Tuesday, 15 December 2015

A few macro thoughts today...

Due to another engagement a slight delay today in pulling together's macro thoughts.

UK pay - Workers in the UK are unlikely to experience a rise in their wages next year, according to a report by the Resolution Foundation. The think tank said pay will stagnate in 2016, unless productivity is steady and inflation goes up quicker than expected. Their current estimate is a pay increase of just one per cent (link here).  So much for those real wage increases…

High yield - Massachusetts’s top securities watchdog said on Monday it is opening a probe into Third Avenue Management’s closure of a junk-bond mutual fund.  As I observe on Twitter however:

Excellent chart...and also noteworthy just how many HY charts winging around currently = risk of too much fear.

(h/t @Callum_Thomas)

And on a related front:

From a credit pick perspective agree, best ops where big panic

China - China will maintain economic growth in a "reasonable range" in 2016, said its Politburo, the Communist Party's top decision-making body, in a meeting on Monday according to the state-run Xinhua News Agency.  Nevertheless overnight there was the seventh straight weakening and, since the mid-August devaluation — when the fix was suddenly softened by 1.9% — the fix has been weakened by 5.55%.  Meanwhile Zero Hedge highlights economic data problems (link here). 

Europe - noteworthy the tone from the Swedish Riksbank today...

Riksbank keeps interest rate unchanged at -0.35%, as expected but remains ‘highly prepared’!

The Executive Board of the Riksbank has therefore decided to hold the repo rate unchanged at –0.35 per cent. Purchases of government bonds will continue for the first six months of 2016 as was decided in October. The Board is also highly prepared to make monetary policy even more expansionary, even between the ordinary monetary policy meetings.

However did you see the detail on their economic forecasts?  They look...better/stronger!  That's what happens when sentiment is low. 

Meanwhile ahead of the Fed disclosures tomorrow (the meeting starts today) markets are up...well as Fast FT noted it has been a rough/tough month (before today's European session). 

Nikkei 225 down 6%, but a little better in Hong Kong, where the Hang Seng is off 2.9%. Euro Stoxx 50 index is down 10.2% so far, FTSE 100 is down 7.6%. S&P 500 is down 2.8% and the Nasdaq Composite is off 3.1%.  The S&P/ASX 200 is down 5% this month, which, as we noted yesterday, has it eyeing the worst December performance since the benchmark was introduced in 1992.

Well - as I did say on the latest Financial Orbit Speaks - it is not a time to sell.  

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