factors, both on the upside and on the downside. Weak retail sales and a strong currency speak for lower prices. …
Poland: MPC preview – wait and see
Along with the larger than expected 50bps rate cut last month, the Polish MPC has shifted into wait-and-mode. Domestic data released over the past month were mostly on the soft side. Does it mean that monetary policy easing in Poland will be continued?
Russia’s economy expanded by a less-than-expected, CBR has to act, but when?
Rouble renewed minimums versus currency basket since September 2012 on EUR’s rally versus rouble, however USD vica versa stepped back from technical resistance 31.7-31.8. Last week’s dynamics was the worst for rouble since 2Q12. Oil prices plunged on Friday after …
FX Comment: last man standing?
The weak US data revived the hopes of QE continuation, putting pressue on the USD. IMF gives green light to IMF weakening - chase the carry where it's still left!
Strike again in the Norwegian oil sector tomorrow?
Strike again in the Norwegian oil sector tomorrow? A strike can push up oil/gas prices if it last for some days
US jobs report points to yet another spring slowdown in growth
Today’s US employment report supports our expectation of yet another spring slowdown in growth.
Swedish week ahead no. 15
Production in the manufacturing industry has been on a weak trend ever since mid-2011. Indicators suggest that the situation has improved somewhat recently. However, any marked recovery still seems distant. As for February, we expect production to rise by 1% …
Sweden Update – Ahead of March CPI: Clothing prices the wild card
We expect the CPI to be up 0.3% m/m in March. It seems increasingly certain that inflation will remain low and that the Riksbank will have to revise down its inflation forecast for coming years.
Service production – strong but still confusing
Another confusing data point connected to the service sector. Recently, large revisions in seasonal and calendar adjustment have made the short-term forecasting of the service sector more volatile.
Pressure comes from all sides, CBR started to buy rouble
Rouble is under the pressure which comes from everywhere. Commodity market again slumped and yesterday oil prices renewed local bottom at $105.29 /bbl. CBR officials presented very controversial views on the situation but still if recently CBR followed exclusively inflation-targeting …
Draghi turns more dovish
Draghi turned more dovish at today’s ECB press conference. Another rate cut has become more likely, but still depend on incoming data in the near term.
NEMO: more bumps in the road
Risk appetite in general has been surprisingly resilient to adverse events in the past few months.
Norway: Consumers are shopping at home again
Retail sales surprised on the upside with 0.5% growth m/m (seasonally adj.) compared to consensus at 0.3% and Nordea at -0.5%. With strong figures for both January and February we feel more certain that the weakness in Q4 last year was temporary.
US jobs report to add to concerns of a spring slowdown – preview
We forecast a 175k rise in US payrolls in March. An outcome in line with our forecast will support our expectation of yet another spring slowdown in growth.
The US: History to repeat itself in 2013
We expect US economic data generally to disappoint compared to consensus estimates over the next few months as the sequester kicks in. As a consequence, we see increased risks of a temporary reversal of some the recent increase in risk appetite in financial markets.
BoJ: Sayonara deflation
Bank of Japan’s new governor, Haruhiko Kuroda, was not afraid of introducing bold monetary policy measures at his first policy meeting.
Slovenia – vulnerable but very different from Cyprus
While investor have reason to worry about Slovenia, comparisons to Cyprus seem hugely exaggerated.
Swedish services PMI dropped below 50 in March
Instant view: Services PMI dropped in March by a full 7.3 points to 47.3, thus well below the growth mark 50. This was worse than we had expected. The PMI is very volatile and has been hovering around the 50-mark …
Central Bank gave dovish signal, rouble has reached local minimums
Dovish monetary signals from CBR and the fact that CBR finally acknowledged the risks of sharp slowdown of the economy hit Russian currency. Support instantly disappeared as exporters became passive and oil prices slumped to $107 /bbl. after US data …
China housing bubble: no reason to be worried
We have long argued that the Chinese housing sector differs from area to area and imbalances should be assessed on a regional basis. In this report we analyse the development of housing prices, construction activities, transaction volumes and inventory build-ups in the tier one, two and three cities separately.
Norway: Unemployment has leveled out
Norges Bank mentioned the weaker than expected LFS figures at the last MPC meeting, but did not seem to give that much weight to it. We think that is still the view.
Shipping Essentials Weekly
Macro and Events in Brief The market reaction to the new Cyprus deal in the beginning of last week was immediately positive, but the mood turned negative as the new deal means that both bond holders and depositors with deposits …
The Bank of Russia kept key rates unchanged, but cut certain rates, sees risk to growth
The Board of Directors of the Bank of Russia decided to keep refinancing rate and key interest rates unchanged. However CBR reduced the interest rates on certain longer-term refinancing operations by 0.25 percentage points. Again CBR kept inflation in the …
ECB preview – still too early for Draghi to signal near-term rate cut
We expect no changes in key policy rates and no new non-standard measures from the ECB at Thursday’s meeting. Lots of questions about Cyprus, but Draghi will probably not give any answers. Market reaction could be slightly negative again.
Turkish GDP falls short of expectations
Domestic demand was the main drag on growth last year. Q4 is, however, luckily already history, and looking forward the Turkish economy seems in a better position. S&P raised the country's credit rating last week, but kept it below investment grade. A widening CA deficit is the largest risk for further ratings upgrades.
Swedish manufacturing PMI 52.1 in March
The manufacturing PMI picked up further in March and reached 52.1, above expectations and the highest reading since June 2011.
Rouble has lost local support, CBR’s decision ahead
Rouble stepped back during last few sessions as it lost exporters support. Tax payments came to the end and exporters’ activity faded away. Moreover rouble faced pressure from everywhere. Anticipation of less hawkish CBR stance is playing against the rouble …
FX Comment: it’s the economy, stupid
A new quarter starts with broad USD weakness. EUR is a special case...so far.
March
Czech central bank retains easing bias
The Czech central bank kept the key rate unchanged at 0.05%, as expected. The already weak CZK limits the need for looser monetary policy at the moment. Nevertheless, governor Singer reiterated that the central bank is ready to loosen monetary policy through FX interventions.
Sweden and the SEK – 9.35 old normal 8.35 in new normal
There has been a multitude of under-capitalised public finances and growing public debt ever since the EMU was formed. This is of course one of the key reasons for why Europe is in its current state, and for the sagging …
Swedish week ahead
Wednesday a busy day for Q1 GDP indicators
Nordea Risk Perception Index – week 13
More fragility, but overall assessment unchanged: Stick to the ranges.
No signs of relaxation before Easter holiday break in oil market
Don’t let Easter holiday skiing, sunbathing, television or crime novels carry you too far away from the oil market just yet. The oil markets will still be open for another 36 hours so it might be wise to keep at least one eye on the oil chart on your computer screen until the market closes. We expect prices to move sideways and even fall somewhat as trading volumes are likely to decrease before the Easter break tomorrow afternoon.
Poland: On the fast track to euro adoption?
Poland’s Prime Minister Donald Tusk took a big political gamble yesterday, opening the door to a referendum on euro adoption amid record strong public opposition to the single currency. Does it mean that we are going to see a major expansion of the Euro area soon (Poland would become the 6th largest economy in the single currency bloc)?
Sweden: Sluggish trade figures in February
Instant view: Exports of goods were rather weak in February, as we had expected. Exports were down by a full 11% y/y in current prices. However, the figures are not too bad at a closer look. First of all, there …
Sweden: NIER turns more optimistic
As expected the National Institute of Economic Research (NIER) revised their forecast on the Swedish economy somewhat upwards. NIER now also forecast that the Riksbank will not cut rates more. Overall the NIER’s forecast is very close to our own …
Swedish retail sales beats all expectations
Instant view: Today’s retail sales figures beat expectations by improving with a full 3.5% y/y and 1.0% m/m. The outlook for household consumption going forward is also bright. Households will face decent wage increases which, together with the low inflation, …
Swedish NIER surveys improved without impressing
Instant view: Overall, today’s NIER figures came in largely as expected. They support the view that the Swedish economy is rather divided with a sluggish manufacturing sector and a decent growth in private services sector. Still all confidence indicators remain …
Worries regarding the beginning of April – MinEco expects CBR to cut rates
Exporters are the main reason for Rouble appreciation these days. This helps to be optimistic today, but brings worries regarding the beginning of April when exporters step back. Yesterday deputy MinEco said that CBR can cut interest rates in April …
Hungary – uncertainty remains high
No surprises here – Hungary cut its base rate for the eighth consecutive time by 25bp, bringing it down to a record-low 5.00%. Further interest rate cuts are possible, but they depend on inflation pressure and financial market uncertainty. No signs of unconventional monetary policy measures, which should help to firm HUF.
Turkey – flexible monetary policy continues
CBRT kept the benchmark one-week repo rate and the overnight borrowing rate unchanged. However, they decided to cut the O/N lending rate to 7.50% (from 8.50%). This is a fine-tuning move to monetary policy, and we rather see scope for tighter policy going forward.
Cyprus and the law of unintended consequences
I tried to put a bit of “Ordnung” in my thoughts about European crisis management after Cyprus. Here is what came out: Crisis management was slow and chaotic Confidence in banks might have been shattered by the idea to bail-in …
Dividends negative for SEK
The dividends from OMX30 is significantly larger during 2013 than 2012 and the outflow to foreign investors exposes the Swedish krona for short term depreciation. The effect on the value of the SEK will however be mitigated by the fact …
Be careful what you wish for
The EU appears to have fast-tracked its plans for bank resolution in earnest, at least based on the comments from the Eurogroup President Dijsselbloem. Such plans are another blow for the funding outlook of banks, and risk escalating the euro crisis again.
The beginning of April can be difficult for rouble, support will melt
Roubles are expensive on the money market and relatively stable on the currency market. Global uncertainty decreased but investors worry regarding potential Cyprus incident aftermath. Thus risky assets are still under the pressure, rouble tried yesterday to step back from …
Rouble basket decreased slightly…
Rouble basket decreased slightly and continues this trend today as tension on external market faded away with uncertainty around Cyprus bailout. Cyprus and the “troika” came to agreement on the weekend in Brussels, paving the way for bailout package of …
This deal sends more constructive signals – credibility still hurt
A deal on Cyprus was finally reached this morning. Unlike the earlier agreement that basically sent the message that all depositors in troubled banks should immediately withdraw their money, the terms of this agreement actually send a more constructive message. Still, days of wrangling and bad suggestions earlier have hurt the credibility of Euro-zone decision-makers further.
Swedish week ahead
Wednesday a busy day for Q1 GDP indicators
Wealthy Germany – and even more wealthy Italy and Spain
Private households in Spain and Italy are much more wealthy than German households. This is one of the results of a study that the Bundesbank published yesterday. Interesting finding and interesting timing given all the discussions about who should and who can bear the burden of adjustment in Europe.
