Number [XX] , 01 January 2006

Transcription

Macro Research
April 11, 2014
Monthly Macro Update
Global recovery scenario remains on track
China: No imminent crisis, but reforms going too slowly
Eurozone: Downside data risks make second quarter ECB move likely
US: Inflation not a good indicator of resource utilisation
Sweden: How long will monetary policy stand alone at the wheel?
Contents
INTRODUCTION
3
CHINA
No imminent crisis, but reforms going too slowly
5
EUROZONE
Downside data risks make second quarter ECB move likely
6
US
Inflation not a good indicator of resource utilisation
7
SWEDEN
How long will monetary policy stand alone at the wheel?
8
NORWAY
Housing market stronger than many feared
9
FINLAND
Uncertainly blurs the recovery outlook
10
UNITED KINGDOM
Mind the gap
11
JAPAN
Tankan survey points to slower economic activity
12
CENTRAL AND EASTERN EUROPE
Tug of war over Ukraine continues
13
BRAZIL
Why inflation remains elevated
14
INDIA
Will a Modi victory revive the reform process?
15
SOUTH EAST ASIA
China worries surface again
16
FX
ECB to follow words with actions before long
17
Key ratios
18
Disclaimer
21
Contact Information
Jan Häggström, +46 8 701 1097, [email protected]
Petter Lundvik, +46 8 701 3397, [email protected]
Gunnar Tersman, +46 8 701 2053, [email protected]
Helena Trygg, +46 8 701 1284, [email protected]
Anders Brunstedt, +46 701 54 32, [email protected]
Eva Dorenius, +46 701 50 54, evdo01@ handelsbanken.se
Tiina Helenius, +358 10 444 2404, [email protected]
Tuulia Asplund, +358 10 444 2403, [email protected]
Knut Anton Mork, +47 2239 7181, [email protected]
Kari Due-Andresen, +47 223 97007, [email protected]
Marius Nyborg Hov, +47223 97 340, [email protected]
Jes Roerholt Asmussen, +45 4679 1203, [email protected]
Bjarke Roed-Frederiksen,+45 4679 1229, [email protected]
http://www.handelsbanken.se/research
MONTHLY MACRO UPDATE, APRIL 11, 2014
Introduction
While the political tug of war in Ukraine is obviously a source of concern for the global community, it has yet
to leave a distinct mark on economic sentiment around the globe. So far, markets seem to regard a serious
escalation in geopolitical relations as a tail risk. Other factors suggest that the global economy is indeed
picking up speed, and these are viewed as more important. We agree with this assessment and think that the
global recovery scenario remains on track.
Full-blown trade war
over Ukraine seen as
a tail risk
While a sizeable share of media attention remains devoted to Ukraine and the geopolitical
tug of war between Russia on the one side and the EU and the US on the other, markets
have so far not been rattled. Judging from current market pricing, a scenario with significant
disruptions to Russia’s oil and gas exports is not viewed as very likely. How the stand-off in
Ukraine develops, especially in light of the events unfolding in the eastern part of the country
during the past couple of days, is of course still very much an open question. However, a
full-blown trade war is still viewed as a tail risk.
The global recovery
led by the US
Instead, markets are focusing on the global business cycle and the widely expected uptick in
global activity this year and next. This US is obviously taking the lead in that regard. Other
advanced economies have less to celebrate but are also making important contributions. In
contrast, the outlook among emerging economies is mixed. Many countries are grappling
with tight labour markets, inflation, and sizeable macro imbalances, while failing to put in
place a credible structural policy framework that allows them to boost productivity over the
longer haul. In many places—Russia may currently be the chief example in this regard—
those problems are obviously very much intertwined with politics.
The Fed and ECB put to different tests
Inflation pressure
will likely force the
Fed to act
In the US, a key issue is the pace at which the Federal Reserve will move to normalise its
monetary policy. Fed chair Janet Yellen is not concerned that rising inflation could derail the
Fed’s ambition of maintaining the current, low fed funds rate until mid-2015. That, however,
is a brave assumption, in our view. It takes time for increasing resource utilisation to express
itself in higher consumer price inflation. Against that background, it is essential to follow
other indicators of inflationary pressure too. Signs of such pressure are already showing up
in data on prices for services and wages, typically more closely related to the output gap
than the overall consumer price level. Several FOMC members already worry that monetary
policy is excessively loose. Maybe Yellen should too?
The troubled south
eurozone is a headache for the ECB
In the eurozone, the recession is over but widespread economic weakness continues to
characterise much of the south. Further, we are concerned that Q2 developments will prove
a disappointment and that continued weak money supply growth and high unemployment
3
will accentuate deflation risks in the troubled south. The combination of high debts, low real
growth and “lowflation” makes it very hard to rebalance those economies. The ECB has
hinted several times that it is ready to add further stimulus if the outlook deteriorates, and we
do not think that much more is needed before real action is taken. The ECB will most likely
want to forestall a destructive risk scenario taking hold before it is too late. All in all, we think
that the combination of weaker-than-expected data and the prospect of deflation in the
southern eurozone will tip the balance in favour of monetary easing in the second quarter.
Emerging economies a mixed bunch
Chinese growth looks
safe for now, but
reforms are too slow
The situation in the emerging economy universe is mixed. China remains a global economic
powerhouse. There are, however, a number of unresolved problems for policymakers. While
we feel reasonably confident that systemic financial risks are being handled adequately, it is
disappointing that progress is so slow with regard to other reform areas. Although financial
reforms are to be welcomed on their own merit, they have not been sufficient to remove capital
market inefficiencies. As a result of those incomplete reforms, state-owned firms are now able
to borrow from banks at subsidised rates and use such loans for on-lending to shadow market
institutions. The land market is not only a murky legal area, but is also related to the ticking
bomb of local government financial vehicles. Serious problems with regard to labour mobility,
competition in the service sector, and the environment have not been addressed. In light of
that, there is a temptation to again rely on demand stimulus to reach growth targets. We believe this would increase the risks of stagnation down the road.
“Stagflation” an
emerging theme
The other large emerging economies face more immediate issues. Several countries, such
as Brazil, Russia, South Africa and Turkey, are subject to capacity constraints. We see a
“stagflation” scenario being played out that is best met with a progressive structural policy
agenda to enhance economic opportunities in a genuine way. In most cases, no such
agenda has appeared on the horizon, mostly for domestic political reasons, as it would likely
challenge various vested interests. Russia may be a particularly disappointing case in that
regard. The medium-term outlook was already gloomy well before Ukraine occupied the
headlines and it is even gloomier now. We are not optimistic that this state of affairs will
change soon and find the brightest prospects in the emerging segment in Asia. Among the
larger economies, we view India, which just initiated its marathon election process, in a relatively favourable light.
