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Important disclosures and certifications are contained from page 15 of this report. www.danskeresearch.com
Investment Research — General Market Conditions
Market movers ahead
Focus remains on monetary policy across the Scandinavian countries. In Sweden on
Thursday the Riksbank cut the repo rate and introduced a QE programme. In Norway,
we still expect Norges Bank to ease further in March. In Denmark, the appreciation
pressure on the Danish krone is still a major theme.
The minutes from the FOMC’s January meeting will likely shed light on why the
FOMC chose to refer to ‘International developments’ in its statement.
The talks on Greece continue at the regular Eurogroup meeting on Monday.
In the UK, we expect CPI inflation for January and the unemployment rate for
December to come out at 0.3% and 5.8%, respectively. Minutes from the MPC’s
February meeting may also attract some attention.
In Japan, we expect the economy to have recovered strongly in Q4.
We expect Swedish CPI and CPIF inflation rates to come out at -0.3% y/y and 0.5%,
respectively.
Global macro and market themes
Strong labour market report clears way for Fed hike as soon as June.
Market pricing of Fed actions is still too complacent – we expect the USD and
treasury yields to go higher.
Aggressive easing across Europe – we expect it to underpin low bond yields in Europe.
Euro area and Japan appear to be recovering.
Bank of Japan unlikely to join easing party next week, in our view.
Strong private consumption in G3 underscores that deflation has so far not been
destructive.
Focus
Flash Comment: Euro area recovery gains momentum, 13 February.
Swedish repo rate in negative territory Euro PMIs expected to increase
Source: Macrobond Financial, Riksbank, Danske Bank Source: Eurostat, Markit Economics
13 February 2015
Editors Allan von Mehren +45 4512 8055 [email protected] Steen Bocian +45 45 12 85 31 [email protected]
Weekly Focus
Scandinavian central banks are in the spotlight
Contents
Market movers ...................................................... 2
Global macro and market Themes ........... 6
Scandi Update ........................................................ 9
Latest research from Danske Bank
Markets .................................................................... 11
Macroeconomic forecast ............................ 12
Financial forecast .............................................. 13
Calendar .................................................................. 14
Financial views
Source: Danske Bank
Major indices
13-Feb 3M 12M
10yr EUR swap 0.69 0.80 1.00
EUR/USD 114 112 112
ICE Brent oil 60 70 84
13-Feb 6M 12-24M
S&P500 2088 0-5% 5-8%
2 | 13 February 2015 www.danskeresearch.com
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Market movers
Global
The main US event in the coming week will be the release of the January FOMC
meeting minutes on Wednesday. There has been a lot of speculation on why the FOMC
chose to include a reference to ‘international developments’ in its statement (see Flash
Comment: FOMC meeting - more patience, 28 January) and we believe the minutes are
likely to give us some answers. We are also looking forward to Fed Chairman Janet
Yellen’s semi-annual testimony on 24 February but more on that next week.
We are due lots of housing data this week and, in general, we expect the gradual
improvement in the housing market to continue this year, with a pickup in the pace of
construction activity. The week kicks off with the NAHB for February, which we
expect to stay virtually unchanged. We expect February housing starts to surprise on
the upside, with an increase of 0.6% m/m and building permits to jump 1.0% m/m.
Finally, the preliminary Markit PMI for February and the regional Philly Fed index
will give us a feel of how the manufacturing sector is coping with the stronger USD.
For January, we expect manufacturing production growth to show a solid increase of
0.4% m/m, thereby extending the upward trend in growth.
In the euro area, talks on Greece’s current and future co-operation with the EU continue
at the regular euro group meeting on Monday. Last week, there were no real conclusions
at the extra euro group meeting and the two sides even failed to agree on a way to take
negotiations forward but today Greece started talks with its euro area partners in a bid to
find common ground. This should also reflect that the agreement stalled on wording not
substance, according to a Greek government official. In our view, this also reflects that
the rhetoric will be harsh until it is absolutely necessary to reach an agreement.
In terms of data releases, we expect euro services PMI to increase above 53 for the
first time since August 2014. The increase should reflect that the services sector
benefits from the boost to consumers’ purchasing power due to the lower oil price.
Added to this, the January flash estimate was revised up by 0.4 points, which could
reflect progress during the month. The manufacturing PMI is also expected to
increase for a third month in a row, supported by the fading headwind from the
weaker euro and a general improvement in business sentiment.
In Germany, there have been positive changes in survey data since late 2014 and
across the board ZEW, IFO and PMIs suggest a pickup in activity for 2015. In the
coming week, we believe this should continue and we expect the ZEW expectation to
increase from 48.4 to 64.0. This is a large increase but, if we look solely looking at
the Sentix expectation, which is good leading indicator, there seems to be upside risk.
We also expect consumer confidence to continue strengthening in February. In January,
consumers reported a marked improvement in expectations on future unemployment
and the overall economic situation. Looking ahead, we see room for further
improvement as consumers’ purchasing power has increased due to the oil price decline.
We are also due to get the first release of the ECB accounts from the 22 January
meeting on Thursday. Based on Mario Draghi’s comments during the press
conference, it will contain information about whether the decisions were unanimous,
based on majority or consensus. We do not expect names to be mentioned in relation
to this. As the decision was described during the press conference, it should not bring
much new information but it is likely to cast some more light on the QE discussion.