Norway: Registered unemployment slightly up
The main picture is still that registered unemployment moves about sideways in line with Norges Banks forecast.
Fragile equilibrium – no suicide want to take weekend-risk
External uncertainties and relative low risk appetites, along with quite weak internal marco data opposed to exporters who continue to sell USD ahead of tax payment. Hence rouble has found local equilibrium. But in the end of the March when …
Danish central bank keeps its powder dry
In the attached analysis we present an updated forecast on Danish yields. In here we find that: A stronger DKK puts off the timing of the next rate hike The ECB on hold – the risk is still on the …
Italy heading towards a AAA rating?
The recent report by the ratings agency Standard & Poor’s shows most countries studied have actually already made a lot of progress in addressing their increasing age-related spending compared to 2010, even though a lot of work remains. One of the most striking aspects of the report is the progress seen in Italy, which could see its rating rise notably going forward.
Nordea WebTV: New oil price forecast
We lift our Brent oil price forecast to USD 112/bbl in 2013 and to USD 115/bbl 2014. Oil prices are expected to remain high over the forecast period, as the market will remain tight by historical standards.
Maths in China: 1 + 1 > 2
In a long time, the Chinese GDP figures were merely a laughingstock for economists around the globe. The key to change the culture of over-reporting lies in Beijing. We believe that the new administration has promoted for other criteria than simply growth. A new normal seems to have emerged.
The rouble gained back part of losses, ignoring macrostatistics
The rouble gained back part of losses yesterday. Exporters helped Russian currency to restore. USD retreated to RUB30.81, Basket closed 7 kopecks lower at RUB34.92. Oil prices’ dynamics supported rouble as Brent futures bounced from local bottom. Russian currency ignored …
Fed not ready to stop the party just yet
As expected, the Fed left its policy and forward guidance unchanged at today’s FOMC meeting. Regarding QE3, there was no change in the wording of the statement to signal plans to scale down the Fed’s asset purchases yet. The FOMC's new unemployment projection is still consistent with no hike rate at least until late 2015.
Nordea WebTV: Slow recovery in the Eurozone
The Eurozone has started a slow recovery, but the recovery is fragile. A loss in confidence due to the recent turmoil in Cyprus or increased political chaos in Italy can threaten the recent improvement in the Eurozone. Euro economist Holger …
Consumption continues to pull Russian economy ahead with decreasing strength
Consumption continues to pull Russian economy, but even this sector can show signs of deceleration. Russian statistics service published retail sales numbers, which showed increased by 2.5% in February y-o-y, after a 3.5% in the previous month. Current tendency is …
Cyprus votes no before voting yes
The Cypriot parliament yesterday rejected the proposed bailout including the controversial levy on bank deposits, putting the future path of Cyprus very much in question again. However, as the alternative for the bailout for the country looks much worse than the terms of the aid package, Cyprus will most likely have to accept the terms in the end.
Will Russia help Cyprus and does it matter for rouble?
The rouble was under notable pressure versus US dollar as Cyprus lawmaker didn’t make situation clearer as they rejected deposit taxes and thus bailout scheme is in disarray. Oil market slumped to new local lows on this news and Brent …
New financial forecasts
Here are the usual financial forecast slides with our new financial forecasts published this this morning in Economic Outlook. We have changed our forecast for the Fed, the BoE, the SNB, Riksbanken, Euro rates, USD rates, EUR/USD, JPY, GBP, SEK, NOK, oil and the base metals.
Poland: Output growth back in the negative territory
Output figures for February came in broadly in line with expectations. The numbers confirm the ongoing economic slowdown, but at the same time suggest the worst is over for the Polish economy and with tailwind provided by a rebound in Germany the EU’s largest Eastern economy is likely to see a shy recovery within a few months. How do the figures affect monetary policy outlook and the PLN?
Nordea WebTV: Chinese growth back on track
We have an optimistic view on Chinese growth prospects and are expecting GDP-growth aroung 8% both this year and next year. Risks related to the housing market and to the local governments funding problem though remain.
EURSEK forecast revision
• Swedish economy a strong performer
• More SEK appreciation to be expected
New forecasts: Oil prices creep higher
We lift our Brent oil price forecast to USD 112/bbl (USD 110/bbl) in 2013E and to USD 115/bbl (USD 112/bbl) in 2014E. Oil prices are expected to remain high over the forecast period, as the market will remain tight by historical standards.
CBW Sweden: Pilar to post
• Further repo rate cut by the Riksbank not expected
• Repo rate to be hiked to 1.50% in 2014
• EUR/SEK at 8.10 in a year
Quiet revolution at the Fed spells inflation
Due to the strength of underlying fundamentals in the US economy, an elevated structural level of unemployment and the Fed credibly aiming for higher inflation we expect the US yield curve to continue steepening over the coming year or so as markets price in higher inflation.
The US: Ready for lift-off
With much improved economic fundamentals and significantly diminished policy risks the stage is set for a much stronger US economy in 2013 and 2014, but not without bumps along the road.
Economic Outlook – Slow turnaround
The global economy is slowly but surely improving. Both the US and China can look forward to solid progress over the coming years, and there is hope that Japan will resurrect itself and emerge from the protracted deflationary spiral. The weak link is still the Euro zone.
Internal and external news are not so bright, rouble resists pressure
The rouble lost 19 kopeks versus US dollar yesterday, but was up against a weak euro. USD strengthened on Forex after the Cyprus turmoil. Today all eyes on Cyprus still. Parliament is due to convene at 1600 GMT. It is …
Shipping Essentials Weekly
Macro and Events in Brief After a fairly quiet last week, markets were stunned over the weekend by the surprising composition of the aid package deal for Cyprus, where a levy (tax) on bank deposits was included. Markets reacted very …
CBR meeting got lost among other factors
Currency market didn’t pay much attention to CBR meeting. The central bank kept all rates unchanged. CBR didn’t mention words that the economy was running close to its potential pace. This can be treated as a slight dovish signal. Currently …
Initial thoughts on the Cyprus deal
A EUR 10bn bailout for Cyprus was agreed on Saturday. Today, the Cypriot parliament will have to pass the most controversial part of the bailout. In our view, the bailout does not change the overall picture for the Euro area here and now even if the final bailout terms include a haircut on deposits that was supposed to be insured. However, the current deal clearly increases the longer-term risks for the Euro area.
FX Comment: Oops they did it again
Cyprus - be cautious, but don't panic. It's not the first "surprise" from the EMU leadership, and probably not the last.
Nordea Risk Perception Publication – Week 11
Complacency ruling – play the ranges.
Fed to signal no let-up in easing yet
Our expectations for next week’s FOMC meeting.
Russia’s central bank kept rates on hold and added intrigue…
Situation on FX market didn’t change. RUB comparing to the basket strengthened a bit – by 5 kopeck. Pressure of the previous days was a bit smoothed by oil correction and EUR/USD rise. Successful Spanish sovereign bonds issue and US …
Swedish production drops
Statistics Sweden’s indicator for production in the business sector came in weak. This was expected given the previously released figures for manufacturing and private service sector. Production in construction fell by 3.9% y/y. Total production in business sector fell by …
kNOKout?
Have we seen the last of the NOK-strength? Norges Bank is not impressed by Norwegian inflation which is no big wonder. The question now becomes is the range between 7.30 and 7.50 history. Large movements in EURNOK normally needs support …
Poland: Inflation below the target range
Poland's CPI inflation for February came in lower than expected. Does it mean the Polish central bank will continue monetary policy easing, even despite it has adopted the "wait-and-see" mode recently? Stronger than expected data on exports has muted negative impact on PLN coming from lower than expected inflation.
Norges Bank: No change, but a dovish report
More dovish than we expected and a kind of easing bias. We have to look more into the report, but so far we will keep our forecast for a first hike in March 2014. The risk of a cut/later hike has however increased.
Sweden: Employment resilient in February
The February Labour Forces Survey was somewhat better than we had expected. Employment stayed flat on the month while we had expected employment to slip by 0.1% m/m. The rise in unemployment is thus the result of an uptick in …
Who supports rouble despite negative oil prices dynamics?
Despite pressure from weak oil market dynamics rouble steadied yesterday. It seems that quite strong USD offer doesn’t let dollar to go higher. Taking into account current levels of Brent futures USD can go even higher RUB31. But we don’t …
Strong Irish bond launch tells us much more than the weak Italian auctions
Despite today's weak auctions, the risk of an Italian auction actually failing looks remote. In fact, one should not give too much weight to the performance of individual auctions. Italian troubles will be reflected first on secondary markets, not on weak auction demand. The strong Irish 10-year bond launch carries a stronger message.
Europe’s next protest movement – this time in Germany
Protest movements can achieve strong election results and render forming a government difficult, creating uncertainty on financial markets. This is one of the lessons to draw from the Italian election. Now in Germany a protest movement has been founded, the …
Sweden: Long term inflation expectations below 2%
Inflation expectations for the 5y horizon fell to an 8 year low and below 2% in March, increasing pressures on the Riksbank to cut rates.
Intrigue disappeared, rouble is steady, pressure is not over
Dynamics of commodity market will be the major factor for the local currency market in the coming days as other factors are not so meaningful. Exporters are not so active and besides they will start to prepare for tax paying …
Norges Bank on hold
If we are right, the main message will be that Norges Bank is on hold. That is in line with market pricing and nothing much will happen
Shipping Essentials Weekly
Macro and Events in Brief Last week’s data releases further confirmed the relative economic underperformance of the Euro-zone versus the US while key figures from China point to a recovery which started in Q4 slowed down in February. The market …
Sweden: February CPI a tad higher than expected
Instant view The February CPI came out at +0.4% m/m, in line with consensus but 0.1% point above our call. The main surprise to us was prices for clothing and footwear that added 0.19% point instead of the 0.08% point …
Intrigue over an appointment of new CBR chairman intensified
It seems that rouble basket continues to follow very gentle upward trend. Basket is trading right below RUB35, USD is near previous levels at RUB30.75. EUR is flat, hovering around RUB40. Ruble can stay under the pressure as oil prices …
CPI preview and index-linked bonds
February CPI We see CPI at -0.3 % y/y (0.3 % m/m) Broad based and seasonally normal increase in prices for February. As usually rents are increased at the beginning of the year although this year somewhat less. Volatility in …
Norway: Inflation down – but close to Norges Bank
We see the deviation to Norges Bank's forecast to small to have any significant impact on the upcoming new interest rate forecast from Norges Bank.