Swedish politicians eager to show off their fiscal prudence
More focus on the
ultimate economic
policy targets needed
Sweden is finally picking up speed on all fronts, both domestically and externally. Against
that background, output and labour market gaps should gradually shrink during the next
couple of years, raising the issue of monetary tightening, although that is not an immediate
prospect. Fiscal policy could also come into play at some point, but here the outlook is
clouded by the uncertain election outcome and still-vague reform ambitions among political
parties, the implications of which are hard to assess. As the political season is heating up,
the major contenders seem locked in competition about who has the strongest commitment
to fiscal prudence, while signalling prompt action on any temporary budget shortfall that may
come their way. However, fiscal policy is best framed in a medium-term context. Given very
low public indebtedness, there is certainly no need for hasty action. While we agree that
strong public finances are highly beneficial, we would nevertheless recommend that more
attention is paid both to the policy mix and to the ultimate policy targets.
4
China
No imminent crisis, but reforms going too slowly
Although a recent visit calmed our nerves regarding systemic financial risks, we are disappointed that the
reform process is going much more slowly than first indicated, and that traditional demand stimulus again is
being used to reach growth targets. The risk of future stagnation, or even a crisis, is thus increasing.
Although we can
expect more default
cases...
The recent run on two small, local banks on the heels of a couple of much publicised defaults had raised fears of an impending systemic crisis. Lengthy discussions with a number
of prominent analysts allayed those fears, however. Not that defaults, bankruptcies or even
bank runs are not set to continue. They will. However, we believe they will be isolated cases
and will not threaten the overall stability of the financial system.
...the systemic risks
to the financial system are manageable
It is also not that we believe the official non-performing measure of 1 percent of bank balances. Nobody does, and the true number is probably five to ten times as large. However,
the large banks, which dominate the market, are sufficiently capitalised to be able to absorb
350bp of losses annually for three years. Thus, there should be no need for large-scale government capital injections. And if that should nevertheless be needed, the overall publicsector debt burden of 50-60 percent of GDP is small enough for the government to manage
it. The government also faces no legal hurdles in this regard. Further, as essentially all the
debt is internal, the government can always print the money if needed.
Impatience about reforms
The slow pace of reforms is much more
serious...
The big reform programme announced by Xi Jinping at the Third Plenum has not been followed up as quickly and as forcefully as hoped for. And to the extent that it (or other forces)
dampened Q1 growth, it has now made the government lapse into old habits of demand
stimulation. Although we maintain our view that the effects of this stimulation will be somewhat limited, it sharpens the conflict between the short-run focus of reaching the 7.5 percent
growth target and the medium-term need for deeper reforms.
...as short-term expediency continues
to trump longerterm structural
needs
Reforms are coming in the financial sector. However, financial reform without real-sector reforms is starting in the wrong end, and in the real sector, major problems remain. Financial
reforms have not removed capital market inefficiencies and may in some cases have worsened them, as state-owned enterprises (SOEs) are borrowing from banks at subsidised rates
and on-lend to shadow market institutions. The labour market remains seriously distorted by
the hukou regulations that seriously hinder mobility. Moreover, the land market is not only a
murky legal area, but is also tied up with the ticking bomb of local government financial vehicles (LGFV). The service sector remains underdeveloped and dominated by SOE monopolies,
and air pollution has reached critical levels, especially in and around Beijing.
If not solved, the
structural problems
will lead to stagnation and possibly
crisis
None of these problems are likely to result in immediate crises, except possibly for the air
pollution problem. But if they are not solved, the debt problem, which is manageable today,
may grow and produce a real crisis five years from now. The longer reforms are postponed,
the harder it will be for China to break out of the middle-income trap. In other words, growth
rates may decline seriously even with continued stimulation measures.
Although President Xi Jinping appears to understand these challenges, he is obviously
meeting serious resistance from vested interests in the ministries and the SOEs. And even
his closest ally, PM Li Keqing, has become nervous enough about short-term growth to set
off new stimulation measures. They will probably raise H2 growth sufficiently to bring fullyear growth back close to 7.5 percent. Already next year, however, we see risks of a more
significant slowdown as slower urbanisation dampens housing construction, especially in the
many third- and fourth-tier cities.
Knut Anton Mork, +47 2239 7181, [email protected]
5
Eurozone
Downside data risks make second quarter ECB move likely
Our leading indicator for the eurozone surprise index points to negative readings in Q2. Meanwhile,
continued weak money supply growth and high unemployment accentuate deflation risks in the south
eurozone, and together make an ECB move in the second quarter likely.
Weaker-thanexpected data likely
Our leading indicator for the eurozone economic surprise index (published by Citibank) has
a lead-time of almost one quarter and suggests the surprise index is likely to spend the rest
of the second quarter in negative territory, implying that macroeconomic data will on average
surprise on the downside. This would weigh in favour of some kind of ECB monetary easing.
Mario Draghi has hinted the ECB is ready to add further stimulus if the economic or inflation
outlook deteriorates. The ECB revised down inflation forecasts significantly a couple of
months ago and its first shot at 2016, published in March, pointed to a rate of inflation significantly below 2 percent. We do not think the outlook needs to deteriorate much more before the ECB decides to act. Following the April policy meeting, Draghi said the ECB was
discussing what options were available for quantitative easing.
Prospect of deflation
in south eurozone
Increasing deflationary risks in the south eurozone is especially relevant for the ECB policy
outlook. The combination of high debts, low real growth and deflation will make it very hard
to rebalance these economies. Spain already surprised by dipping into deflationary territory
in the latest reading. We expect the high unemployment rates to put downward pressure on
wages this year in Spain and in other economies with large slack in labour markets. Weak
spending power for households will translate into weak pricing power for firms; thus, it is
easier to see downside rather than upside risks for inflation in these countries. See also the
eurozone chapter in February's Monthly Macro Update.
We draw the same conclusion when looking at monetary developments. Money and credit
supplies have been shrinking for several years in these countries, and typically inflation
rates respond with a lag. Greece has been in deflation for almost two years. The ECB will be
sensitive to negative tendencies in the overall eurozone inflation rate, but even more concerned if south eurozone risks a debt-deflation spiral similar to Japan in the past decade.