We expect the gradual increase in
housing activity to continue
Source: Macrobond Financial
Euro PMIs expected to increase
Source: Macrobond Financial
Sentix suggests large jump in ZEW
Source: Macrobond Financial
3 | 13 February 2015 www.danskeresearch.com
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Weekly Focus
In the UK, there are many important releases next week. Minutes from the February
Monetary Policy Committee meeting are scheduled for release on Wednesday. As the
February Inflation Report released this week was overall hawkish compared with the
November report, this suggests that a rate hike in 2015 is still very likely (see Flash
Comment – UK: Bank of England inflation report supports the case for rate hike in
2015, 12 February.
The release of CPI inflation in January is also likely to attract attention. In December,
inflation declined to 0.5% y/y and we expect the January reading to decline further, down
to 0.3 %, which will be a new record low. Average weekly fuel prices declined by 16.6%
from December to January, indicating that fuel prices alone will pull down the inflation
rate by approximately 0.2 percentage points. Some of the British gas companies have
announced energy price cuts, which could also pull down inflation somewhat.
There is also news to come from the labour market, as February labour market statistics
are due for release. Although we expect unemployment to continue declining, we expect
the ILO unemployment rate (3M) to stay unchanged at 5.8%. Remember to keep an eye
on the weekly earnings figures, which have been rising in recent months. In our view,
future wage growth will be a key determinant of when the MPC hikes. If wage growth
picks up further in coming months, it could lead to higher core inflation and thereby
increase the likelihood of a hike. The combination of higher wage growth and low
inflation implies that real wage growth is positive, which is supporting growth in the UK.
Retail sales for January are also due for release next week.
In China, the important Chinese New Year public holiday starts on 18 February and
most Chinese will be off for a week. Hence, the week ahead will be very quite. The
only notable release scheduled is official house prices for January. Preliminary data
for January released by the real estate agency Soufun showed the first month-on-
month increase since mid-2014. Hence, it appears that the stabilisation in the housing
market evident in late 2014 has continued in early 2015.
In Japan, the main event next week is the Bank of Japan (BoJ) meeting on
Wednesday and the release of Q4 GDP on Thursday. We expect the meeting to be
relatively uncontroversial, in the sense that the BoJ is unlikely to announce any new
easing measures in connection with the meeting. It has already communicated that it
will ignore the short-term downward pressure on inflation from lower oil prices as
long as the economy continues to recover and inflation expectations do not decline
substantially. We expect the Q4 GDP data released on Monday ahead of the BoJ
meeting to show that Japan recovered substantially in Q4 following the technical
recession in Q2 and Q3 in the wake of the consumption tax hike in April. We expect
GDP to expand a solid 1.1% q/q in Q4 after contracting -0.5% q/q in Q3. There
appears to have been strength across the board, with both private consumption and net
exports contributing substantially to GDP growth in Q4.
We expect foreign trade data for January, also due to be released next week, to show
that the strong export performance in Q4 has continued into early 2015. We believe
export growth accelerated further in January to 14.5% y/y, from 12.8% y/y in
December, while import growth eased to -1.6% y/y from 1.9% y/y partly on the back
of lower crude oil prices. Consequently, Japan’s trade balance deficit is currently also
declining. Finally, the flash estimate for the Markit/JMMA manufacturing PMI for
February is also set to be released next week. Our model based on the Economic
Watchers business survey suggests a slight improvement to 52.7 in February, from
52.2 in January.
We expect CPI inflation to decline to
0.3%
Source: ONS
Tentative signs of stabilisation in
house prices in China
Source: Macrobond Financial, Danske Bank
Markets
Strong recovery in Japan in Q4
Source: Macrobond Financial, Danske Bank
Markets
4 | 13 February 2015 www.danskeresearch.com
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Scandi
In Denmark, the coming week will see a further focus on the upward pressure on the
krone against the euro and so we will continue to keep a close eye on messages from
the Nationalbank, which has said that it will use all necessary means to defend the
fixed-rate policy. The week ahead also brings the latest results for consumer
confidence. We expect the indicator to fall from 9.0 in January to 7.0 in February,
which should be seen as a normalisation following the jump in January. This is still a
high level, though, thanks partly to low petrol prices and low inflation boosting
consumers’ purchasing power. Statistics Denmark is also due to release retail sales
figures for January during the week.
In Sweden, the week ahead will be about one thing and one thing only – the January
consumer price index (Tuesday at 09:30 CET). In our view, this particular number has
the ability to make even the most seasoned trader break into tears. The reason is that
Statistics Sweden applies a reweighting of the products that constitute the CPI basket
every January. Normally, this implies lower inflation (on average the effect is -0.1pp
to -0.2pp) and has sometimes subtracted as much as 0.5pp from inflation but at times
it has even contributed to inflation. In our forecast, we have assumed a -0.1pp effect
and as the Riksbank has a headline number only a couple of hundredths above ours,
we can only assume that it makes more or less the same estimate. Another, related,
issue is how different weighting will hit forecasts, i.e. even if headline inflation were
to hit our forecast, large shifts in the weights could push the forecast inflation path in
either direction. Thus, it seems as though the suspense continues for yet another
week....
In Norway, data is set to be thin on the ground, with the only release of note trade
balance data for January. Stronger global growth and a weaker krone boosted
mainland exports towards the end of 2014 and higher export growth helped counter
the negative impact on the economy of lower activity in oil-related industries. The
January figures for mainland exports will, therefore, give us an idea of whether this
has continued to be the case this year.