Ahead of February CPI: Low and falling inflation
CPI inflation rose by 0,3% m/m in February according to our forecast. Risks are balanced. Evidence is mounting that the already low inflation will persist.
FX Comment: The new (old) normal?
History rhymes, but doesn't repeat. Is USD king again? Not so fast.
Who will be next Russia’s central bank chairman?
Ruble is stable ahead of CBR meeting. Basket gained slightly but didn’t renew local maximums. USD is trading today ay RUB30.78 slightly below local maximums at 30.82. EUR leg decreased on Friday but today is relatively stable at RUB40. The …
Plus 5% for all? A look at this year’s wage negotiations in Germany
German steel workers in North-West Germany will get a pay rise of 3%. IG Metall demands 5.5% but (as always) this is not where it will settle. We think a deal of around 3.5% sounds about right which might give a real wage rise of 1½%. It will support growth but alone won't save Europe.
Norway: Core inflation slightly below Norges Bank – again
Core inflation has on average been 0.1% below Norges Bank’s forecast the three last months if we are right. That is probably not enough to have any influence on the coming interest rate forecast
Norway: Regional network on the weak side to Norges Bank’s view
Norges Bank’s regional network report signals lower output growth in Q1. The survey indicates a GDP growth in Q1 of 0.5% q/q, significantly lower than Norges Bank’s forecast (0.9%).
Swedish production continues down
The year has started on a weak note. Production came in at -7.8% y/y, which was significantly lower than expected.
The voice of ordinary Chinese
Language barrier and information restriction make it difficult for the outside world to get a true picture of what ordinary Chinese think and want. Here we present the results of China's largest opinion poll, released today, where 85,000 random persons responded. A number of topics are touched on and provides an excellent overview of what ordinary Chinese care about in 2013.
ECB keeps rates unchanged, but rate cut risks remain
The ECB decided to keep interest rates unchanged at today’s meeting. Draghi’s statement was more or less unchanged in its wording compared with the statement a month ago. Draghi remains dovish but more weakness is needed to make the ECB cut rates.
Poland: Policy rate at record low
The Polish MPC surprised the market, delivering 50 bps rate cut at its meeting in March while a modest move by 25 bps or no cut had been expected. Does it herald start of more aggressive monetary easing in Poland and thus PLN weakness?
Chaves contributed to high oil prices – no changes in the horizon
Oil prices did not react sharply to the news that Venezuela’s President Hugo Chavez passed away Tuesday after 14 years in office. Now an election will be held within 30 days and there is considerable uncertainty. Short term, growing political …
Norway: Household credit growth still high
Household credit growth has stabilised at a level higher than income growth which means household debt burden is increasing further from an already high level.
Internal factors are weak, external are not clear
After some rebound ruble again approached local lows on weak oil prices. Basket is gaining today and trading at 34.92, USD is also near monthly peaks at RUB30.76. CBR doesn’t intervene as basket is trading within CBR «do-nothing» zone. Exporters …
EM FX Monocle – Divergent paths
For the first time the EM FX Monocle includes all the CEE and Asians economies that Nordea covers. The headlines for March are: CNY: In line with our expectation, the Chinese yuan has been volatile in the past three months. In general, …
High inflation numbers ahead of CBR meeting
Ruble followed oil market dynamics and USD retreated by 13 kopecks to RUB30.61 yesterday, EUR retreated by 10 kopecks to RUB39.96. Ruble basket also declined. External factors improved, Brent futures rose to $112 /bbl. following positive economic data from the …
Exciting times for monetary policy in Hungary
The parliament expectedly nominated economy minister Matolcsy as central bank chief. The appointment increases the likelihood of unconventional monetary policy measures, although these are unlikely in the short term. With all the negative sentiment surrounding Hungary, don't forget the possibility of a positive surprise from a recovering Germany!
Italy update: Uncertainty here to stay
Italy update: Uncertainty here to stay One week after the elections in Italy ended without clear majorities, we give an update from a markets, a political and an economic perspective as well as on our ideas on how it might …
Sweden: Service production – confusing
The uptick in production is difficult to interpret due Statistics Sweden’s implementation of new methods for calendar and seasonal adjustments and the major revisions of the previous months.
Swedish services PMI continued up in February
Services PMI continued to rise and stood at the decent level of 54.6 in February. Most sub-indices rose.
Support out of nowhere – but only after RUB renewed lows
Ruble renewed lows versus USD since December 2012; basket also approached its target technical level at RUB35. However exporters surprisingly helped ruble during the session as new attractive levels made them willing to sell more USD and EUR. Thus negative …
China’s 12th People’s Congress: the key word is people
Premier Wen Jiabao’s speech at People’s Congress opening today was lengthy and offered little news that could shake the markets to the core. Nonetheless, it was positive to confirm that the future economic policies will increasingly emphasise on improving the livelihood of ordinary people. New president and premier will inaugurated between 13 and 16 March.
NOKSEK gone too far?
From its highs in November NOKSEK has fallen more than 6%. This has partly been driven by stop-losses, but also a major shift in the analyst’s perception of Norwegian and Swedish economy. Looking at surprise indices Norwegian economy has disappointed …
Shipping Essentials Weekly
Macro and Events in Brief Political uncertainty following the inconclusive Italian elections and the inability of US policy makers to avoid the initiation of the automatic budget spending cuts added to a cooling of risk appetite last week. Already later …
Metals Weekly: Speed adjustment
The sell-off in metals on the London Metals Exchange (LME) continued last week sending several base metals into “over-sold” territory on certain technical indicators. A confluence of factors have contributed to the recent correction in our view. Growth expectations have …
Latvia: On track to adopt the euro in 2014
The government of Latvia today submitted a request to the European Commission and the European Central Bank to evaluate the eligibility of Latvia to become a member of the euro area. This is another formal step on the road to …
ECB preview: No help for Italy
We expect no changes in key policy rates and no new non-standard measures from the ECB at Thursday’s meeting. The new staff projections for growth and inflation will be roughly unchanged. There will be no help for Italy from the ECB.
Comparing with other commodity currencies ruble is in good shape
Market lost exporters’ support and we can see it on the screens, tracking relatively sharp ruble decline versus USD on the graphs. The end of tax payment period made exporters passive and weak oil prices now started to play first …
FX Comment: say no more, Draghi
The central bank week (11), expect a lot of talk, no changes. The GBP downside may be done for now, if risk sentiment improves. If not, commodity currencies, especially CAD, will come under pressure...
US fiscal policy – timeline of key events
US policymakers failed this time to reach a last-minute agreement averting the so-called sequester cuts. But the fiscal battle doesn’t end here. A timeline of key events related to the impending fiscal debate is provided in this post.
Finland: GDP contracted 0.5 % in Q4
Preliminary data published today by Statistics Finland reports that Finnish GDP fell in Q4 by 0.5 per cent from Q3. This reading is exactly in line with expectations (both Nordea and consensus). From the year earlier GDP contracted 1.5 %.
Swedish week ahead no. 9
Although Swedish GDP Q4 came in much better than forecasts, the development did not impress. GDP stayed unchanged over the quarter, i.e. stagnation there is.
Poland: Nearing the bottom
GDP growth in Q4 slowed, but less than expected. Together with the recent high frequency domestic data and promising activity indicators from Germany (Poland's key export market) this supports our view that the Polish economy is nearing the bottom while monetary policy easing is coming to an end. PLN positive.
Norway: Registered unemployment is not giving in
In total the LFS survey and weak GDP figures in Q4 point to a downward revision of the output gap. But that registered unemployment is stable at a low level argues that the revision will be rather moderate.
Swedish GDP Q4 – no reason for rate cut in April
Today’s Q4 GDP release was very much in line with the Riksbank’s forecast. This, together with glimpses of light here and there, such as improved PMIs, makes a rate cut in April very unlikely.
Swedish manufacturing PMI above 50
The PMI passed the 50-mark in February, which was somewhat better than forecasts. Looking at the sub-indices, both order intakes and production plans, typically leading indicators, picked up. The sub-index for employment also improved but the level at 45 suggests …
Ruble can start to lose exporters support
Ruble can start to lose exporters support as tax paying period came to the end and exporters’ activity will likely fade away. Thus commodity market will become the major vector for the local currency market. Oil prices are weak on …
No smooth sailing in Chinese recovery
The Chinese industrial sector has cooled down in February. It did not come as a surprise to us, as we have always believed in an uneven recovery path, where the export sector remains as a key risk factor. We continue to see the Chinese economy ticking upwards in the coming months.
February
“Small is beautiful” – especially when it comes to bank failure
Sixth-largest Lithuanian bank Ūkio bankas was declared insolvent and divided into a “good bank” and a “bad bank” The “good bank” was sold to Šiaulių bankas and will continue its operations, while the “bad bank” will be liquidated Estimated loss …
Norway: Finally a solid rebound in retail sales
January retail sales figures were more in line with Norges Bank’s strong consumption growth forecast than the very weak figures last autumn. Still we believe that Norges Bank will revise down its forecast for GDP growth, but the downward revision would probably have been even bigger if today’s figures had been on the weak side.
Instant view: Swedish retail sales continue up
Instant view: Today’s retail sales figures contained no drama. Sales increased by a 1.9% over the year, which was in line with our call and a tad below consensus. The overall trend remains positive though not strong. The outlook for …
Commodity market supports currency basket
Ruble is torn among several factors. Yesterday positive news on U.S. house building and consumption, optimistic dynamics on US markets along with inspiring Bernanke’s speech and not bad Italian bond auction supported the ruble. From the other side it brought …
Growth plan with perspectives
Yesterday the danish government presented it new growth plan: Growth Plan DK – strong businesses, more jobs. The plan strives to provide the basis for economic growth by strengthening Denmark’s competitive edge and long-term growth potential through initiatives designed to improve …
Norway: Higher unemployment – again
The LFS figures could be an indication that growth is slowing and capacity utilization stabilizing. The main argument for higher rates then weakens.
Swedish trade recovers
Trade surplus increased in line with expectations as both exports and imports increased picked up in January. A recovery was on the cards. The improving trade figures for January are supported by indicators such as export order intakes which seem …
CBR continues to give interesting signals
External markets’ sentiment is not so bright, oil prices are under the pressure and thus ruble retreated versus euro and US dollar yesterday. However exporters partially offset negative dynamics. Tomorrow last but not least income tax payment will spur exporters …
Fed unlikely to scale down QE3 the next few months
Fed Chairman Bernanke defended today the central bank’s asset purchases and said that they are still merited. With no new policy signals we still believe that the Fed is unlikely to scale down QE3 over the next few months.
Voters say ‘NO’! Do politicians listen?