ECB should take action before it is too
late
Such a scenario would be difficult to get out of with the help of the ECB, as it cannot target
monetary policies to individual countries. If deflation takes hold in these countries, real interests will start to rise and the fiscal situation could soon become unsustainable. Meanwhile, it
would be even harder to achieve debt consolidation in the private sector and, as a result, the
outlook for banks would worsen again. For the ECB, it is best to avoid such an outcome before it is too late. All in all, weaker-than-expected data and the prospect of deflation in the
south eurozone should tip the balance in favour of monetary easing in Q2 2014.
Jan Häggström, +46 8 701 1097, [email protected]
6
US
Inflation not a good indicator of resource utilisation
Janet Yellen is not concerned that rising inflation could derail her ambition of maintaining the current low
fed funds rates until mid-2015. However, tightening resource utilisation is not always reflected in consumer
price inflation. It is already showing in the inflation for services and wages. Our analysis indicates that both
these inflation rates will rise sharply in the future. Maybe she should be concerned.
Low rates for a considerable time to
fight unemployment
To fight unemployment, Fed Chair Janet Yellen advocated an “optimal policy” of maintaining
the current low fed funds rates until unemployment declines to slightly above its natural rate,
which Fed officials assess at 5.2-5.8 percent. It seems as if the majority of the Federal Open
Market Committee (FOMC) has embraced her vision. In the Committee’s own words: It continues to anticipate that it likely will be appropriate to maintain the current target range for the fed
funds rate for a considerable time after the asset purchasing programme ends. Janet Yellen
indicated at the press conference that “considerable time” means roughly six months.
Inflation on services
an indicator of resource utilisation
Unemployment has declined faster than the FOMC expected and will, according to our forecast, hit 6 percent by the end of the year – within the range for a first hike of the fed funds
rate. At the moment, the FOMC is not acknowledging the vanishing slack in the economy.
Rather, it is reiterating that subdued inflation poses a risk to the recovery. However, resource utilisation is not always reflected in the consumer price inflation, not even in the core
measure excluding food and energy. A major reason is that prices on tradables to a large
extent are determined by global factors. Resource utilisation is primarily reflected in the price
inflation on non-tradables, such as services. Thus, the conclusion is straightforward – use
service inflation and not consumer inflation as an indicator of resource utilisation.
Core service inflation
excluding special
factors
Over the past five years, price inflation on financial services has been abnormal because of
the financial turmoil. Moreover, healthcare inflation has declined. This is partly due to the
expiry of an unusually large number of drug patents in 2011 and 2012, when expensive
branded drugs were replaced by cheaper generic versions, but is mainly the result of decisions in Congress, such as Obama’s healthcare reform. Thus we exclude these two components as well as the energy component from service inflation to get a better indicator of resource utilisation, and call the measure core service inflation.
A first hike before
the end of the year
We have used Phillips curves to estimate core service inflation as well as wage inflation.
Both inflation rates have already risen due to improvements in the labour market. Forecasts
of these rates based on our unemployment forecast and the CBO’s forecast of the natural
rate of unemployment indicate sharp rises in both service inflation and wage inflation in the
future. Several members of the FOMC already seem concerned about the prevailing extremely easy policy. Maybe Janet Yellen should be too.
7
Sweden
How long will monetary policy stand alone at the wheel?
Unlike previous years, we expect foreign demand to contribute to an acceleration in Swedish GDP. In 201415, output and labour market gaps should gradually shrink, thus monetary policy needs to start tightening at
some point in time. That should bring fiscal policy back into the limelight sooner or later. Considering a
highly uncertain election outcome and still-vague reform ambitions among political parties, the outlook for
fiscal policy seems to be a truly open field that potentially poses a risk to any Swedish forecasts.
Recovery for exports
and manufacturing
should persist at
least in Q2, indicators suggest
Increased likelihood
of a rate cut this
year, but we still
don’t expect one
Despite the election
being just months
away, reform ambitions remain unclear
Economic activity stepped up markedly in Q4; we forecast high GDP growth for both 2014 and
2015. While household consumption was the cornerstone of demand growth in prior weak
years, brighter prospects for foreign markets should now propel both exports and investments.
Further, hard data now show that export markets are on a stronger footing. Swings in Chinese
leading indicators, alongside the weak US data in Q1 (blurred by weather effects) have been
recurring themes for those questioning the outlook for recovering exports and manufacturing
output. However, Swedish export growth has already picked up quite a bit, while survey and
order data clearly suggest a continued acceleration, so at least H1 seems to hold the kind of
industrial recovery that we forecast. The export outlook remains strong and the lower
EUR/USD that we forecast should definitely help to boost European markets. As we forecast a
SEK strengthening versus the EUR, some loss of competitiveness versus the eurozone seems
inevitable. Overall, however, exports should benefit more from stronger growth in the core
markets of Europe. That said, flattish exports to Nordic neighbours seem likely for a while
given a rather weak growth outlook for 2014 for the Nordics as a whole.
After the Riksbank lowered its repo rate path in the April Monetary Policy Update (MPU), the
short-term probability of a rate cut rose. Through substantial downward revisions of the Riksbank’s CPIF forecast, the downside risk to the Riksbank inflation outlook seemed limited – for
a while. At best, those revisions were meant to save the Riksbank from being haunted by the
expectations game centred on monthly readings, but just a day after the MPU, the CPIF reading on March held yet another negative shock. Now, a rate cut in July seems most likely. However, a hiking cycle should not be that far off, and we do not revise our outlook further out. With
the general election just months away (September 2014) and monetary tightening around the
corner, fiscal policy should return to the limelight. But fiscal reform ambitions remain vague or
unveiled. While the recently-published spring budget bill does not really have an impact, rhetoric suggests loyalty to budgetary targets rather than “excessive stimulation” in the race to win
the election. Setting the self-imposed fiscal policy framework aside, Sweden’s indebtedness
leaves clear leeway for stimulation. Should there be no goals other than just conforming to the
fiscal straitjacket?
Anders Brunstedt, +46 701 54 32, [email protected]
8
Norway
Housing market stronger than many feared
The Norwegian housing market has not collapsed, as many had feared. Rather prices have levelled off, and
over the past two months have even been rising. We foresee moderate growth ahead, as the market balance
is strained, but consumer confidence still relatively low.
Housing market cooling off, but no crisis
Fears of a housing
market collapse
proved overblown
The housing market, which for several years contributed positively to economic growth, both
directly through housing investment and indirectly by boosting consumer confidence, has
cooled. However, the momentum change has so far been more benign than many had
feared, with prices only levelling off. The cooling of the housing market is a result of weakening economic growth and tightening credit conditions. The quite rapid correction in house
prices before Christmas was probably also driven by an additional fear factor, depressing
consumer confidence and affecting investment.