Consumer confidence still high
Source: Statistics Denmark
If not next week, then when? In the
future
Source: Macrobond Financial
Strong export growth
Source: Macrobond Financial
5 | 13 February 2015 www.danskeresearch.com
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Market movers ahead
Source: Bloomberg, Danske Bank Markets
Global movers Event Period Danske Consensus Previous
Mon 16-Feb 0:50 JPY GDP, preliminary q/q|ann. 4th quarter 1.1%|… 0.90%|3.70% -0.50%|-1.90%
17:30 EUR Eurogroup meeting on Greece
Tue 17-Feb 10:30 GBP CPI m/m|y/y Jan -0.9%|0.3% -0.80%|0.40% 0.00%|0.50%
11:00 DEM ZEW exspectations Index Feb 64.0 55.5 48.4
16:00 USD NAHB Housing Market Index Index Feb 56.9 58.0 57.0
18:15 CHF SNB President Jordan Speaks in Brussels
Wed 18-Feb - JPY BoJ target for exspansion of monetary base trn. Yen 80 80 80
- JPY BoJ monetary policy announcement
10:30 GBP Minutes from MPC meeting Feb
14:30 USD Housing starts 1000 (m/m) Jan 1096K (0.60%) 1073K 1089K (4.40%)
20:00 USD minutes from Jan. 27-28 FOMC Meeting
23:00 USD Fed's Powell (voter, neutral) speaks
Thurs 19-Feb - EUR ECB publishes minutes (accounts)
8:45 FRF HICP, preliminary m/m|y/y Jan …|-0.3% …|-0.3% 0.10%|0.10%
Fri 20-Feb 10:00 EUR PMI composite, preliminary Index Feb 53.0 53.0 52.6
10:00 EUR PMI manufacturing, preliminary Index Feb 51.5 51.4 51.0
10:00 EUR PMI services, preliminary Index Feb 53.3 53.0 52.7
10:30 GBP Retail Sales m/m|y/y Jan -0.20%|6.10% 0.40%|4.30%
15:45 USD Markit manufacturing PMI, preliminary Index Feb 53.6 53.9
Scandi movers Event Period Danske Consensus Previous
Tue 17-Feb 9:30 SEK Underlying inflation CPIF m/m|y/y Jan -1.08%|0.53% 0.20%|0.50%
Fri 20-Feb 9:00 SEK Economic Tendency Survey Index Feb 105.6
6 | 13 February 2015 www.danskeresearch.com
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Global macro and market themes
Fed hike in June back on the agenda
In the US a rate hike as soon as June is back on the agenda.
First, the labour market for January was strong across the board, see US: very strong
employment report, 6 February 2015. Overall, the combination of better wage growth and
continued solid growth in employment should give the Fed more confidence that the
labour market is still improving.
Second, the communication from Fed members has turned more hawkish. Three
voting members of Fed’s FOMC have been speaking since the release of the strong labour
market report. San Francisco Fed president John Williams in an interview in Financial
Times said that the time for the Fed to start raising interest rates is moving ‘closer and
closer’ and that there is an increasing risk that the Fed ‘could be behind the curve’, see
Financial Times. Williams also said that a decision on whether to hike interest rates
would be ‘in play in June’. Williams’s comments are notable because he is usually
regarded as slightly dovish. Richmond Fed president Jeffrey Lacker in a speech said he
favoured a rate hike in June, which is less surprising as he is regarded a moderate hawk.
However, Jerome Powell, a member of the Fed’s governing board, in a speech said that
he believed it was too early to remove the phrase that the Fed can afford to be ‘patient’.
This would effectively rule out an interest rate hike in June, as according to Janet Yellen
‘patient’ should be interpreted as meaning that interest rates will not be raised at the next
two meetings.
Fed hike possible as soon as June
In light of the strong labour market report and more hawkish communication from Fed
members we stick to our call that Fed will deliver the first rate hike in June this year
but we expect the pace of subsequent hikes to be slow initially. We also acknowledge
risks are still skewed towards a later hike (July or September) as low inflation gives Fed
room to be patient. In the wake of the strong labour market report money market futures
are now also pricing an earlier rate hike. A 25bp rate hike in September is now priced
with 90% probability, whereas a 25bp rate hike in June is priced with a 25% probability.
The market pricing of the first rate hike in our view is still complacent and markets
will probably continue to gradually price an earlier Fed hike in the coming months.
Hence, the USD and treasury bond yields should continue to move higher in the coming
months. In our view the 2-5 year segment on the US yield curve is probably the most
sensitive to pricing of an earlier Fed hike. In Europe we expect low bond yields to
continue to be underpinned by the aggressive monetary easing across Europe.
Key points
Strong labour market report
clears way for Fed hike as soon as
June
Market pricing of Fed is still too
complacent - USD and treasury
yields to go higher
Aggressive easing across Europe
expected to underpin low bond
yields
Euro area and Japan appear to be
recovering
Bank of Japan unlikely to join
easing party next week
Strong private consumption in G3
underscores that deflation has not
been destructive so far
Strong labour market in the US
Source: Macrobond Financial
7 | 13 February 2015 www.danskeresearch.com
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Private consumers fuel recovery in G3
Data released in the past week suggest that global growth is firming and supports
our view that global growth will pick up in H1 15. OECD’s leading indicators for
December improved further for G3, driven primarily by strong improvements in the euro
area and Japan, see Euro area is recovering, 11 February 2015. However, according to
OECD’s leading indicators emerging markets remain fragile: There are tentative signs of
stabilisation in India and China but Russia appears to be contracting sharply and Brazil
remains subdued.