Another European election where the dissatisfied voters flocked to a character who wants to change everything but have no real idea as what to put in its place. This is a worrying sign.
Monetary easing continues in Hungary
No surprises here – Hungary cut its base rate for the seventh consecutive time by 25bp, bringing it down to 5.25%. The monetary policy stance is likely to remain loose in the coming months as well, especially as the current central bank governor steps down after this meeting. On top of rate cuts, unconventional monetary policy easing would not be a suprise.
Hungary: Central bank turning completely dovish?
One of the main events in Hungary this spring is the stepping down of current central bank chief Simor in early March. The next central bank chief will be someone who plays well with PM Orbán. The main risk is that the central bank will be ready to give up some of the focus on the inflation target in favour of boosting growth, thus undermining long-term credibility of the central bank.
Nordea Risk Perception Publication – Week 9
Arrow pointing at deteriorated risk sentiment near term. But, don’t fear, Draghi is here.
Italian politics in a dead end – any way out?
The one thing that seems clear after the Italian election is that nothing is clear at all and uncertainty will linger on. As Bersani put it: Italy is in "a very delicate situation."
Riksbank minutes with limited guidance
We find the tone in the Riksbank’s minutes from the 12 February monetary policy meeting as fairly neutral. Very much in line with the monetary policy report.
Russian exporters are taking advantage of higher USD
Liquidity is relatively high, as budget injections offset tax payments. Demand for ruble on the interbank market remains high, however 1-day rates can go even higher and we expect 1-day rates can approach 6.5%. Swap rates have already reached that …
Italy: First impression from election results – could have come much worse
Polling stations in Italy are now closed and we are getting the first exit poll results. Financial markets were haunted by the idea that Silvio Berlusconi might collect enough votes to stage his third comeback or Beppo Grillo’s anti-establishment Five …
Shipping Essentials Weekly
Macro and Events in Brief Risk sentiment turned more cautious last week where commodities prices were hardest hit following China’s return from New Year celebrations, liquidity tightening from PBoC and expressed concern about the reflation in home prices. Focus also …
Metals Weekly: The Dragon woke up grumpy
Metals were sent to the slaughter last week as the LME index shed 5.5% to erase all gains year-to-date. The return of the Chinese to the marketplace resulted in a sudden turn of risk sentiment across the commodities space, especially …
Hungary-IMF negotiations have reached the end of the road
It has become increasingly clear that there will be no new arrangement between Hungary and the IMF/EU. The encouraging market sentiment is helping Hungary meet its external financing needs without IMF support. However, an IMF package can be much more valuable than the cash itself through the discipline and accountability it introduces to economic policies.
Ruble found balance on the edge of zone of interventions
Ruble currency basket is balancing on the edge of CBR intervention zone. But the dynamics of USD and EUR versus RUB is more interesting. USD leg increased in the end of last week on oil market slump but this shift …
FX Comment: And the loser is…
Where things almost couldn't get worse, it did for GBP. Only "risk on" striking back and dovish Bernanke can save the day.
The UK loses one of its triple-A’s
The UK was downgraded one notch by Moody’s from Aaa to Aa1 on Friday. Moody’s says the rating outlook is now stable. It is not a major surprise that the UK has been downgraded. Many expected the downgrade already last year and there were numerous rumours during last week. S&P and Fitch both have the UK on negative outlook and may follow soon.
The US: Self-inflicted pain – how badly will the cuts hurt?
I put the odds of the full sequester spending cuts going through on 1 March at more than 50%. Moreover, I expect most of the cuts to be sticking. I expect such an outcome to be slightly negative for risky assets and slightly positive for US Treasuries and the USD.
Exports and inventories dragged down Q4 GDP
According to our forecast Q4 GDP was down by 0.8% q/q. Compared to Q4 2011 GDP expanded by just 1.0%. This is below the Riksbank forecast and supports the view of a rate cut in April.
Not such a big rush this time
The ECB announced today 356 banks would return a total of EUR 61bn of the 3-year money they took from the central bank in the second 3-year LTRO early last year. The numbers illustrate that a considerably amount of excess liquidity will remain in the system for a long time, keeping overnight rates close to current levels. The banking system in general will heal only slowly.
Sweden: Better than expected NIER surveys
Consumer sentiment was pretty much unchanged compared to the previous month while manufacturing rebounded some.
RUB basket remain relatively stable
Volatility increased slightly yesterday but thus didn’t add constructive ideas. Ruble currency basket was hovering around the same levels. Exporters increased activity on the market, buying ruble preparing for tax payments. This factor will remain in the focus till the …
Fed divided – should we worry?
Yesterday’s Fed minutes showed a central bank increasingly divided about the future of asset purchases, even though most participants found the purchases effective in easing financial conditions and helping stimulate economic activity. Still, the Fed clearly wants to be careful not to start removing accommodation too soon or too fast.
NEMO: Punch bowl not going anywhere yet
Risk sentiment has continued to mostly thrive lately. Improving economic data and continued easy monetary policy should still to provide support, but an increasing amount of event risk and uncertainty in the near future should lead to temporary profit taking and a correction lower in equity prices.
Geographic aspects of population dynamics in Latvia since 2000
Data from the recent population census of 2011 allow making a reliable analysis of the geographic aspects of population dynamics in Latvia since 2000, the year when the previous population census took place. From 2000 to 2012 Latvia lost 340 …
Swedish debt office report – slightly more borrowing need than expected
Rather small changes compared with the previous report on 23 Oct 2012. Net borrowing is now seen at 165 (55) in 2013, including the lending to the Riksbank (100), and 63 (56) for 2014.
RUB stabilized near CBR interventions threshold
Yesterday a bunch of macroeconomic statistics was in the focus on the Russian market. Investors are concerned regarding further pace of economic growth and the latest data again left a lot of questions. Russia’s retail sales disappointed in January, growing …
Poland: A positive surprise eventually
Industrial output figures for January have beaten the most optimistic forecasts, which together with stronger-than-expected German ZEW index released earlier today, heralds better times for the Polish economy going forward. PLN gained on the data and swap curve moved up. Will the Polish central bank continue monetary policy easing?
Turkey takes steps to restrict credit growth and limit TRY gains
The central bank action is aimed at limiting speculative capital inflows and restricting credit growth. The reserve requirement hikes will drain liquidity from the markets, while the rate cuts should dampen capital inflows and thus help limit TRY gains.
Not so fast
Regulators have been forced to backtrack on many of their most ambitious reforms lately, due to fears that big reforms could really hit the markets and the real economy very negatively. This trend now also continues regarding the planned margin requirements for derivatives, while more “fine tuning” of the planned reforms no doubt lies ahead before any actual implementation.
Sweden: January CPI as expected
The January CPI came out 0.8% m/m, as we had expected and in line with consensus. Thus, inflation is low and also below the Riksbank’s forecast, supporting our view that probably there is an additional rate cut in the pipeline.
Swedish LFS – no major surprises
The January Labour Forces Survey came out pretty much in line with our expectations. Employment declined by 0.1% on the month, while unemployment stayed unchanged at 8.0%.
Ruble froze near CBR intervention zone
Ruble froze near CBR intervention zone. CBR started to buy USD and EUR in the end of last week but the amount is insignificant. From the other side tax payment period will continue to support ruble. Till the end of …
Now for the second big one
The other bigger one-time repayment of ECB 3-year loans will take place next week, when the second 3-year LTRO will have its first repayment date. The repayment interest is likely to come below the EUR 137bn seen in the first operation. That said, as we have seen a notable correction lower in short interest rates since the first repayments, risks are tilted towards higher rates and a steeper money market curve ahead of Friday’s data.
Ruble basket continued to trade near lower edge of CBR do-nothing zone
Ruble basket continued to trade near lower edge of CBR do-nothing zone at 34.65. USD is trading higher at RUB30.12; EUR is more or less stable ear 40.20. Russian industrial output showed a surprise fall in January, pointing at new …
FX Comment: Eyes wide shut
Big chance for EURUSD to rebound above 1.3300 as the European numbers confirm EMU recovery this week...
Swedish Week Ahead
- All eyes on the labour market
- NSI: Spot on consensus
Poland: Sharp inflation drop heralds next rate cut
Deeper than expected inflation drop in January adds to pressure on conservative majority at the Polish rate-setting panel to continue policy easing, despite a nearing pause in rate cuts suggested by them earlier this year.
Sweden Update, Ahead of the CPI: January chill
CPI inflation fell by 0.8% m/m in January according to our forecast. There are considerable uncertainties. Risks are skewed towards a higher reading. Our forecast is below the Riksbank’s view.
Sweden: Revisions of the LFS – dovish
Yesterday Statistics Sweden announced that the Labour Force Survey is revised for the years 2010-2012. The revisions of the LFS all point in the same direction, namely to lower resource utilisation and to lower cost pressures.
Sweden: Inventories will weigh on Q4 GDP
Inventories in the manufacturing industry were reduced in Q4 and will weigh on GDP growth by almost 1% point y/y in Q4. This is in line with our forecast, supporting our view that Q4 GDP was somewhat weaker than Riksbank’s …
Swedish production data put some upside risk to our GDP Q4 forecast
Statistics Sweden’s indicator for production in the business sector came in somewhat stronger than we had expected due to a jump in the construction sector by 3% m/m. Otherwise today’s figures were in line with previously released figures for production …
Tax payments are starting – it’s RUB time
RUB strengthened yesterday – basket priced dropped by 7 kop. – approached the CBR bound of interventions. Week statistics of Euro zone GDP played in favor of USD in the USD-RUB pair, EUR – dropped, mirrored the FX events picture. …
Sweden January CPI preview and index-linked bonds
We expect a flat CPI y/y (-0.8% m/m). The seasonal drop in clothing and footwear after the holiday in December the major contributor to this month’s print. Huge uncertainty regarding the yearly reweighting of the CPI basket, especially when it comes …
SNDO debt report preview
No further upward revision to the borrowing need apart from the 100 bn in new lending to the Riksbank but watch out for assumptions on selling of Nordea shares . With the event of the report out of the picture, the market will likely start looking at ways to pick up the cheap Swedish 10y government bonds, both buying them against Bunds and taking profit in ASW tighteners.
The French patient gives most reason to worry
Euro area GDP fell by 0.6% q/q in Q4 of 2012, more than we expected. Indicators point towards a better outcome in Q1. The moderate recovery view for 2013 is based on the expectation of Germany picking up – which …
Struggling Hungary – rate cuts will continue
Dismal. The only word that properly describes Hungary’s GDP data today. Today’s weak GDP data and lower than expected inflation cements expectations of further rate cuts. Risks are certainly mounting for further easing beyond 5.25%.