Low building activity
and high population
growth underpin
new housing demand
However, net immigration to Norway is still strong and new demand for housing has been
significantly higher than construction in recent years. Prices have now been rising on a seasonally adjusted basis for the past two months and, going forward, we expect to see a sustained pickup in prices, maybe after summer, as a marked reduction in building activity this
year and continued high population growth strain the market balance.
Expecting GDP growth
to remain below 2% in
2014e-15e
Although the housing market has cooled considerably, we do not see significant downside
risk. The correction has no doubt contributed to depressing consumer confidence, but consumer confidence should improve somewhat as it becomes clear that the bottom has not
fallen out of the housing market. We nevertheless believe slow economic growth and increasing unemployment will keep confidence at modest levels. As a consequence, we expect housing investment to become negative this year and consumption growth to be very
modest, contributing to keeping GDP growth below 2% both this year and next.
Kari Due-Andresen, +47 2239 7007, kadu01@handelsbanken
9
Finland
Uncertainly blurs the recovery outlook
With domestic demand still depressed, the export sector is the most likely source of GDP growth. However,
uncertainty has increased lately, putting downside risks to our growth outlook for 2014-15.
Exports and economic performance
weaker than expected in early 2014
The Finnish economy has started the year on a weaker note than we expected. The global
business cycle has improved gradually, according to our expectations, but the Finnish export
sector has not been able to get a decent hold of that recovery. After a promising Q4 2013,
goods exports performed anaemically in early 2014, pushing the Jan-Feb accumulated trade
balance further into negative territory than during the corresponding period in 2013. In addition to the ongoing restructuring of the industrial sector, the strong trade-weighted EUR has
been a factor behind the poor performance of the export industry. The euro has appreciated
by 7 percent since August 2012, the previous bottom for the nominal trade-weighted EUR,
and now Finland’s exports suffer from the strongest trade-weighted currency in four years.
Risks to our GDP
growth forecast for
2014-15 are to the
downside
Tensions over Crimea increase the risks of exports to Russia, Finland’s third largest goods
export market, although Russian trade has already decreased markedly since the start of
2013, hand-in-hand with the weaker RUB and anaemic performance of the Russian economy.
Without Russian trade to rely on and Chinese growth slowing, Finland’s export sector would
need a demand boost from the northern eurozone, Sweden, the US and UK. The PMIs for the
most important western export markets indicate continuing GDP growth, but not as high as
during previous periods of booming Finnish exports. Thus, the question is, will the global recovery continue to be too mild to support Finland’s export sector in a meaningful way? With
domestic demand still depressed, the export sector is the most likely source of GDP growth in
2014-15. While our cautiously positive export outlook is blurred by uncertainty and risks, the
risks to our GDP growth forecast for 2014-15 are clearly to the downside.
Fiscal drag on domestic demand to increase significantly in 2015
Fiscal drag on economy significant in
2015-18
According to calculations by the Ministry of Finance, the fiscal adjustments to state finances
will be remarkably harder in 2015-18 (approximately 3 percent on average in relation to
GDP) than in 2013-14 (when the adjustments are estimated to amount to only slightly above
1 percent of GDP). Those adjustments are planned to push the public debt-to-GDP level
down in 2016, but state finances will still show a small deficit in 2018. It is evident that fiscal
policy will be a drag on the economy, households’ purchasing power and corporations’ investment plans for years to come.
Continuity of economic policy at risk
due to coming
changes in government
In addition to the uncertainty deriving from fiscal policy, the political environment itself turned
more uncertain last week when PM Jyrki Katainen announced that he will no longer apply for
the National Coalition party’s (the ruling cabinet party) chair this summer. That means the
departure of the Left Alliance after budget frame negotiations in March was only the start of
a series of changes to the government’s composition; the Prime Minister will be changed in
the summer and possibly also the Social Democrat Minister of Finance, as a party colleague
is challenging her in what is likely to be a tight race for party chair. Furthermore, European
Parliament elections are likely to bring additional changes before the summer, as several
ministers are running for European parliament. On top of those likely changes, the Green
Party has threatened to leave the government coalition if the previous government’s resolution on a sixth nuclear power reactor is renewed. All-in-all, the likelihood of the government
coalition lasting another year, until the scheduled parliamentary election in April 2015, has
decreased significantly. That raises doubts over the continuity of economic policy and political stability in general, which may keep domestic sentiment weak throughout 2014.
Tuulia Asplund, +358 10 444 2403, [email protected]
10
United Kingdom
Mind the gap
The introduction of the new forward guidance at the Bank of England was introduced as unemployment is
reaching 7 percent. As the labour market improves, the new guidance focuses on how to absorb spare
capacity. The gap between actual GDP and potential GDP is still high even if the outlook has turned brighter.
Scope remains to
absorb spare
capacity further
In August last year, the Bank of England introduced forward guidance that linked the rate of
unemployment to the policy rate. The message was that the central bank would keep the
policy rate low for at least as long as unemployment was above 7 percent. In February this
year, as unemployment approached 7 percent, the MPC made a further guidance statement
on setting monetary policy once the unemployment threshold had been reached: The MPC
sets policy to achieve the 2 percent inflation target and, subject to that, to support the Government’s economic policies, including those for growth and employment. Despite the sharp
fall in unemployment, scope remains to absorb spare capacity further before raising the official bank rate (the BoE’s base rate). When the bank rate does begin to rise, the appropriate
path to eliminate slack over the next two to three years and keep inflation close to the target
is expected to be gradual. However, the actual path of the bank rate over the next few years
will depend on economic trends. Even when the economy has returned to normal levels of
capacity and inflation is close to the target, the appropriate bank rate is likely to be materially
below the 5 percent level set on average by the MPC before the financial crisis.
More Britons are
working more hours,
but producing less
Since the beginning of 2008, overall production has decreased by more than employment,
causing spare capacity to rise and productivity to fall. In the beginning of the crisis, firms
kept their headcounts more or less intact, reducing benefits and bonuses to keep costs
down. However, the latest labour market statistics show that more and more British employees are working more hours but producing less. This is what the central bank will focus on in
its new guidance.