In G3 the improvements have to a large degree been driven by private consumers.
Consumer confidence in the US has surged recently and in the past two months consumer
confidence has also started to recover in the euro area and Japan. Lower gasoline prices
are an important explanation. Another one is improving labour markets. Even in the euro
area the unemployment rate appears to have peaked but it remains high. Private
consumption has been relatively strong in the G3 countries. This suggests that so far
deflation has not been of the ‘destructive’ kind and the boost to real purchasing power
from particularly the lower crude oil price has more than offset any concerns about
declining consumer prices.
Recovery in euro area and Japan
In the euro area GDP in Q4 expanded slightly more than expected by 0.3% q/q after
increasing 0.2% q/q in the previous quarter. The details in the national accounts data
have not yet been published, nor have the main growth drivers. However, retail sales in
the euro area were strong in Q4, suggesting that growth in private consumption also
improved. Germany returned as the most important growth engine with GDP growth
accelerating markedly to 0.7% q/q in Q4 from just 0.1% q/q in the previous quarter.
In the US retail sales data for January were slightly disappointing with core retail
sales only increasing 0.1% m/m after declining 0.3% m/m in the previous month. Hence,
on the surface it looks like retail sales lost a bit of momentum in early 2015. There could
be a slight downside risk to our forecast of 2.9% q/q annualised GDP growth in Q1.
Nonetheless, private consumption in our view is still on track to increase 3.5% q/q
annualised in Q1 after increasing a solid 4.3% q/q annualised in the previous quarter.
Hence, the private consumer remains the main growth engine in the US.
In Japan the first estimate for GDP growth in Q4 is expected to show that GDP
expanded solidly by 4.4% q/q annualised after the technical recession in Q2 and Q3.
Growth in private consumption is expected to accelerate to 2.9% q/q annualised in Q4
from 1.6% q/q annualised in the previous quarter and hence appears to have recovered
after the consumption tax hike in April. The implication in our view is that Bank of Japan
is unlikely to join the current easing party in Europe in connection with next week’s
monetary meeting.
Euro area and Japan appear to be
recovering
Source: Macrobond Financial
Consumer confidence improves in G3
Source: Macrobond Financial
Retail sales suggest solid private
consumption in the euro area
Source: Macrobond Financial, Danske Bank
Markets
Strong recovery in Japan in Q4
Source: Macrobond Financial, Danske Bank
Markets
8 | 13 February 2015 www.danskeresearch.com
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Global market views
Source: Danske Bank Markets
Asset class Main factors
Equities
Positive on 3m horizon, moderately positive on 12m horizon Strong US outlook, moderate Chinese growth, a sharp drop in the o il price and
QE from ECB and BoJ and stimulus from PBoC is supportive of equities. In addition equities are still
attractive versus bonds
Bond market
M edium term moderate rise Strenthening G3 growth and Fed hikes getting closer. ECB QE supporting EGB markets.
US-Euro spread: Wider 2-5y, stable longer maturities Policy divergence drives short-end spread wider, longer-end spread stable
Peripheral spreads to continue gradual tightening Neg. policy rate, QE expectations and improving fundamentals support search for yield.
Credit spread to remain stable, but with bouts of vo latility Added liquidity from ECB, stable fundamentals and search for yield
FX
EUR/USD - Lower short- and medium-term Lower on 0-6 months on diverging growth and monetary policy
USD/JPY - Higher Relative monetary policy, Fed hikes and outflows will remain supported by pension reform
EUR/SEK - Near-term risk tilted to the upside Near-term risk tilted to the upside, lower medium term on valuation and relative monetary policy
EUR/NOK - To edge higher short-term on o il, lower during 2015 Oil prices lower short term, higher medium term
Commodities
Oil prices - close to the bottom, recovery during the year Higher global growth, supply consolidation to support recovery this year. Limited risk of supply disruptions
M etal prices sideways before trending up during the year Chinese growth concerns a near-term negative factor, supply side risks.
Gold prices to correct lower still Trending down as first Fed hike draws closer. Geopolitical concerns a supportive factor.
Agricultural risks remain on the upside Trending up again, extreme weather is key upside risk.
9 | 13 February 2015 www.danskeresearch.com
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Scandi update
Denmark – deflation a reality in January
With the krone still coming under upward pressure, the Nationalbank was in the limelight
again during the week. Although the market anticipated a further rate cut on Thursday,
the bank decided to leave things alone rather than make its policy rates clearly the world’s
absolute lowest. This inaction could mean the bank will increasingly intervene instead to
weaken the currency by flooding the market with kroner rather than make further rate
cuts. This said, we cannot rule out further cuts, especially if the appreciation pressure
intensifies.
Statistics Denmark released inflation figures for January during the week showing that
consumer prices fell 0.1% y/y. This is the first time since 1954 that prices have fallen,
giving us – in principle – not inflation but deflation. There are three reasons for the fall.