Czech contraction continues
The Czech economy continued on a dismal path, with GDP contracting 1.7% y/y in Q4. We expect the Czech economy only to pick up pace towards the end of the year, along with strengthening activity in the euro area.
Positive market sentiment helps commodity currencies to gain
Ruble currency basket is hovering near RUB34.7. Current high ruble levels are supported by strong oil prices. However current technical situation on the commodity market is not so strong as Brent futures are showing signs of overheating. Step back in …
Central Bank Watch Sweden: All eyes on the labour market
Today the Riksbank left its repo rate unchanged at 1.0%. It was fairly uncertain ahead of the interest rate decision, but we had reckoned that the bank would cut rates to 0.75%. We think the bank will cut rates again, …
Norway: GDP growth weak and well below Norges Bank
All in all today’s figures makes us more certain that Norges Bank will revise down its interest rate forecast in the coming March report. We still do not believe in a cut, but the uncertainty has clearly increased
The Riksbank leaves rate unchanged
Instant view: To our surprise, the Riksbank today left the policy rate unchanged at 1.00%. The rate path signals a likelihood of 20% for a rate cut in next meeting in April, then unchanged rates throughout 2013. The Riksbank’s forecast …
GDP day for the Euro area: a gloomy look back, but better days ahead
Both for the Euro area and Germany, the flash estimate for Q4 GDP due on Thursday 14 February will probably show a decline by around 0.4% q/q. However, the moderate recovery story is intact – and so is the view …
Exporters’ activity – the next ruling factor after CBR
Oil prices edged higher after OPEC issued optimistic demand outlook and this pulled ruble higher versus USD, which closed 12 kopecks lower yesterday at RUB30.03. EUR was stable at RUB40.40. Yesterday the Bank of Russia decided to keep key rates …
How much will 60bn move the market?
In May this year investors will receive NOK 60bn as we see the largest bond redemption on record. This could have a substantial market impact as investors reinvest the proceeds elsewhere.
Nordea Risk Perception Index – week 7
Markets taking a breather – next stop Italian elections and LTRO II redemptions.
Italian elections – what if Berlusconi wins?
Italian general elections, due 24-25 February, are nearing and hence we take the opportunity to sum up our views and add a scenario, where Berlusconi unexpectedly wins the lower house. The election is most likely to produce a favorable outcome …
Bank of Russia decided to maintain interest rates unchanged
The Bank of Russia decided to maintain the refinancing rate and the interest rates unchanged as inflation risks and growth concerns are balanced. Inflation In January 2013 inflation increased to 7.1% over a year ago, driven by higher growth rates …
Norway: Significant cool down in mainland growth
The Q4 2012 national accounts are due out on 13 February at 10.00 CET. We project mainland GDP growth at 0.2% q/q (2.7% y/y) in Q3 compared to 0.7% q/q (2.9%y/y) in Q3. The consensus estimate, according to Reuters, is …
RUB is flat ahead of CBR meeting
Since the end of January Brent futures increased by ~7% and ruble continues to feel support. Exporters will become more active on the next week and this can add confidence for the ruble. But now there are very few market …
Q1 oil price forecast revised up as market is tightening
The oil market supply/demand balance has tightened more than expected in Q4 and start of Q1 2013. We have therefore decided to adjust upwards our short-term oil price forecast for Q1 to USD 113/barrel from USD 106/barrel.
Nordea WebTV: Tighter supply/demand balance in the oil market
The oil market supply/demand balance has tightened more than expected in Q4 and start of Q1 2013. We have therefore decided to adjust upwards our short-term oil price forecast for Q1 to USD 113/barrel from USD 106/barrel. Oil demand growth …
Shipping Essentials Weekly
Macro and Events in Brief Focus shifted back to Europe last week as markets realised political risk in the Euro-zone has not disappeared despite a substantial easing in financial market tensions. ECB president Mario Draghi also managed the impressive task …
Financial forecasts – More upside for EUR/USD and yields in the near term
This is a regular monthly update of our financial forecasts. See the summary below or the full report via the link. Markets have settled a bit since our 29 Jan update (Markets getting too far ahead of economies). Still, we …
Danish inflation at post-2009 low
The consumer price index in Denmark dropped by 0.4 in January on the previous month, the fourth straight month of decline. That took the year-on-year rate down to 1.3%, the lowest rate of price increases registered since the end …
Metals Weekly: Hibernation mode until the Dragon wakes up
Trading in base metals markets may move into hibernation mode this week as China celebrates the new year of the Snake. The LME index closed 4.35% higher year-to-date on Friday, a whisker below its 10-month high reached earlier in the …
Norway: Inflation up – close to Norges Bank
Strong NOK and the possibility of tighter monetary conditions due to regulations are the main reasons why we believe Norges Bank will postpone the first hike to early 2014.
Higher oil prices is the major driving factor for ruble
Ruble appreciated versus EUR, USD and currency basket on Friday on higher oil prices, which is the major driving factor. Internal factors are weak as exporters took a pause and are very passive, waiting for the end of the month. …
FX Comment: G20 – From Russia, Without Love
Lots of talk this week, less data and Asian holiday with Brazilian Carnival...room for a pause?
Swedish Week Ahead
We expect the Riksbank to cut the repo rate by 25 bps to 0.75% at next week’s monetary policy meeting. The interest rate path will likely signal an unchanged repo rate of 0.75% during the remainder of the year, which …
Latvia: Primary dealer system being established
The Latvian State Treasury is implementing a primary dealer system in order to develop the government debt market and increase market activity.
Swedish production – don’t get excited
Even though industrial production in December came in much better than feared the underlying trend in the sector remains negative. November figures were revised down and production was down almost 3% in the fourth quarter compared to the third quarter. …
Ruble will continue to retain potential
Yesterday ECB was is the focus of the market and finally EURUSD dynamics also impacted Russian currency. By the end of the day ruble appreciated versus euro and retreated versus UD dollar, following the trend on Forex. Currency basket continues …
Global Alpha Weekly: Distinguish markets from CBs
The recent aggressive back-up in EUR rates can be derived from a mix of coincident factors: the pick-up in confidence indicators and consensus expectations being caught off guard, a surprisingly positive tone from Draghi which deleted the pricing of a negative deposit rate, and larger-than-expected draining of excess liquidity.
Draghi optimistic but “monitoring closely”
The ECB left key policy rates unchanged as widely expected. Draghi struck an optimistic tone, but was maybe slightly more concerned about the LTRO repayments and EUR strength than most had expected.
Finland: Exports down by 14 per cent
Decline driven by fewer working days Finnish goods exports volume decreased in December 14 per cent and the volume of goods imports 10.5 per cent from the year earlier. Trade balance showed a deficit of 735 million euro. The fall …
Not much potential for USD / RUB growth
Ruble currency basket added slightly yesterday, the major trends remained the same, basket closed at 34.85. USD was trading lower 30 versus RUB and only in the end of the session managed to close higher. Some market participants felt the …
Czech central bank plays down FX intervention risk in the near-term
The Czech central bank kept its repo rate unchanged at 0.05%, as expected. However, the central bank chief noted that the need for monetary policy easing is less urgent now than before (because of the recent CZK weakening), while keeping the door open for FX interventions later during the year.
Poland: Central bank chases reality
Polish central bank cut rates for the fourth month in a row in an attempt to reinvigorate the ailing economy. The decision was fully in line with expectations, but message in the post-meeting statement and during press conference was more hawkish than expected (again), strengthening the PLN and driving market rates higher. What's next for Poland's monetary policy?
Norway: Core inflation back on Norges Bank forecast in January
Consensus is yet not known, but we guess most analysts will predict core inflation at about 1.2% so nothing will happen in the market if we are right
Ruble continues to hover around 30 versus US dollar
Ruble continues to hover around 30 versus US dollar. Yesterday Russian currency finished the session slightly below this crucial technical level adding 9 kopecks. EUR was relatively stable against ruble and thus currency basket decreased slightly, staying within CBR “do-nothing” …
Poland: MPC preview – fourth cut in a row and what next?
We expect that the Polish central bank will continue policy easing with 25 bps rate cut tomorrow. The key focus of attention will be on the post-meeting statement and comments at the press conference in search for hints at future policy actions. How far will Polish rate-setters go with rate reductions? Can monetary policy prospects in Poland be affected by a possible reshuffle of the MPC?
Blog: Who’s greedy?
I realised it all of a sudden. 160,000 euros just appeared on my bank account. A sum equivalent to the annual salary of the President of Finland, out of nowhere. And all it took was an effort of a few …
Riksbank’s interviews: Companies stay downbeat and signal low inflation
The Riksbank has conducted interviews with companies in the construction, retail, manufacturing and service sectors ahead of every Monetary Policy Report since 2007, thus three times a year. The interviews were conducted for 25 companies with total number of employed of around 210,000 during the period 7 January – 18 January.
Sweden: Service production beat expectations
Service sector production rose in December by 0.7% m/m, well above our forecast. We had expected production to decline by 0.5% m/m after the rise in November.
Swedish Services PMI continues to recover
Services PMI has been quite volatile the last year. The increase in today’s figure was broad based. Headline PMI rose to 52.4, the highest since July. It was driven by orders jumping to 53.9.
Siesta no more
Political risk has been on the rise again in Spain and Italy lately, serving as the latest reminder that the risks inherent in these countries have by no means gone away. As the Spanish corruption scandal is far from resolved, while Italy is headed for uncertain parliamentary elections, market tremors will likely continue in the near future.
Swedish Services PMI continues to recover
Services PMI has been quite volatile the last year. The increase in today’s figure was broad based. Headline PMI rose to 52.4, the highest since July. It was driven by orders jumping to 53.9. This level of the PMI indicates …
Volatility increased, takeprofits are on the way
Ruble spent too little time below 30 versus USD to acknowledge the defeat of this level. Yesterday global market investors saw the opportunity to take profit. This process started from government bond’s yield growth in Europe. Markets have been waiting …
Central Bank Watch Sweden: One last rate cut
We expect the Riksbank to cut the repo rate by 25 bp to 0.75% at next week’s monetary policy
meeting. The new interest rate path will likely signal an unchanged repo rate of 0.75% during the
remainder of the year, which is also our forecast.
ECB preview: Is Draghi concerned about LTRO repayments and EUR strength?
I expect no change in rates, no new non-standard measures and no change in bias. Is the ECB concerned about large-scale LTRO repayments draining liquidity? Is the ECB concerned about the rise in short rates and strengthening of the EUR?
