Tuesday, 18 August 2015

Some macro thoughts today

Some brief macro thoughts today...

Moody’s estimates - 1.5% for Europe this year and next year?  Sounds below trend to me (still): 

Globally, Moody's cuts US GDP forecast to 2.4% for 2015 and sees China's growth declining to 6% in following years.  Wonderfully lampooned below:

(h/t RANsquawk) 

Greece/Germany -  "In July, it was not a question of us throwing Greece out - that is a distortion, which was completely false," Wolfgang Schaeuble told German broadcaster ZDF, referring to July's initial agreement on a debt deal. "We did not lead Europe to a precipice."  (link here). 

Protesting too much in my view...

Greece other - Greece requires a further EUR 6.2bln, according to Sueddeutsche Zeitung.  Meanwhile in Athens, lawmakers are likely to call a confidence vote following a rebellion among the left-wing members of the ruling Syriza Party.

China - The People’s Bank of China tripled the amount of cash added to the financial system in its open-market operations, helping to ensure an adequate supply of funds as it supports the yuan following last week’s devaluation (link here). Technical but feels important 

The central bank conducted 120 billion yuan ($18.8 billion) of seven-day reverse-repurchase agreements, up from 40 billion yuan on Thursday, according to a statement on its website. That compares with 50 billion yuan of contracts that matured Tuesday and was the largest offering of reverse repos since late January 2014. The interest rate on Tuesday’s reverse repos was kept unchanged from last week at 2.5 percent. “As the PBOC tries to stabilize markets, keeping liquidity ample to ensure proper functioning in the domestic financial system is essential,”

Chinese house prices - New home prices in 70 Chinese cities fell by an average 3.7% in July from a year earlier, the smallest contraction since December.  Also an interesting deviation between first, second and third tier property (I noticed this too from the IMF/China report insights - link here). 

(h/t @RealPhatDragon)

Chinese yuan – best news for the currency today: GS does not like it!!  Via Bloomberg

Goldman Sachs Group Inc. lowered its forecast for the yuan, saying China’s deepening economic slowdown will weaken the currency and increase volatility.

The yuan will decline to 6.60 per dollar in 12 months, and to 6.70 per dollar by the end of 2016, London-based strategist Kamakshya Trivedi wrote in a note Monday. The bank previously predicted the currency would trade at 6.15 per dollar and 6.20 by those dates, respectively. The yuan was little changed at 6.3947 Monday.

Meanwhile Chinese stock market volatility is back (well if the yuan has stopped falling for the time being then something else has to be volatile...).  Still not easy conditions.  

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