First, and most important, the protracted crisis in Europe is making it difficult for
businesses to put up prices and for workers to demand higher wages, resulting in low
inflation. Second, the sharp slide in oil prices has brought much cheaper petrol and oil for
consumers in recent months. Third, the security-of-supply tax on heating was rolled back
at the start of the year, tipping inflation below zero. Deflation is often portrayed as the
big, bad wolf and evokes memories of the Great Depression of the 1930s, but cheaper
petrol is by no means a reason to be unhappy. The danger comes if negative expectations
become entrenched, leading to a prolonged decline in wages, house prices and so on, as
then households’ debts could grow in real terms even if they make repayments. But this is
not the situation we are seeing now, and the current flirtation with deflation is in all
probability only a very temporary phenomenon. We expect to see a return to positive
territory in February.
Sweden – a primer on the Riksbank
The main policy rate, the repo rate, was lowered into negative territory (to -0.1%) when
the Riksbank executive board convened past Wednesday. It is a first in Sweden, and – as
far as we know – it is the first negative main policy rate (no, deposit rates don’t really
count) for any inflation targeter. However, in addition to lowering rates, the Riksbank will
also make a first shot (sort of) on QE, buying nominal government bonds for a total of
SEK10bn.
Despite all the fuss that the Riksbank’s decision created, it really won’t make much of a
difference. Instead, the main effect will probably stem from the promise of ‘more to
come’ and, hopefully, from the weakening krona. We expect the Riksbank to be forced to
act again, possibly as soon as the beginning of March (11 March, when wage and
inflation expectations are being published), which would constitute an intra-meeting
policy action since the next official meeting date is 28 April. However, as early as next
week we will receive information that could prove decisive for further Riksbank measures
(more on that in the Market mover section), when January inflation numbers are
published.
Nationalbank leaves rates alone
Source: Danmarks Nationalbank
Deflation in January
Source: Statistics Denmark
Riksbankers are a negative lot
Source: Macrobond Financial, Riksbank, Danske
Bank Markets
10 | 13 February 2015 www.danskeresearch.com
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Norway – Still no need to panic
The GDP figures for Q4 revealed that the slide in oil prices has now begun to affect the
Norwegian economy. Oil investment is falling and taking mainland business investment
with it. On the other hand, mainland exports are rising relatively rapidly on the back of
stronger global growth and a weaker krone. The rate cuts also seem to have stimulated
consumption, while housing investment has surprisingly dropped off somewhat. We also
note that public-sector consumption and investment are continuing to grow, which goes to
show how the spending of oil revenue is completely shielded from earnings in the short
term. We expect this trend to continue through the year, with lower activity in oil-related
industries offset to some extent by low interest rates, a weaker krone and expansionary
fiscal policy. Unless oil prices fall significantly further, there is therefore little risk of a
serious downturn in the Norwegian economy.
A new normal?
Source: Macrobond Financial
11 | 13 February 2015 www.danskeresearch.com
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Weekly Focus
Latest research from Danske Bank Markets
13 Febraury Flash Comment: Euro area recovery gains momentum
The euro area economy expanded 0.3% q/q in Q4 up from 0.2% q/q in Q3. This was a bit
below our expectation (0.4%) but above consensus expectations (0.2%).
12 February Flash Comment - UK: Bank of England inflation report supports the case
for rate hike in 2015
The Bank of England’s inflation report released today was relatively mixed, with a quite
dovish short-term focus on inflation but also a more confident view on the medium-term
outlook for the UK economy.
12 February Flash Comment: Minsk 2.0 - not a game changer for the Russian rouble
The 16-hour Minsk talks have ended, adopting new measures. The headline-driven RUB
market returns to pre-talks mode. We keep our view on the RUB unchanged, as we do not
expect any major support from macro figures in 2015.
11 February Global Business Cycle: Euro area is recovering
Leading indicators continue to pick up in the G3, driven primarily by improvements in
the euro area and Japan.
10 February Periphery business cycle monitor
In the euro periphery, the Greek political uncertainty is in focus. The spillover to other
periphery countries has so far been relatively limited.