Shipping Essentials Weekly
Macro and Events in Brief Financial market sentiment remained resilient last week supported by the unbroken sequence of moderate upside surprises to key economic data from the world’s largest economies. The MSCI World Index of stocks in 24 markets has …
Russian currency broke strong psychological level
Ruble broke strong psychological level versus USD on Friday on the back of commodity market growth and external optimism. Oil prices continued to increase and renewed local maximums since September 2012. Currently Brent futures are trading higher at USD 116.52 …
FX Comment: going for more
ECB's Draghi is on staget this week, and the chances are he is not going to verbally talk the EUR down... just yet.
Sweden and the SEK – Neutrality in the currency war
Current movements on the financial market are chiefly a repricing of risk. The economy still has a lot to prove. Central banks are currently attempting to trash the value of their currencies. The Swedish krona has been declared neutral in …
Swedish week ahead
- Production still on a downward trend
… but survey data suggest a stabilization is imminent
- NSI: Surprisingly positive
Finland: Trade balance in surplus
The volume of Finnish goods exports de-creased 2 per cent and goods imports close to 12 per cent in November from the year earlier. Data released yesterday by Finnish Customs shows a surplus in foreign trade of goods for the first time since June 2011. In contrast, balance of payments statistics of the Bank of Finland show a surplus for most months in 2012.
Swedish manufacturing PMI recovers
The January PMI hit 49.2, which was far above all forecasts. Looking at the sub-indices is also encouraging.
Strong oil market + weak macro data = flat ruble
Ruble again and again meet resistance at 30 versus USD and the break trough this level can become strong technical signal for market participants. Yesterday publication of GDP numbers could become a drag for the ruble as the numbers were …
January
Global Alpha Weekly: Ahead of US employment data
For over a month we have been looking for upside surprises in macro data, not only for the US but also for EU and China. Tomorrow’s release of US NFP data is no exception. In FX space we are still long EURUSD, targeting 1.40. As for correlation with risk sentiment, we expect the current pattern to stay, i.e. a good macro reading (on both sides of the Atlantic) means risk on and EURUSD up.
Macro Strategy – Watch US NFP
As we see a strong recovery in Housing Starts, a level of 1.25 mn Housing Starts by this summer would, by historical standards, mean a sharp improvement in Housing Completions, that front run employment in construction. If (and yes, it is a big if) we assume historical relations this type of move would imply a NFP of +250 000 in 3 months. However for now our model is somewhat more cautious, indicating a reading at +175 000, just a tad above consensus.
Norway: Retail sales figures a tiny positive surprise, but trend still weak
December retail sales figures were weak and probably weaker than Norges Bank’s forecast.
Inflation can make CBR more hawkish – good for ruble
Ruble retreated slightly versus basket but again showed desire to break resistance at 30 versus USD. During yesterday’s session Russian currency was below this psychological level but then returned back. Today in the morning USDRUB continues to trade near this …
Fed stays the course
Today’s FOMC meeting was a non-event, leaving monetary policy and the forward guidance unchanged as widely expected.
US recession is not coming despite shocking GDP drop
Today’s Q4 GDP report will likely prompt recession talk in financial markets, but we are pretty sure that the US economy is not on the verge of a new contraction.
Strong EUR could prompt an ECB rate cut
Expectations of another ECB rate cut were taken out of the markets after the January ECB meeting when Draghi was perceived to be too upbeat on growth prospects to consider cutting interest rates again. Ironically, Draghi’s tone and the surprisingly large LTRO repayments may force the ECB to cut interest rates again!
Lithuania: Industry-led GDP growth surprised on the upside
According to a flash estimate, Lithuanian GDP increased by 3.6% in 2012. The reading was better than anticipated by the Ministry of Finance (3.5%) as well as the Bank of Lithuania (3%), which suggests that the ongoing budget consolidation process will proceed as planned with budget deficit falling to 3% in 2012 and 2.5% in 2013. Quarterly economic growth decelerated slightly from 4.4% in Q3 2012 to 4.0% in Q4 2012, but nevertheless remained robust. Positive growth was observed in all economic activities, except for construction, which suffers from prolonged stagnation of real estate prices.
Norway: Higher unemployment – a surprise
The likelihood of a rate hike this year in the March Norges Bank interest rate forecast seems small
Sweden: business sentiment indicates low growth
The main conclusion from the January Business Tendency Survey is that growth remains low in the total business sector.
Swedish consumers turn more optimistic
Consumer sentiment improved considerably in January. The CCI came in at -2.9 which was even somewhat better than our above-consensus-forecast at -5.
Ruble takes advantage of commodity market growth
The ruble added yesterday versus USD and again approached local peaks near RUB30. USD gave up 14 kopecks and finished yesterday’ session at 30.03. EUR decreased only slightly (-8 kopecks) finishing at 40.52. However currency basket stayed in Central Bank’s …
Poland: GDP figures not as weak as feared
Slowdown of the Polish economy in the final quarter of last year proved somewhat less pronounced than feared. Moreover, breakdown of the GDP growth is supportive to our relatively constructive view on the Polish economy for 2013. We read the data as neutral for monetary policy expectations and not good enough to remove short-term pressure on the PLN weakening.
Tomorrow’s FOMC meeting a non-event – expect weak Q4 US GDP but focus on the underlying trend
Tomorrow’s FOMC meeting is likely to be a non-event. Q4 US GDP growth is likely to be weak, but the breakdown should contain some positives.
Hungarian central bank cuts key rate
The Hungarian central bank cut its key rate by 25bp to 5.50%. We are pencilling in one more rate cut over the near term, but the weakness of the HUF and the still elevated inflation rate will remain decisive factors for further monetary easing.
Macro Strategy – Watch US GDP Growth
For over a month we have been looking for upside surprises in macro data, not only for the US but also for EU and China. Tomorrow’s release of US GDP growth data is no exception.
Markets getting too far ahead of economies
Risk-on is likely to dominate in the very near-term but given the lack of fundamental improvements we expect to see a correction sometime during the spring.
Bronze medal for Lithuanian industry
Lithuanian industry performed better than expected and grew by 4.5% in 2012 in spite of worsening economic situation of Lithuania's major trading partners. The result would have been even better if not a temporary closure of AB "Orlen Lietuva" oil refinery (May-June 2012), which accounts for more than a quarter of Lithuanian industrial production. Indeed, excluding production of mineral products, Lithuanian industry grew at a robust 7.4% in 2012 - just a little slower than 8.1% in 2011 and 7.5% in 2010.
CBR didn’t let ruble go higher
The ruble bounced back after it went higher outside CBR «do-nothing» zone. During last few sessions CBR intervened in the currency market, buying USD and selling ruble. Yesterday CBR bought ~USD88 mn. These interventions along with fading exporters support will …
Finland to offer solid AAA-quality bonds tomorrow
State Treasury Finland will re-open RFGB 2.75% Jul 2028 on Tuesday, 29 January 2013. The credit quality of Finnish bonds remains solid, as has been illustrated by the recent actions taken by the rating agencies. With the 15-10-year curve looking quite steep, maturity extension offer good pick-up.
Shipping Essentials Weekly
Macro and Events in Brief Risk appetite across financial markets were further bolstered last week by the 3-month suspension of the US federal budget limit, Bank of Japan’s more aggressive monetary policy to fight deflation, larger-than-expected LTRO repayments from banks …
Metals Weekly: Pausing for breath
Base metals markets have paused for breath and prices remained range-bound last week as it appears that Chinese buyers have moved to the side lines already ahead of the Lunar New Year. Continued strong risk appetite across other financial markets have not spilled over to the metals markets and encouraging estimates for purchasing manager indices from China, Euro-zone (notably Germany) and the US were not enough to lift LME prices further last week.
Swedish trade figures worse than expected
The plunge in exports of goods by -17% y/y in December is due to sluggish demand and major calendar effects (4 less working days than in 2011).
Swedish retail sales beat expectations
Retail sales increased by a 1.2% over the month and by 2.5 % over the year. This was better than our and consensus estimates.
Exporters’ activity can start to fade away – less support for the ruble
The ruble edged higher versus USD and renewed its peaks. USDRUB hit a fresh high since May 2012 against the dollar lower RUB30 on high risk appetite and exporters’ demand. Tax payments continue to make commodity exporters the major players …
Swedish Week Ahead no 5
Table of content:
On Monday morning…
Less bad indicators for the manufacturing industry
NSI: Surprisingly low unemployment
An era coming to an end
In this analysis we present an updated forecast on Danish yields. In here we find that: Mounting pressures on the krone prompted the Danish central bank to sanction an independent rate hike, marking the beginning of the end of an …
US fiscal risks significantly diminished
Recent political events in Washington have made the global economy somewhat safer. Thus, while we continue to see policy-related downside risks to our 2.1% GDP growth forecast for 2013, these risks have diminished significantly over the past few weeks because the threat from both the fiscal cliff and the debt ceiling has been addressed.
Banks rush to repay the ECB – at least initially
The ECB announced that 278 banks will repay a total of EUR 137bn of the 3-year loans taken from the central bank. The amount paid was higher than many had expected, and has put upward pressure on rates. However, one should not draw the conclusion that monetary policy was about to see an abrupt tightening and that rates would be heading higher for good.
New peaks for the ruble – almost the best commodity currency
The ruble edged higher yesterday and USD renewed its bottom versus RUB since May 2012. USD RUB closed at 30.03 (-8 kopecks), EURRUB closed at 40.25 (+8 kopecks). Currency basket showed slight decline and today in the morning it is …
Global Alpha Weekly: LTRO repayments – The billion Euro question
On Friday, January 25, the ECB will announce the first amount to be repaid of the three year LTROs. We estimate EUR 200bn to be paid back during 2013, with limited market impact on rates markets in the short term. In FX space, we believe LTRO repayments will be the key story for EURUSD in the coming weeks; the more repayments, the more upside there is for EURUSD.
Macro Strategy – Watch IFO
The trough in German macro is evident (see Global Alpha’s Roadshow), and as such there is little surprise that IFO will fall in line with this. If anything we see a more solid trough in various core countries, e.g. despite the lackluster French PMI the macro model for French GDP (based on various hard data) has continued to trough.
Sweden: December unemployment below forecasts
The December Labour Forces Survey came out much stronger than we had expected. Employment rose by a full 0.6% on the month, and unemployment fell to 7.8% from 8.1% in November (seasonally adjusted). The December figures were also better than …
Ruble made a successful attempt to approach local peaks
On Wednesday ruble made a successful attempt to approach lower edge of Central Bank’s «do-nothing» corridor. EUR retreated by 12 kopecks, USD lost 9 kopecks. Exporters were aggressive, selling USD-nominated revenue and preparing for the tax payments. Oil prices also …
Finnish Government Debt Handbook
This handbook gives an overview of the market for Finnish government debt. We offer details on the struc-ture of the market including instruments, marketplace, auctions, issuance, outstanding volume and ownership.