Many part-time employees want to work
more hours
An economy with a large degree of spare capacity, as the UK has, results in a negative output gap. As said before, there is still a loss of overall production by almost 3 percent since
Q1 2008, and even if the economic recovery so far has been fairly broad-based, many challenges are still on the agenda. Many part-time employees want to work more hours and the
rate of youth unemployment is still high. On the bright side, employment surveys paint a
more positive picture of firms’ willingness to hire. Overall, we see the bank rate remaining
low for one more year before the gap should narrow enough for the Bank of England to start
its hiking path.
Helena Trygg, +46 8 7011284
11
Japan
Tankan survey points to slower economic activity
GDP in the final quarter of last year was disappointing. As the consumption tax hike is now implemented, big
enterprises fear a repeat of 1997. Even if the latest Tankan survey points to slightly better conditions,
forecasts for all industries have worsened.
Output and activity indicators point to a faster economic rebound in Q1, while the important
Tankan survey indicates that economic activity will slow in Q2. GDP last year was driven by
private and public consumption, while private investment was negative. Export contributed
negatively to overall growth and GDP for the whole of 2013 was reported at 1.4 percent.
Big enterprises expect conditions to
worsen
The highly discussed consumption tax hike is now implemented. The last time this kind of
fiscal austerity was introduced was in 1997, when the tax hike coincided with domestic banking worries and the Asian financial crisis. Big companies are now worried what will happen
this time. According to latest Bank of Japan survey Tankan, big manufacturers and nonmanufacturers expect conditions to worsen in the next three months. They see a slump in
spending after the tax hike that comes as exports remain sluggish. The Bank of Japan Governor said in February that Japan will not see a repeat of the recession that followed the
sales tax increase in 1997 due to the currently strong financial system and absence of a
regional financial crisis, which hurt the export sector back then. However, big enterprises are
worried anyway and this could be enough for economic activity to slow in Q2.
Big firms expect to
increase capital
spending, but lower
growth
The outlook indices for big non-manufacturers, as well as small manufacturers and nonmanufacturers, have worsened more quickly than in 1997, underscoring the alarm companies
feel about the potential effects of the tax hike. Big firms expect to increase capital spending by
just 0.1 percent in the new financial year starting this month, a marked slowdown from the 3.9
percent increase in planned spending for the fiscal year that ended in March.
Japan can maintain
recovery even with
the tax increase
Overall, the Tankan survey points to a second quarter with lower economic activity, mainly
driven by lower consumption but also big enterprises being less confident and more worried
how the tax increase will be met. Finance Minister Aso (Prime Minster 2008-09) recently
said that the next few months would be key in the decision to proceed with a further increase
in the sales tax to 10 percent. At the latest monetary policy meeting at the Bank of Japan, it
was stated that Japan can maintain the recovery even with the tax increase as policymakers
refrained from adding extra monetary stimulus. The coming months will be crucial for the
central bank and the government if extra stimulus is needed to support the economy.
Helena Trygg, +46 8 701 1284, [email protected]
12
Central and Eastern Europe
Tug of war over Ukraine continues
Recent headlines continue to be dominated by Russia’s tug of war over Ukraine. While the outlook for the
Russian economy has deteriorated since the onset of the crisis, markets seem to be ruling out a scenario
where the country’s oil and gas exports to the EU are affected. If the market view is correct, the Central
European economies should not be affected that much. Rising tensions in eastern Ukraine could challenge
that view, though; it is important to keep a close eye on developments as they evolve.
Significant effects on
trade in oil and gas
still a tail risk
The tug of war over Ukraine continues. Russia quickly progressed from the annexation of Crimea to focusing on eastern Ukraine, where there is also a sizeable contingent of Russian
speakers. The verdict on how it will all play out is still out. The use of Russian military force in
Ukraine would certainly cross a red line in the view of the US and EU, likely triggering much
stronger countermeasures than seen before, raising the spectre of an outright trade war. It
seems reasonable to assume that all parties involved realise the risks involved should the crisis escalate further, thus we are still inclined to look at such a scenario as a tail risk.
Real GDP in selected countries (percentage changes)
2012
2013
2014f
2015f
Estonia
3.9
0.8
2.4
3.2
Latvia
5.0
4.1
4.0
3.8
Lithuania
3.7
3.3
3.5
3.9
Czech Republic
-0.9
-0.9
2.0
2.7
Hungary
-1.7
1.1
2.2
2.4
Poland
1.9
1.6
3.0
3.4
Slovak Republic
1.8
0.9
2.3
3.0
Russia
3.4
1.3
0.9
2.2
Ukraine
0.3
0.0
-1.5
2.0
Turkey
2.2
3.9
2.3
3.5
Sources: Official statistics and Handelsbanken forecasts
Russian economy
already taking a hit
Russia is nevertheless already incurring significant costs for its geopolitical assertiveness.
The exchange rate has stabilised and asset prices have recouped some of the initial losses
triggered by Russia’s actions in Crimea. However, capital flight is believed to have been at
record-high levels during the first quarter and the outlook for the remainder of the year looks
bad too. Given its large foreign exchange reserves, the central bank may be able to offset
those negative trends; and there may also be other instruments in the tool-box that come in
handy. Despite that, the economy, which was already weak before the crisis, will take a hit.
The costs, in terms of changing perceptions of Russia as an energy supplier and a place to
invest, will likely accumulate over time. As for Ukraine, while its deal with the IMF, along with
EU and US assistance, may ease the pain, there are massive challenges ahead.
Central Europe
should do well as
Germany performs
Russia’s recent behaviour is obviously a source of great concern in Central Europe on many
levels. However, unless the geopolitical situation deteriorates further, thereby compromising
Russia’s oil and particularly its gas deliveries, the economic impact should be quite modest.
The EU and, above all, Germany matter much more as markets than Russia. There will be
indirect effects, of course. The ongoing stagnation in Russia will have implications for German
export companies. However, such effects are offset by better prospects globally, with the US
and China performing reasonably well. Regional economies are also buoyed by recovering
domestic demand as deleveraging by households and firms draws to a close. We see the pricing of local assets, including regional currencies, as consistent with this state of affairs.
13
Brazil
Why inflation remains elevated
The main reason behind Brazil’s persistently high inflation is the ever-tight labour market, which keeps wage
increases and thus service inflation elevated. Lower population growth and a falling labour participation rate
keep downward pressure on the unemployment rate despite slowing economic growth. Another inflation driver
is the price effects of the ongoing drought, which offsets the effect from recent BRL strengthening.
We have highlighted on several occasions Brazil’s problem of high inflation despite slowing
growth. We therefore devote this month’s Macro Update to answering why inflation remains
high and why we expect inflation to remain elevated going forward.