12 | 13 February 2015 www.danskeresearch.com
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Macroeconomic forecast
1. % y/y
2. % contribution to GDP growth
3. % of labour force. 4) % of GDP
Source: OECD, Danske Bank
Macro forecast, Scandinavia
Denmark 2014 0.9 0.4 0.9 2.2 0.3 2.8 3.8 0.6 5.1 2.3 44.5 6.82015 1.6 1.9 0.9 2.2 -0.1 2.3 2.9 0.6 4.9 -2.4 42.5 6.42016 2.0 2.0 0.6 4.0 0.1 4.2 4.6 1.5 4.7 -2.4 43.0 5.9
Sweden 2014 1.8 2.3 1.5 4.6 0.3 2.2 4.9 -0.2 7.9 -1.9 40.2 5.12015 2.0 1.6 1.5 3.4 0.1 3.2 3.7 0.3 7.6 -1.6 42.0 5.02016 1.9 1.8 0.8 2.1 0.0 5.0 4.5 1.2 7.3 -1.0 42.3 4.8
Norway 2014 2.6 1.8 3.3 1.2 0.4 0.4 2.6 2.1 3.5 - - -2015 1.8 2.0 2.5 -5.5 -0.1 0.8 3.8 2.8 3.7 - - -2016 2.3 2.2 2.2 1.3 0.0 0.9 3.3 2.0 3.7 - - -
Macro forecast, Euroland
Euroland 2014 0.9 0.9 0.9 0.6 -0.1 3.7 3.6 0.4 11.6 -2.6 92.7 2.52015 1.5 1.6 0.9 1.3 0.0 4.5 4.3 -0.3 11.5 -2.3 92.8 2.62016 2.0 1.1 0.7 5.4 0.0 4.2 4.1 1.4 10.9 -1.9 91.5 2.5
Germany 2014 1.6 1.3 1.1 2.9 -0.1 4.1 3.7 0.8 5.1 0.2 74.5 7.12015 2.0 2.2 1.1 2.4 0.0 5.5 5.6 0.2 5.0 0.0 72.4 7.12016 2.6 1.6 0.8 6.8 0.0 4.9 5.3 2.1 4.7 0.2 69.6 6.7
France 2014 0.3 0.4 2.0 -1.7 -0.1 2.5 3.2 0.6 10.4 -4.4 95.5 -1.92015 0.6 0.8 1.1 -0.8 0.0 4.4 4.0 0.1 10.4 -4.5 98.1 -1.92016 0.9 0.6 0.4 3.1 0.0 3.4 4.0 1.3 10.2 -4.7 99.8 -2.2
Italy 2014 -0.4 0.3 -0.2 -2.6 0.3 1.9 0.4 0.2 12.6 -3.0 132.2 1.52015 0.5 0.6 0.3 -1.4 0.0 3.5 2.3 0.1 12.6 -2.7 133.8 1.52016 1.2 0.5 0.4 3.4 0.0 4.3 3.8 1.0 12.4 -2.2 132.7 1.8
Spain 2014 1.3 2.3 0.8 2.5 -0.1 4.6 7.7 -0.2 24.7 -5.6 98.1 0.52015 2.3 2.4 0.3 4.8 0.0 6.0 7.0 -0.8 23.2 -4.5 101.2 0.72016 2.6 1.9 0.4 6.8 0.0 4.5 4.9 1.3 21.7 -3.7 100.6 0.9
Finland 2014 -0.2 -0.2 0.2 -4.5 - 1.5 -0.5 1.0 8.6 -2.2 59.5 -1.52015 0.5 -0.2 0.0 0.0 - 3.0 1.5 0.9 9.0 -2.2 61.5 -1.02016 1.3 0.5 0.0 3.0 - 4.0 3.0 1.2 8.8 -1.5 62.5 -0.5
Macro forecast, Global
USA 2014 2.4 2.5 -0.2 5.2 0.1 3.1 3.9 1.6 6.2 -4.1 101.0 -2.32015 3.1 3.8 1.1 4.2 -0.1 3.6 4.8 0.0 5.2 -2.9 104.0 -2.52016 2.7 2.9 0.9 5.3 0.0 3.7 5.0 2.4 4.6 -2.6 103.0 -2.6
Japan 2014 0.4 -0.9 0.3 4.2 0.2 7.9 7.0 2.6 3.6 -8.1 245.0 0.32015 1.2 1.0 1.1 0.7 0.3 7.2 3.5 1.4 3.5 -6.7 245.0 1.02016 1.6 1.4 1.2 0.8 0.4 7.6 7.0 1.7 3.3 -6.3 246.0 1.1
China 2014 7.4 - - - - - - 2.0 4.3 -1.1 40.7 1.82015 7.2 - - - - - - 2.2 4.2 -0.8 41.8 2.42016 6.8 - - - - - - 2.7 4.2 -0.8 42.8 2.3
UK 2014 2.6 2.3 1.1 7.8 -0.2 -1.6 -0.8 1.5 6.2 -3.5 80.0 -4.72015 2.8 2.5 0.7 6.1 0.0 2.4 3.9 1.5 5.5 -1.9 81.1 -3.52016 2.8 2.3 -1.0 7.5 0.0 4.7 4.7 2.0 5.5 -0.2 . -2.9
Current
acc.4
GDP 1
Private
cons.1
Public
cons.1
Fixed
inv.1
Stock
build.2
Ex-
ports1
Im-
ports1
Infla-
tion1
Unem-
ploym.3
Public
budget4
Public
debt4
Year
Year GDP 1
Private
cons.1
Public
cons.1
Fixed
inv.1
Stock
build.2
Ex-
ports1
Im-
ports1
Infla-
tion1
Unem-
ploym.3
Public
budget4
Current
acc.4
Public
debt4
Current
acc.4
Im-
ports1
Public
debt4
Public
budget4
Ex-
ports1
Infla-
tion1
Unem-
ploym.3
Year GDP 1
Private
cons.1
Public
cons.1
Fixed
inv.1
Stock
build.2
13 | 13 February 2015 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
Financial forecasts
Source: Danske Bank Markets
Bond and money markets
Currencyvs USD
Currencyvs DKK
USD 13-Feb - 651.3
+3m - 664.6
+6m - 676.7+12m - 664.6
EUR 13-Feb 114.3 744.4
+3m 112.0 744.4
+6m 110.0 744.4+12m 112.0 744.4
JPY 13-Feb 118.9 5.48
+3m 121.0 5.47
+6m 124.0 5.47+12m 126.0 5.28
GBP 13-Feb 153.9 1002.2
+3m 148.0 979.5
+6m 147.0 992.5+12m 148.0 966.8
CHF 13-Feb 92.8 702.0
+3m 86.6 767.4
+6m 90.9 744.4+12m 93.8 709.0
DKK 13-Feb 651.3 -
+3m 664.6 -
+6m 676.7 -+12m 664.6 -
SEK 13-Feb 843.3 77.2
+3m 830.4 80.0
+6m 836.4 80.9+12m 803.6 82.7
NOK 13-Feb 759.0 85.8
+3m 758.9 87.6
+6m 750.0 90.2+12m 727.7 91.3
Equity Markets
Regional
Price trend12 mth.