Portugal is back
Portugal followed in the footsteps of Spain’s hugely successful bond launch yesterday, making a comeback to bond markets for the first time since its bailout from other Euro-zone countries and the IMF. The Portuguese bond sale was just the latest reminder that confidence towards the Euro zone is returning.
And the nominee for best EU vision is … David Cameron
David Cameron’s long awaited speech on the future of Britain in the EU was delivered today. The key message is that his government will campaign for a mandate to change the EU and Britain’s role in it in the 2015 elections and in exchange offer an in-or-out vote to the British people – probably in 2017, if everything goes according to plan.
Downside potential for the ruble basket remains
On Tuesday ruble made an attempt to go higher but the dynamics was modest. Currency basket closed at RUB 34.73, – 7 kopecks lower than previous close. Exporters were the major drivers which supported the ruble. From the other side …
Macro Strategy – Watch EU consumer confidence and PMI
We will see a lot of PMI data, but behind these data points we take an increasing interest in consumer confidence. A trough in this measure will surely convince us even more of the European macro trough (see ‘Global Alpha’s Winter 2013 Roadshow’).
Our model, see fig 1, is indicating a potential upside move, and we think a data print of -22 is in the cards. This could then base the trough in European consumer confidence, a much needed development indeed. Of course, we note that we are far away from the consensus, but we were so on the ZEW print as well…
As such, we enter these data points with a risk-on momentum, long EURUSD and short Bund.
This is big
Spain saw an unprecedented flood of orders for its new 10-year benchmark, the strongest sign yet that the market conditions have seen a material improvement. Only the yield of around 5.4% serves as a reminder that Spain is still facing some problems – quite significant ones for that matter. With this kind of demand, Spain is making good progress in meeting its huge financing needs for the year.
LTRO repayments will be mostly good news
In our view, the key questions are:
1.Who will repay and how much?
2.Will short rates move higher if a lot of LTRO loans are repaid?
3.Is it a good or a bad sign if a lot of LTRO loans are repaid?
4.Is there a case for an ECB response?
5.What will happen to German bonds?
Gold prices: One final push, then it’s over
There may be room for gold prices to make one last push higher during 2013, but after that we believe the party could be over for now. We revise our long-standing baseline gold price forecast for 2013 from USD 1,500/oz to USD 1,750/oz as the return to normalisation of Western monetary policy was prolonged during 2011-2012. We introduce our 2014 forecast of USD 1,600/oz.
Nordea Risk Perception Index – week 4
Nordea Risk Perception Index increased slightly on FX and Rates vol increases. We still recommend to apply vol markets to either gain protection against adverse scenarios or to enter positions that benefit from markets being kept fairly at bay.
Unemployment falls due to statistical bias
The December labour market survey released by Statistics Finland today paints a too bright picture of the Finnish labour market. In our view, the unemployment rate fell mostly because the labour market survey overestimated the number of unemployed in December 2011 and underestimated it in December 2012.
FI Strategy – LTRO and the early repayment option
On Friday, January 25, the ECB will announce the first amount to be repaid of the three year LTROs. We estimate EUR 200bn to be paid back during 2013, with limited market impact in the short term.
The pressure on the money market will continue
Money market Short-term rates were flat yesterday; liquidity hasn’t changed much as tax payments were partially offset by increased CBR REPO auction limit. Moreover Ministry of Finance decided to compensate pumped out liquidity and decided to roll over its deposits …
Macro Strategy – Watch German ZEW and US Existing Home Sales
ZEW is expected to climb to 17 from 6.9, consensus looks at 12. This is a really away from consensus and could spur the market’s discussion of less stimulus from the ECB and hence a higher EURUSD and EURCHF. Existing Home Sales is expected to continue to climb, sending even more bullish signals from US housing.
Metals Weekly: Strong Chinese raw materials appetite in December
Weekly comment: Strong Chinese raw materials appetite in December Sentiment continues to ebb and flow in the base metals markets. The LME index ended last week marginally lower, as aluminium underperformed and nickel over-performed the rest of the major base …
Taxes will be in the focus, ruble will have internal support
Money market Short-term rates started to rise last week ahead of tax payments. Liquidity will decrease further during this week on tax payments. Today we have VAT payments (~150 bn. rubles). Moreover during the end of January banks will return …
FX Comment: White Flags in the Currency War
Moderation is virtue. Even when you are in the currency war.
Poland: Really “nasty” data
At the press conference following MPC meeting last week, head of the Polish central bank, Marek Belka, said that data for December published in January would be “nasty”. A bunch of macro figures released in Poland today actually proved to be “nasty”. What does it mean for prospects of the Polish economy, interest rates and the PLN?
Swedish Week Ahead
The most important figure ahead of the Riksbank’s rate decision 13 February is due next week, namely unemployment according to the Labour Force Survey (Thursday).
ECB to start buying soon?
When the ECB announced its Outright Monetary Transactions (OMT) programme last autumn, Spain was expected to take advantage of the programme rather quickly. The activation of the OMTs would have required an aid programme for Spain, which the country was reluctant to apply for. Could Ireland become the first direct beneficiary of the programme?
Rates are higher – basket is lower
The ruble basket decreased slightly yesterday and today started lower yesterday’s close. Oil market rebounded from local lows, exporters started to sell foreign currency more aggressively ahead of the first big tax tranche on Monday (VAT). Next week calendar is …
Stronger Q4 GDP suggests turning point for China
The Chinese economy expanded by 7.9% y/y in the fourth quarter and the full-year growth for 2012 became 7.8%, thanks to public infrastructure investments and rebound in the house market. We expect the recovery to continue in 2013 with a full-year growth rate of 8.1%. We do not believe the PBoC will cut interest rates in 2013. The CNY will be kept as a potential tool to help exporters.
Global Alpha Weekly: Reiterating our 2013 views
In this week’s edition we reiterate our 2013 views while we also comment on the most recent development in FX and fixed income markets.
Cheap labour – low inflation
Inflation will remain below target despite higher imported inflation and higher growth in rents
Growing optimism drives Danish rates higher
In the attached analysis we present an updated forecast on Danish yields. In here we find that: ECB on the sideline amid rising risk appetite in financial markets and a stabilisation of the economic growth outlook. We expect the Danish …
Macro Strategy – Watch Chinese GDP and US consumer confidence
We enter these data points being long risk. A trough in China could spur our commodity strategy as well as risk on trades in FX.
In terms of US consumer confidence data we have seen that confidence has sharply deviated from actual spending, a re-bound in the consumer data would certainly be great news going forward. As a strategy we continue to see more selling pressure in US rates compared to EU.
Central Bank gave a lot of ambiguous signals
The ruble basket was stable yesterday and continued to trade within CBR «do-nothing» zone. USD added 4 kopecks and finished at RUB30.33; EUR added 1kopeck and closed at RUB40.31, basket also closed without significant changes at RUB34.85. Oil retreated yesterday …
We don’t want your money
Banks will have the first chance to repay the 3-year money borrowed from the ECB on 30 January. Early repayments are likely to give rise to pricing of higher short rates and cause some jitters of tightening policy. Despite the repayments, plenty of excess liquidity will remain, keeping short rates very close to current levels.
Global Alpha’s Macro, Rates & FX Strategy: Views for 2013
We acknowledge the many troughs in global macro. Despite the ongoing recession in Europe and the weak German Q4 GDP number troughs are showing up in this region as well. In the US we see a muddle on, there are factors on both sides of the Growth T Account. To keep matters in perspective we do see several structural issues that are still looming over us. The re-bound in activity indicators will spill-over also on Sweden, but it will coincide with very weak hard data that is more important for monetary policy.
Gold market – land of confusion
Are you confused about where gold prices will go next? Well, you are certainly not alone. In recent years gold has shifted rapidly between different identities. This Jekyll and Hyde behaviour is for sure both confusing and frustrating for investors (and analysts) who are trying to predict where gold prices will move next.
Sweden: From basket case to showcase
Everybody knows that the economic situation in Southern Europe is dire. Occasionally, one gets the feeling that there is no way out. Now, one should not belittle the hardship that ordinary people in Greece, Spain and other countries go through; …
Ruble basket hovers around
The ruble basket didn’t show any notable dynamics yesterday. CBR meeting brought some volatility but in general levels were stable. USD added 9 kopecks to RUB30.29; EUR retreated by 12 kopecks to RUB40.30, and ruble currency basket closed without significant …
Poland: Inflation below the target
The headline inflation rate in December dropped below the target for the first time since August 2010, somewhat reviving expectations for further monetary easing in Poland and supporting our view for two next rate cuts in February and March.
Macro Strategy – Watch CPI in EU & US and production data from the US
We enter these data points recommending being long risk. The industrial data from the US will reignite the cyclical hopes, together with CPI there could be grounds for the USD to strengthen (we are strategically neural the USD for the time being).
Weak Norwegian Bond auction
Today’s NOK4bn auction of NST473 (May 2019) came out surprisingly weak. Bid/cover was just 1.5 and the auction rate came in 6bp above the bid on the exchange before the auction. The bid/cover is particularly weak. We have have seen …
Russia’s central bank left policy rates on hold
Russia’s central bank left all its policy rates on hold as expected. Fixed one-day repo rate, the major rate for the money market was lest unchanged at 6.5%, auction repo rate also unchanged at 5.5%. The overnight deposit rate, the …
German economy contracts
The German statistics office said that the Q4 estimate was a 0.5% q/q contraction, making it the worst quarter since the disastrous 2009Q1.
Sweden: Monthly production data point to a marked GDP contraction
Statistics Sweden’s indicator for production in the business sector came out somewhat better than we expected. However, the recovery in November did not counterbalance the significant downturns in October and September. The production data represents more than 70% of GDP …
Russia’s Central Bank to hold monthly policy meeting today
The ruble basket was stable yesterday after robust growth on Monday. External factors were stable – oil prices increased yesterday but in general Brent futures continue to trade within flat range since the beginning of January. CBR doesn’t intervene on …
And then there was one
The rating agency Standard & Poor’s affirmed Finland’s AAA rating, and changed the outlook for the rating from negative to stable yesterday. After the move, Finland is the only Euro-zone country to have a triple-A rating from all the three major rating agencies with a stable outlook. The move also signals how S&P has seen the effect of the Euro-zone debt crisis fade
Macro Strategy – Watch US data
We are hanging onto our trading views going into these data points (please see our strategic trading recommendations). We expect that retail sales will suffer from lower motor vehicle sales and lower gasoline receipts as gasoline prices dropped 4% in December, and hence come down a notch. In terms of the Empire survey we see it reaching 5 which would be better than consensus. Out tomorrow is also US PPI data, and we expect a continued downside trend with a trough in the next few months.