The labour market is
tighter than ever
The main problem is the ever-tight labour market. Despite lower economic growth, the unemployment rate, in seasonally adjusted terms, has continued to decline in recent years and
reached a record low of 5.0 percent in January (see chart). The tight labour market fuels
strong wage increases and drives up especially service inflation. The latter is hovering at
around 8 percent change y-o-y (see chart). Much-needed labour market reforms are still
lacking. Bureaucracy with respect to hiring and firing is widespread. And there is a huge
mismatch between labour supply and demand, with skilled workers being scarce. Add to this
the unfavourable labour force trend. The working-age population, in contrast to many advanced economies, is still growing but at a slowing pace. What is worse, the labour participation rate is falling, implying a shrinking labour force. As we do not expect economic growth
to pick up any time soon, the unemployment rate will eventually stop falling and start to increase somewhat again, but not enough to take the pressure off the labour market.
Drought puts upward pressure on
food and electricity
prices
The ongoing drought is another factor behind our forecast of continued high inflation ahead as
it puts upward pressure on both food prices and electricity prices (the latter via depleted water
reservoirs and less hydroelectric power production). Both electricity and fuel prices are regulated and are currently below the “market level”. Thus, energy prices could well be raised in the
future to avoid stressed balance sheets among energy and grid companies.
BRL to weaken
going forward
Inflation is dampened somewhat by the strengthening of the BRL in recent months. However, the BRL is not stronger versus the USD than it was in October last year. We do not
expect the exchange rate to help solve Brazil’s inflation problem, as we continue to forecast
the BRL to weaken against the USD in the coming couple of years amid general USD
strengthening and stagnating or even falling commodity prices. We have, however, lowered
our one-month and three-month USD/BRL forecasts to reflect the recent BRL strength.
Bjarke Roed-Frederiksen,+45 4679 1229, [email protected]
14
India
Will a Modi victory revive the reform process?
Narendra Modi from the BJP is the frontrunner in the national election. He is pro-business and promises to
lower inflation, expedite foreign investment and improve rural infrastructure to boost farm income. Religion
and caste are still factors in the election and the Hindu-nationalist BJP is stoking religious tension by
replacing Shariah laws by a uniform civil code.
Ongoing national
election
The national election has started. The voting in nine rounds started on April 7 and will continue
through May 12. All ballots will be counted by May 16. The leading opposition party Bharatiya
Janata Party (BJP), led by the current Chief Minister in Gujarat, Narendra Modi, is the frontrunner. Many voters are blaming the ruling Congress Party, which has led all government coalitions since 2004, for rising vegetable prices, grafts scandals and the slumping growth.
Pro-business message from BJP...
Narendra Modi’s pro-business message includes a vague promise of “minimum government,
maximum governance” and focuses on his achievements in Gujarat, were he has been
Chief Minister since 2001. The state, which has attracted investments from companies such
as Ford Motor and accounts for a quarter of India’s export, has outperformed growth in the
rest of the country. The rise of a large urban middle class has increased the importance of
ideological issues in the election: how to power faster development, the appropriate role and
size of the state, how to weed out corruption and better delivery of public services. The BJP
main economic promises are to lower inflation, expedite foreign investment and improve
rural infrastructure to boost farm income.
...but will the reform
process be revived?
A fragmented election outcome could make it difficult to deliver necessary economic reforms, as the resistance to change is strong in many potential coalition parties. The influence of vested interests is already showing in the BJP’s campaign manifesto despite Modi’s
strong reform ambitions. Most seriously, India’s inefficient retail sector will probably remain
protected from the competition from international multibrand stores such as Wal-Mart also
after a BJP victory. A deregulation of this sector would lower consumer prices significantly
by improving the efficiency of sales and distribution of goods, food in particular. But, it would
also force many incumbent retailers out of business.
Hindu supremacy
Religion and caste are still factors in the election. If voted to power, the Hindu-nationalist
BJP will replace the current law system for marriage and inheritance by a uniform civil code.
At present, Muslims follow Shariah-based laws while other minorities are governed by rules
consistent with their religions. Muslims in particular are protesting. They make up 13 percent
of the population versus 80 percent for the Hindus. Modi’s handling of the 2002 riots in his
home state that killed 1,000 people, mostly Muslims, is also stoking religious tension.
15
South East Asia
China worries surface again
Weaker Chinese growth poses a risk for the exporting economies of South East Asia. This year may therefore
be one of contrasts, with a recovery in the second half as Chinese authorities bring some support forward in
order to not fall too far behind their overall growth target.
Export momentum likely to fade in H1 due to slower Chinese growth
Slower Chinese
growth will hurt both
the commodity and
consumer goods
producers of the region
Manufacturing PMIs for Q1 2014 broadly revealed a trend of a weaker emerging market
business cycle relative to mature economies. The Chinese PMI (HSBC) in particular has
weakened markedly, staying below the 50-point line for a third month in a row. Indeed,
January-February hard macro data for China reveal an even more dramatic growth slowdown that had been expected. Markedly weaker Chinese growth is likely to have an adverse
effect on other economies the region, especially on the non-oil commodity producers and
producers of consumer goods to the Chinese market. Hence, there is a clear risk that Chinese weakness may well play out in the exports of the region, at least in H1 2014, especially
if G3 growth fails to pick-up sufficiently to balance the China effect.
The second half of
the year will be better if Chinese authorities stimulate
even modestly
We feel, however, it is unlikely that the Chinese authorities will tolerate growth slowing too
dramatically; we are already seeing the Chinese authorities bringing forward alreadyapproved projects and measures to support domestic demand and stabilise growth. In that
respect, the South East Asian countries’ export performance may be a year of contrasts,
with the second half of the year perhaps seeing the region’s exporters being able to gain
momentum from moderately stronger Chinese and western demand.
The change in China also has long-term implications
China’s structural
change has longterms implications
for the rest of the
region
As China’s growth is structurally changing (from the production of export goods with a high
labour content to investments in urbanisation and consumption), the rest of the region is also
going to face major changes to its China trade. In 2013, Chinese manufacturing of consumer
goods overtook heavy industry in terms of aggregate profits. China’s import growth has decelerated since 2012, leaving a significant impact on other Asian economies that export
heavily to China. Exports to China amount to roughly 25 percent of GDP in Taiwan; 18 percent in Singapore; 12 percent in South Korea and Malaysia; 8 percent in Thailand; and 3
percent in the Philippines and Indonesia.