Regional recommen-dations
USA (USD) Strong earnings growth, expensive valuation 5-8% Neutral
Emerging markets (local curr) Commodity-related equities are pressured 0-5% Underweight
Japan Reflation, earnings growth, fair valuation 5-10% Overweight
Europe (ex. Nordics) Reflation, multiple expansion, attractive valuation 10-15% OverweightNordics Earnings growth, fair valuation 5-10% Overweight
Commodities
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2016
NYMEX WTI 54 58 66 74 78 80 82 82 63 81
ICE Brent 58 62 70 78 82 84 86 86 67 85
Copper 6,800 6,925 7,050 7,175 7,300 7,375 7,375 7,375 6,988 7,356
Zinc 2,325 2,350 2,375 2,400 2,425 2,450 2,450 2,450 2,363 2,444
Nickel 17,500 18,000 18,500 19,000 19,250 19,500 19,500 19,500 18,250 19,438
Aluminium 2,025 2,075 2,125 2,175 2,225 2,250 2,250 2,250 2,100 2,244
Gold 1,190 1,180 1,170 1,160 1,150 1,150 1,150 1,150 1,175 1,150
Matif Mill Wheat (€/t) 177 180 182 183 185 186 188 190 181 187
Rapeseed (€/t) 347 354 357 361 364 367 371 374 355 369
CBOT Wheat (USd/bushel) 565 575 580 585 590 595 600 605 576 598
CBOT Corn (USd/bushel) 385 395 400 405 410 415 420 425 396 418CBOT Soybeans (USd/bushel) 1,050 1,070 1,080 1,090 1,100 1,110 1,120 1,130 1,073 1,115
357
Average
Key int.rate
0.25
0.25
0.501.00
1.00
-0.85
0.05
0.05
0.100.10
0.50
10-yr swap yield
0.01
0.05
0.050.05
3m interest rate
1.20
0.05
0.10
0.50
-0.75
0.05
-0.02
0.55
0.751.10
-0.85-0.85
0.05
0.50
0.30
0.00
0.10
-0.54
-0.82
1.00
-0.84-0.78
-0.10
-0.10
-0.10
0.25
0.25
1.25
-0.10
-0.10-0.10
1.00
1.00
1.20
1.20
0.26
0.05
0.10
0.57
-0.93
0.46
0.741.32
-0.02
-0.02
0.20
0.15
0.20
1.00
1.00
0.25
1.10
0.25
1.111.38
0.00
0.000.00
-0.76
-0.74-0.69
-0.01
0.25
1.402.00
1.10
1.401.75
0.20
0.200.25
114.3
-
-
--
135.9
744.4
744.4744.4
963.9
867.5
815.0
930.0
825.0
920.0900.0
850.0
106.0
744.4
76.0
77.0
97.0
100.0105.0
112.0
110.0112.0
136.0
136.0141.0
Currencyvs EUR
2-yr swap yield
Risk profile3 mth.
Price trend3 mth.
2.35
2.12
2.65
0.90
0.13
0.17
0.94
-0.79
-0.10
0.15
0.150.15
1.10
74.3
3.15
75.0
386
13-Feb
52
14,705
5,740
2,146
1,227
185
60
1,842
20162015
0.80
0.851.00
0.75
0.800.85
1.79
1.85
0.60
Medium 0-5%
992
524
0.69
1.001.10
1.78
1.70
1.90
2.002.40
0.12
0.04
0.080.16
2.25
0.901.00
0.85
0.94
0.95
0.72
Medium
Medium
Medium 0-8%
Medium 0-5%
0-5%
0-5%
14 | 13 February 2015 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
Calendar
Source: Danske Bank Markets
Key Data and Events in Week 8
During the week Period Danske Bank Consensus Previous
Sat 14 - 18 CNY FDI y/y Jan 10.30%
Sun 15 NOK Consumer confidence Net. bal. 1st quarter 15.4
Sun 15 NZD Retail sales q/q 4th quarter 1.30% 1.50%
Monday, February 16, 2015 Period Danske Bank Consensus Previous
USD US markets closed for president's day
0:50 JPY GDP, preliminary q/q|ann. 4th quarter 1.1%|… 0.90%|3.70% -0.50%|-1.90%
0:50 JPY GDP deflator, preliminary y/y 4th quarter 1.90% 2.00%
1:01 GBP Rightmove House Prices m/m|y/y Feb 1.40%|8.20%
5:30 JPY Industrial production, final m/m|y/y Dec 1.00%|0.30%
9:00 CHF SNB - Sight Deposits
10:00 NOK Trade balance NOK bn Jan 30.1
11:00 EUR Trade balance EUR bn Dec 19 20
15:00 EUR Eurogroup meeting in Brussels
17:30 EUR Eurogroup meeting on Greece
Tuesday, February 17, 2015 Period Danske Bank Consensus Previous
2:30 CNY Property prices y/y
9:00 EUR ECOFIN meeting
9:30 SEK CPI m/m|y/y Jan -1.2%|-0.3% 0.2%|-0.3%
9:30 SEK Underlying inflation CPIF m/m|y/y Jan -1.08%|0.53% 0.20%|0.50%
10:30 GBP CPI m/m|y/y Jan -0.9%|0.3% -0.80%|0.40% 0.00%|0.50%
10:30 GBP CPI core y/y Jan 1.4% 1.30%
10:30 GBP PPI - input m/m|y/y Jan -2.20%|-11.90% -2.40%|-10.70%
10:30 GBP PPI - output m/m|y/y Jan -0.30%|-1.40% -0.30%|-0.80%