Financial forecasts – New Year is over, but the party is not
We have only made minor changes to the financial forecasts this time: We have lifted our mid-year target for the EUR/USD to 1.25, made minor changes to the GBP forecast, lowered our 3M EUR/SEK forecast to 8.60 and we have postponed the first hike from Norges Bank to March 2014 and only expect two hikes in 2014.
A change in view – no hike in 2013
We have changed our forecast for key rates in Norway. We no longer forecast a hike in October 2013, but have postponed the first hike to March 2014.
Ruble showed high volatility, CBR meeting will be in the focus
The ruble basket increased and Friday’s growth erased previous 4-days gains of the ruble. However basket growth was mainly caused by EUR leg spur. EUR gained 46 kopecks versus ruble and finished at RUB 40.42, while USD added only 19 …
FX Comment: ECB from Mars, Fed from Venus
Fed talk is one of this week's highlights - will they get the USD sink more?...
Swedish week ahead
It is a quite week for Swedish data. Production for the business sector will underline downside risks on Q4 GDP. Also, we expect figures to indicate a mildly positive trend on the housing market.
Macro Strategy – Watch Key Euro Zone Data
We are still looking for upside surprises (hence hanging onto our short BUND view and ‘risk on’ FX trades and Carry Index). The consensus is looking for a slightly less fall in production and we agree. When we look further out we see a stronger rebound than the consensus IF the credit creation spurs more demand which will enforce the trough. Of course lagging indicators are still abysmal, but what if consumers (after manufacturing) find a trough?
Swedish house prices continue up
House prices continued to trend upwards in November according to figures from Statistics Sweden. Adjusting for seasonality, house prices are now 3% higher than its trough in February 2012. In November prices were on average 2.6% higher than a year …
The major support for the Ruble comes from the Russian debt market
The ruble basket increased slightly but still stays near RUB 34.65 – the lower bound of CBR zone of interventions, where Central Bank starts to sell ruble. Yesterday Central Bank sold 4.82 bn. rubles (USD 158 mn.). CBR didn’t intervene …
Global Alpha Weekly: Monetary policy – Rather late than sorry
While we don’t expect any rate hikes in many years ahead, it would be foolish to rule out the possibility of Fed ending its asset purchases as soon as in 2013. The December minutes revealed that there are several members who actually want to end or reduce the purchases during 2013, and if that will happen, we expect the US long end to underperform substantially.
Draghi keeps the door wide open for more easing, but it will require more weakness
The ECB decided to keep interest rates on hold today as most had expected. At the press conference, ECB President Draghi more or less repeated the statement from December, which in our view means that the door is wide open for more ECB easing, but it will require more economic weakness.
Living expenses in Denmark declined in December
Living expenses in Denmark declined in December thanks to a 0.3% m/m drop in consumer prices. Lower prices of clothing and footwear, petrol, electricity and communication were the main contributors to the sharp decline in inflation. A key explanation in …
Spain to a flying start with its 2013 issuance
Spain sold a total of EUR 5.8bn of bonds today, which was more than the indicated EUR 4 to 5bn target range for the auctions. This represents just shy of 5% of the estimated total long-term borrowing requirement for the year. Today’s news was certainly positive for Spain, but one should not get too carried away. Spanish issuance needs going forward are daunting.
Don’t play with the debt ceiling
We estimate that a fiscal deal including a timely increase of the debt limit ensuring that all scheduled payments are met as well as further deficit reductions of USD 1-1½trn over ten years will be enough to prevent new rating downgrades of US debt.
Norway: Inflation on the downside
Inflation on the downside adds to the picture of key figures being somewhat on the weak side lately.
Sweden: Inflation above expectations for once
CPI-inflation was 0.1% point above the Riksbank’s forecast in December. However, today’s figures do not change much.
Swedish industrial production continues down
Production fell by 1.3% over the month and by 4.3% over the year. This was somewhat worse than our forecast and puts some downside risk to our forecast of GDP declining by 0.8% q/q in Q4.
Fresh Chinese data shows that the economy gains strength
Fresh Chinese data this morning supported our longstanding view that the Chinese economy is turning towards brighter days. December exports grew by 14%. Off-balance-sheet credit was very high, indicating the overall credit conditions were not as tight as they appear. Generally, we expect the economy to continue recovering thanks to fiscal stimulus.
The ruble basket entered CBR zone of interventions
The ruble basket entered CBR zone of interventions (lower RUB 34.65), where Central Bank starts to sell ruble, buying USD and EUR. Yesterday basket finished at 34.58. We estimate CBR’s interventions approximately at USD 50-100 mn. on the current levels, …
Poland: MPC less dovish than expected again
The Polish MPC cut interest rates for the third time in a row today by 25 bps. As some market participants expected a bolder move by 50 bps and given less dovish message at the post-meeting press conference, PLN gained and market rates went up considerably.
NEMO: Ready, set, go
Financial markets are off to an impressive start to 2013. While we are still looking for fairly slow growth in Europe we recommend staying long risk. Read also what we like and do not like in Scandinavian financial markets and why we like Swedish government bonds, Danish mortgage bonds and think financials might do well.
Norway: What happened to the Norwegian consumer?
Retail sales showed a disappointingly low growth in November with only 0.2% m/m (s/a), much weaker than both consensus at +0.9% and Nordea at +1.5%.
Norway: Core inflation slightly on the downside in December
Core 0.1% points below consensus and Norges Bank will have no effect on the market.
Sweden CPI preview and index-linked bonds
December CPI • We expect a y/y CPI at -0.1 % (+0.2 % m/m) • Apart from the seasonal contributions from food (on the upside) to clothing and footwear (on the downside), one can note that a positive contribution is expected to …
Ahead of CPI inflation December: CPI inflation still below zero
CPI inflation rose by 0.2% m/m in December according to our forecast. That is marginally above the Riksbank’s view. However, inflation pressures are low, underlining that the Riksbank has more work to do.
Ruble basket can show positive dynamics
Currency Market The ruble basket can show little positive dynamics in the beginning of January following firm oil prices, Russian debt market capital inflow trends, and relatively optimistic external sentiment. Yesterday Ruble gained slightly versus currency basket as temporary resolution …
It’s not all gloom in Greece
Greece is starting to see some light at the end of the tunnel, even though the country still has a long way to go. Economic confidence has seen a sharp rebound in the past few months, and is now at its highest level since the country received its first bailout in early 2010. Even the outlook for Greece is thus not all gloomy.
Macro Strategy – Watch Key German Data
Ahead of German industrial production and the release of ZEW we stand on the upside compared to the consensus. To our regular readers this was something new that started with the IFO print in December – luckily the trend seems to hold so far.
Nordea Risk Perception Index – week 2
Low rates, low realized and implied vol and continued downward pressure on risk premiums for a longer period.
Riksbank minutes: A 50 bp rate cut was considered
Riksbank minutes from the 17 December monetary policy meeting strengthens our view that the Riksbank will cut rates again in February by 25 bp.
Price level targeting – next ECB easing step
The next easing step from the ECB could be the introduction of a temporary price level target path.
Italian politics gets more messy
Berlusconi announced on Monday that his party, the People of Freedom (PdL), had formed an electoral pact with Lega Nord. This move increases the risk of a hung government and, in turn, a weak government, exactly what Italy does not need.
FX Strategy – AUD enjoying the IMF boost
The IMF recently included the AUD among its official reserve currencies. This highlights the nation´s increased safe haven status, and we see this as another strategic reason to play the intra-region bet, long AUD vs NZD.
Swedish Government Debt Handbook
This handbook gives an overview of the market for Swedish government debt. We offer details on the structure of the market including instruments, marketplace, auctions, issuance, outstanding volume and ownership.
Norway: Somewhat higher unemployment
Despit higher than forecasted unemployment today's figure did not change our view.
Sweden: Service production up in November
Service sector production recovered in November after the sharp drop the previous months. Production was up by a full 1.8% on the month and 0.5% compared to a year ago.
The fear of overregulation frightening the regulators themselves
The Basel Committee on Banking Supervision announced yesterday it had agreed to considerably loosen its new liquidity requirements. The relaxation of the rules illustrates the regulators are not particularly willing to risk another big hit to the economy due to heavy regulation.
ECB preview – no rate cut, but dovish tone
I do not expect any action from the ECB at this Thursday’s meeting. There is still a risk that the refi rate will be cut, though, and, if not, the door will be kept wide open for future rate cuts.
FX Comment: staying positive
ECB will not break the zero bound, and US may disappoint near term, with no end to QE - renewing pressure for USD.
Fed getting closer to its objective
US jobs data highlight why we are increasingly sceptical of the Fed’s indications that it will keep the funds rate near zero for at least 2½ more years.
Swedish Week Ahead
Next week’s data will provide some insight on how the year ended in both real and nominal terms. We’ll also receive the minutes from the Riksbank’s policy meeting in December.
Poland: MPC preview – bolder policy action this time?
Government’s officials keep pushing on the Polish MPC to quicken rate cuts and help the slowing economy. Will Polish central bankers deliver 50 bps cut next week?
Macro Strategy – Watch US Nonfarm payrolls
Also our second macro call of the year will be above consensus, just as ISM earlier this week. The strong market sentiment partly attributed to the recent fiscal cliff decision may lose some momentum if our model for tomorrow´s nonfarm payrolls is correct (pointing at 170k vs consensus at 150k), and the expected maturity and size of the open ended QE pro-gram is reduced.
Sweden: Credit growth may reach 6% in 2013
Annual household credit growth came in at 4.6% in November, up marginally from 4.5% in October. The monthly growth pace, however, moderated somewhat in November.
Fiscal cliff averted but still plenty of policy risks
The last-minute fiscal cliff deal is clearly a relief because it helps the US to steer clear of recession. However, while the fiscal cliff is now history, we will likely face another fiscal battle in Washington in just a few weeks’ time, with potentially negative consequences for confidence.
Macro Strategy – Watch US ISM
Macro Strategy – Watch US ISM As for today’s ISM print our models are actually pointing towards a surprise to the upside. This is the first time we are above consensus in a macro call for over a year …
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Latest tweets
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@connectlatvia interesanti. Tomer nepiekritu otrajai dalai. Action without vision might be better than no action.
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RT @Pawelmorski: BTP future off 1.40 despite bunds stronger. Behaving like a risk asset today.
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A below +-1% move in Nikkei must be tail event on the distribution curve. Does anybody seriously believe central bankers can control this?
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ECB’s Cœuré says European Banking Union before fiscal union is possible but challenging #ICMAAGM
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@naitwit you could be right. Chinese PMIs not good today