Those that provide
high-quality services
for the Chinese middle-class may fare
better
A logical conclusion should be that the economies of the region are left to rely more on their
own demand and hope that the appetite of mature economies for Asia-based production
recovers. Those Asian economies that generate high-quality services for the increasing Chinese middle-class, such as tourism, for example, may fare better.
16
Tiina Helenius, +358 10 444 2404, [email protected]
FX
ECB to follow words with actions before long
Monetary policies in the US and eurozone have shifted in the directions we predicted. However, the magnitudes
of the shifts have been smaller than we expected, in the eurozone in particular, and the USD has depreciated
against the EUR, contrary to our forecast of an appreciation. But that is probably history. The softening rhetoric
at the latest interest rate meeting indicates that the ECB is edging towards more action before long.
ECB policy not
reflecting financial
conditions...
The USD has weakened against the EUR since mid-2013, contrary to our forecast of a
strengthening, which was based on monetary tightening in the US and monetary easing in the
eurozone. Although policies changed as we predicted, the magnitudes of the changes were
smaller than our forecast, in the eurozone in particular. The Fed’s still-increasing holdings of
longer-term securities are making monetary policy in the US more expansive, despite ongoing
tapering. Eurozone monetary policy is tighter than in the US, despite less favourable economic
and financial conditions. The ECB’s balance sheet is contracting – not expanding as in the US.
The rate cut in November of last year to 0.25 percent should be seen as an attempt to support
the ECB’s pledge to “do whatever it takes” to maintain low interest rates and fight deflation.
...is likely due to political factors
To fight persistently high unemployment, the Fed is signalling that the fed funds target rate
would stay close to zero until unemployment has declined to its natural rate, which Fed officials assess at 5.2-5.8 percent. In other words: waiting too long to tighten and deliberately
accepting future inflation to overshoot its target of 2 percent. On the other side of the Atlantic, the ECB is not easing policy despite a record-high unemployment rate of 12 percent. The
paralysis is political. The ECB charter is not providing clear guidelines for monetary policy at
the zero lower boundary when the use of quantitative easing (QE) is necessary. So far,
words have been enough to calm financial markets, but that is likely not sustainable in a
longer perspective. Eventually, words have to be followed by actions, especially if market
interest rates start to rise or if the deflation outlook worsens.
Bundesbank
opposition to QE
has softened
At the press conference after the last interest rate meeting, ECB President Mario Draghi
turned his dovish rhetoric up a notch. Following the apparent softening of the Bundesbank’s
previous opposition to QE, he said the Governing Council is “unanimous in its commitment
to using all unconventional policy measures within its mandate”, including asset purchases,
to cope effectively with the risk of a longer period of low inflation. In addition, he indicated
that a weakening EUR would mitigate the risk of low inflation.
USD rally
The necessary shifts in monetary policies, which seem to be in the cards, will trigger a USD
rally versus the EUR. Part of the USD strengthening will come on the expectations of policy
shifts before the central banks deliver, and part will come at the actual delivery.
17
Key ratios
Real GDP
2012
1.3
2.9
3.4
-1.0
-0.4
2013f
1.5
0.8
2.0
-1.4
0.4
(Previous
forecast)
1.5
0.8
1.8
-1.2
0.3
2014f
2.9
1.7
1.7
1.5
0.8
(Previous
forecast)
3.0
1.7
1.5
2.0
0.9
2015f
2.5
2.0
1.9
2.2
0.8
(Previous
forecast)
2.5
2.0
2.0
2.2
0.8
EMU
USA
UK
Japan
-0.7
2.8
0.3
1.4
-0.4
1.9
1.8
1.6
-0.4
1.9
1.7
1.6
1.0
2.9
2.3
1.3
1.0
2.8
2.3
1.5
1.2
3.0
1.9
1.1
1.2
3.0
1.9
1.2
Brazil
Russia
India
China
1.0
3.4
4.8
7.8
2.3
1.3
4.6
7.7
2.3
1.3
4.7
7.7
2.0
0.9
4.8
7.3
2.0
2.0
4.8
7.3
2.5
2.2
5.5
7.0
2.5
2.5
5.5
7.0
-0.9
-1.7
1.9
1.8
-0.9
1.1
1.6
0.9
-1.1
1.1
1.6
0.9
2.0
2.2
3.0
2.3
2.0
1.9
2.9
2.3
2.7
2.4
3.4
3.0
2.7
2.2
3.4
3.0
2012
0.9
0.7
2.8
2.4
2013
0.0
2.1
1.5
0.8
(Previous
forecast)
0.0
2.2
1.5
0.8
2014f
0.1
2.0
1.6
1.6
(Previous
forecast)
0.5
1.9
1.8
1.6
2015f
2.1
1.6
2.2
1.7
(Previous