11:00 DEM ZEW current situation Index Feb 30.0 27.0 22.4
11:00 DEM ZEW exspectations Index Feb 64.0 55.5 48.4
14:30 USD Empire Manufacturing PMI Index Feb 9.0 10.0
16:00 USD NAHB Housing Market Index Index Feb 56.9 58.0 57.0
18:15 CHF SNB President Jordan Speaks in Brussels
18:45 USD Fed's Plosser (non-voter, hawkish) speaks
22:00 USD TICS international capital flow, Net inflow USD bn Dec -6.3
Wednesday, February 18, 2015 Period Danske Bank Consensus Previous
- JPY BoJ target for exspansion of monetary base trn. Yen 80 80 80
- JPY BoJ monetary policy announcement
10:30 GBP Average Earnings 3Ms/YoY Dec 1.7 1.7
10:30 GBP Minutes from MPC meeting Feb
10:30 GBP ILO Unemployment rate % Dec 5.80% 5.70% 5.80%
13:00 USD MBA Mortgage Applications %
14:30 USD Housing starts 1000 (m/m) Jan 1096K (0.60%) 1073K 1089K (4.40%)
14:30 USD Building permits 1000 (m/m) Jan 1068K (0.95%) 1070K 1058K (0.60%)
14:30 USD PPI m/m|y/y Jan -0.40%|0.40% -0.30%|1.10%
14:30 USD PPI core m/m|y/y Jan 0.10%|2.00% 0.30%|2.10%
15:15 USD Capacity utilization % Jan 79.90% 79.70%
15:15 USD Industrial production m/m Jan 0.40% 0.40% -0.10%
20:00 USD minutes from Jan. 27-28 FOMC Meeting
23:00 USD Fed's Powell (voter, neutral) speaks
15 | 13 February 2015 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
continued
Source: Danske Bank Markets
Thursday, February 19, 2015 Period Danske Bank Consensus Previous
- EUR ECB publishes minutes (accounts)
0:50 JPY Export y/y (%) Jan 14.5 13.50 12.80
0:50 JPY Import y/y (%) Jan -1.6 -4.80 1.90
0:50 JPY Trade balance, s.a. JPY bn Jan -599.1 -712.1
5:30 JPY All industry activity index m/m Dec -0.20% 0.10%
6:00 JPY Leading economic index, final Index Dec 105.2
8:00 CHF Trade balance CHF bn Jan 1.52
8:45 FRF HICP, preliminary m/m|y/y Jan …|-0.3% …|-0.3% 0.10%|0.10%
9:00 DKK Consumer confidence Net. bal. Feb 7.0 9.0
10:00 EUR Current account EUR bn Dec 18.1
14:30 USD Initial jobless claims 1000
16:00 EUR Consumer confidence, preliminary Net bal. Feb -7.5 -8.0 -8.5
16:00 DKK Press release from Danish CB if any changes to policy rates (no press release if no changes)
Friday, February 20, 2015 Period Danske Bank Consensus Previous
- EUR Moody's may publish Spain's debt rating
2:35 JPY Markit/JMMA manufacturing PMI, preliminary Index Feb 52.7 52.5 52.2
9:00 DKK Retail Sales m/m|y/y Jan -0.50%|2.30%
9:00 FRF PMI manufacturing, preliminary Index Feb 49.5 49.6 49.2
9:00 FRF PMI Services, preliminary Index Feb 49.8 49.9 49.4
9:00 SEK Economic Tendency Survey Index Feb 105.6
9:00 SEK Consumer confidence Index Feb 98.6
9:00 SEK Manufacturing confidence Index Feb 107.3
9:30 DEM PMI manufacturing, preliminary Index Feb 51.8 51.4 50.9
9:30 DEM PMI service, preliminary Index Feb 54.6 54.3 54.0
10:00 EUR PMI composite, preliminary Index Feb 53.0 53.0 52.6
10:00 EUR PMI manufacturing, preliminary Index Feb 51.5 51.4 51.0
10:00 EUR PMI services, preliminary Index Feb 53.3 53.0 52.7
10:30 GBP Retail Sales m/m|y/y Jan -0.20%|6.10% 0.40%|4.30%
11:00 ITL HICP, final m/m|y/y Jan ...|-0.40%
14:30 CAD Retail sales m/m Dec -0.40% 0.40%
15:45 USD Markit manufacturing PMI, preliminary Index Feb 53.6 53.9
The editors do not guarantee the accurateness of figures, hours or dates stated above
For furher information, call (+45 ) 45 12 85 22.
16 | 13 February 2015 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
Disclosures This research report has been prepared by Danske Bank Markets, a division of Danske Bank A/S (‘Danske
Bank’). The authors of the research report are Allan von Mehren, Chief Analyst, and Steen Bocian, Chief
Economist.
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Weekly Focus
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