forecast)
2.1
1.7
2.4
1.7
2.5
1.8
2.8
1.3
1.2
2.6
1.3
1.2
2.6
1.1
1.4
2.1
1.1
1.5
2.2
1.5
2.1
2.1
1.5
2.1
2.0
Sweden
Norway
Finland
Denmark
2012
8.0
3.2
7.7
6.1
2013
8.0
3.5
8.2
5.8
(Previous
forecast)
8.0
3.5
8.1
5.8
2014f
7.9
3.7
8.1
5.6
(Previous
forecast)
7.8
3.7
8.1
5.6
2015f
7.4
3.9
7.8
5.6
(Previous
forecast)
7.4
3.9
7.8
5.6
EMU
USA
UK
11.4
8.1
8.0
12.1
7.4
7.6
12.1
7.4
7.6
12.0
6.4
7.0
12.0
6.4
7.0
11.8
5.7
6.7
11.8
5.8
6.7
Sweden
Norway
Norway Mainland
Finland
Denmark
Czech Republic
Hungary
Poland
Slovakia
Source: Handelsbanken Capital Markets
Inflation
Sweden
Norway
Finland
Denmark
EMU
USA (core)
UK
Unemployment
18
Currency forecasts
Apr 9
EUR/SEK
USD/SEK
GBP/SEK
NOK/SEK
DKK/SEK
CHF/SEK
JPY/SEK
8.99
6.50
10.89
1.09
1.20
7.38
6.38
<1 m
9.00
6.43
10.91
1.10
1.21
7.38
6.18
<3 m
9.20
6.52
11.22
1.11
1.23
7.48
6.27
<6 m
8.80
7.04
10.73
1.09
1.18
7.15
6.77
<12 m
8.40
7.64
10.37
1.04
1.13
6.77
7.14
<24 m
8.10
8.10
10.13
1.01
1.09
6.43
7.36
<36 m
8.00
8.00
10.67
1.00
1.07
6.15
7.08
EUR/USD
USD/JPY
EUR/GBP
GBP/USD
EUR/CHF
1.38
101.85
0.825
1.67
1.22
1.40
104.00
0.825
1.70
1.22
1.41
104.00
0.820
1.72
1.23
1.25
104.00
0.820
1.52
1.23
1.10
107.00
0.810
1.36
1.24
1.00
110.00
0.800
1.25
1.26
1.00
113.00
0.750
1.33
1.30
EUR/DKK
USD/DKK
GBP/DKK
CHF/DKK
JPY/DKK
7.47
5.40
9.05
6.13
5.30
7.46
5.33
9.04
6.11
5.12
7.46
5.29
9.10
6.07
5.09
7.45
5.96
9.09
6.06
5.73
7.45
6.77
9.20
6.01
6.33
7.46
7.46
9.32
5.92
6.78
7.46
7.46
9.94
5.73
6.60
EUR/NOK
SEK/NOK
USD/NOK
GBP/NOK
CHF/NOK
JPY/NOK
8.22
0.92
5.95
9.96
6.76
5.84
8.20
0.91
5.86
9.94
6.72
5.63
8.30
0.90
5.89
10.12
6.75
5.66
8.10
0.92
6.48
9.88
6.59
6.23
8.10
0.96
7.36
10.00
6.53
6.88
8.00
0.99
8.00
10.00
6.35
7.27
8.00
1.00
8.00
10.67
6.15
7.08
USD/BRL
USD/RUB
USD/INR
USD/CNY
EUR/PLN
2.21
35.68
60.13
6.20
4.17
2.35
36.00
61.00
6.20
4.15
2.45
36.00
61.00
6.10
4.15
2.65
38.50
62.00
6.05
4.10
3.00
40.50
62.00
6.00
4.00
3.25
41.50
60.00
6.00
3.90
3.35
40.00
58.00
6.00
3.75
Policy rates
Sweden
US
Eurozone
Norway
Denmark
UK
Apr 9
0.75
0.125
0.25
1.50
0.20
0.50
<1 m
0.75
0.125
0.25
1.50
0.30
0.50
<3 m
0.50
0.125
0.25
1.50
0.30
0.50
<6 m
0.50
0.125
0.25
1.50
0.30
0.50
<12 m
1.00
0.75
0.25
1.25
0.30
0.50
<24 m
1.75
1.75
0.25
1.75
0.40
1.00
<36 m
2.00
2.75
0.25
2.25
0.40
1.50
3m interbank rates
Sweden
US
Eurozone
Norway
Denmark
Apr 9
0.91
0.23
0.33
1.74
0.29
<1 m
0.90
0.25
0.30
1.70
0.35
<3 m
0.75
0.30
0.20
1.65
0.35
<6 m
0.75
0.40
0.20
1.55
0.35
<12 m
1.20
0.90
0.20
1.50
0.35
Interest rate forecasts
19
Interest rate forecasts, continued
2y govt. yields
Sweden
US
Eurozone (Germany)
Norway
Denmark
Finland
UK
Apr 9
0.74
0.37
0.18
1.64
0.19
0.20
0.65
<1 m
0.60
0.40
0.15
1.60
0.20
0.15
0.65
<3 m
0.60
0.55
0.15
1.60
0.20
0.20
0.65
<6 m
1.00
0.90
0.15
1.50
0.20
0.20
0.70
<12 m
1.50
1.60
0.15
1.50
0.25
0.20
0.75
<24 m
1.95
2.30
0.15
2.00
0.30
0.20
1.00
<36 m
2.20
3.00
0.30
2.60
0.40
0.35
1.25
5y govt. yields
Sweden
US
Eurozone (Germany)
Norway
Denmark
Finland
UK
Apr 9
1.38
1.63
0.65
2.11
0.79
0.67
1.90
<1 m
1.30
1.65
0.60
2.00
0.75
0.70
1.90
<3 m
1.35
1.70
0.70
2.00
0.90
0.80
1.90
<6 m
1.90
2.00
0.75
2.00
0.95
1.05
2.00
<12 m
2.25
2.50
0.80
2.10
1.10
1.10
2.25
<24 m
2.50
2.90
0.90
2.50
1.15
1.20
2.50
<36 m
2.70
3.20
1.00
3.00
1.30
1.30
2.75
10y govt. yields
Sweden
US
Eurozone (Germany)
Norway
Denmark
Finland
UK
Apr 9
2.12
2.68
1.58
2.91
1.59
1.85
2.69
<1 m
2.05
2.65
1.55
2.90
1.60
1.85
2.70
<3 m
2.15
2.80
1.65
2.90
1.75
1.90
2.85
<6 m
2.50
3.20
1.90
2.90
2.05
2.20
3.00
<12 m
2.75
3.50
2.00
3.00
2.15
2.30
3.25
<24 m
3.00
3.60
2.10
3.20
2.30
2.35
3.50
<36 m
3.20
3.70
2.20
3.40
2.40
2.45
3.70
2y swaps
Sweden
US
Eurozone (Germany)
Norway
Denmark
UK
Apr 9
1.07
0.53
0.48
1.99
0.62
1.05
<1 m
0.90
0.50
0.45
1.90
0.70
1.05
<3 m
0.90
0.70
0.50
1.90
0.75
1.05
<6 m
1.65
1.00
0.50
1.80
0.75
1.10
<12 m
1.85
1.70
0.50
1.80
0.80
1.25
5y swaps
Sweden
US
Eurozone (Germany)
Norway
Denmark
UK
Apr 9
1.80
1.77
0.98
2.53
1.17
2.00
<1 m
1.70
1.75
0.95
2.50
1.25
2.00
<3 m
1.75
1.80
1.05
2.50
1.30
2.05
<6 m
2.30
2.10
1.10
2.50
1.35
2.10
<12 m
2.65
2.60
1.20
2.50
1.45
2.30
10y swaps
Sweden
US
Eurozone (Germany)
Norway
Denmark
UK
Apr 9
2.48
2.80
1.80
3.14
2.01
2.77
<1 m
2.40
2.80
1.80
3.30
2.10
2.80
<3 m
2.50
2.90
1.90
3.30
2.20
2.95
<6 m
2.90
3.30
2.10
3.30
2.35
3.10
<12 m
3.15
3.60
2.30
3.40
2.50
3.35
20
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Number [XX] , 01 January 2006

Transcription

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