Investment Research — General Market Conditions
19 February 2016
Weekly Focus
Key data to shed light on the true state of the economy
Market movers ahead



We have several important economic data releases next week which should give us
more information about the state of the world economy. Good data could give some
relief as the financial turmoil partly reflects rising growth concerns.
Contents
Market movers ...................................................... 2
In the US, we get news both from the consumer side (consumer confidence, and
personal spending and income) and the producer side (PMI manufacturing and
durable goods orders). We expect PCE core inflation rose to 1.5% y/y in January,
which is still 0.5pp below the Fed’s 2% target.
In the euro area, we expect weaker PMIs and German IFO expectations indicating that
growth has slowed. We are also looking out for the M3 money supply and bank
lending figures, as these have been to the weaker side recently.
Global Macro and Market Themes .......... 6
Scandi Update ........................................................ 8
Latest research from Danske Bank
Markets.................................................................... 10
Macroeconomic forecast ............................ 11
Financial forecast .............................................. 12
Calendar .................................................................. 13

We have some important central bank speeches next week. Most important are the
speeches by Peter Praet, Chief Economist of the ECB, and Fed’s Bullard.

The Norwegian oil investment survey is one of the most important indicators for the
development of the Norwegian economy.
Financial views
Major indices
19-Feb
3M
12M
10yr EUR swap
0.57
0.55
0.95
EUR/USD
111
108
116
Short-term relief in markets on dovish central banks, easing fears over China and
stabilisation in oil.
ICE Brent oil
34
40
48
19-Feb
6M
12-24M
1918
0-3%
5-8%

However, we still see rising risk of systemic crisis.
Source: Danske Bank

Sharp decline in inflation expectations challenges central banks.
Global macro and market themes

S&P500
Focus

FX Forecast Update: Central bank fatigue, 17 February.

Yield Forecast Update: Waiting for the central bank response, 16 February.

FOMC minutes: Soft minutes support uncertain Fed on hold, 17 February.
Follow us on Twitter for the latest on
macroeconomic and financial market
developments:
@Danske_Research
Euro-area indicators signal slower
growth
Central banks to react to de-anchoring
of inflation expectations
Editors
Allan von Mehren
+45 4512 8055
[email protected]
Source: Markit, Sentix, IFO
Source: Macrobond Financial, Bloomberg
Important disclosures and certifications are contained from page 15 of this report.
Las Olsen
+45 45 12 85 36
[email protected]
www.danskeresearch.com
Weekly Focus
Market movers
Global

There is a heavy calendar of US data releases in the coming week. We expect
February data for consumer confidence to look somewhat weaker, with a decline in
the Conference Board’s February measure released on Tuesday, and a downward
revision in the final February release from the University of Michigan on Friday. That
said, consumer confidence remains at healthy levels. The continued consumer
optimism despite falling equities was reflected in strong January retail sales, and we
estimate that overall consumer spending, released on Friday, will show a similar
strong gain of 0.5% m/m with personal income increasing 0.3% m/m. Inflation
continues to be subdued with core PCE inflation estimated to increase at 0.1% m/m
and 1.5% y/y while headline inflation was probably zero on the month and 1.0% y/y.
US consumer confidence lower but
still healthy
Source: Conference Board, University of Michigan
The Markit PMI for the manufacturing sector is released on Monday. The PMI has
been running at a much higher level than the manufacturing ISM recently and it will
be interesting to see if this continued in February. We will get January data on durable
goods orders on Thursday. The weakness in durable goods demand has been a major
factor behind the downturn in the US manufacturing sector and a turn in demand
would be very much welcomed. On Wednesday we will get the non-manufacturing
PMI.
In terms of the housing market, we expect a decline in home sales in January
following the major gains in December. We look for a decline to around 5.25m for
existing home sales, released on Tuesday, and a decline to 513,000 for new home
sales released on Wednesday.
The most interesting speech in the coming week is likely to be that of St. Louis Fed
President Bullard on Thursday. This week he gave a very dovish impression, stating
that he found it unwise to proceed with the hiking cycle when inflation expectations
continued to decline.

2|
Next week in the euro area we start the week with PMI figures for February on
Monday, where the concern is whether the large decrease in January continues. In
general we expect the decline to continue, although at a slower pace and with regional
differences. For the manufacturing PMIs, we look for the largest decline as the
stronger euro is a headwind to exports. In this regard, we will especially keep an eye
on the new orders component and see whether the large drop in January continues.
Regionally, the German manufacturing sector could be more affected through a
greater sensitivity to China through exports, but on the other hand a solid domestic
economy is pulling in the other direction. In France, we expect to see quite a large
decline as a weak domestic economy is also affecting the manufacturing sector
negatively at the same time. Regarding service PMIs, we expect to see a smaller
decline as the sub-component of future business expectations has increased lately,
which could be due to a lower oil price on top of a solid domestic economy with a
decreasing unemployment. Here we expect to see the same regional picture.
19 February 2016
Indicators signal a slower growth
Source: Markit, Sentix, IFO
www.danskeresearch.com
Weekly Focus
On Tuesday, the German IFO expectations are due for release, and will also be
followed closely by the markets. Developments here relate closely to German
manufacturing PMI (please see chart) as this survey includes responses from
manufacturing firms. Therefore, we also look for a modest continuation of the decline
from January. On Tuesday we also get the German GDP components, where the focus
here will be on the degree of weakness in exports.
Euro-area M3 money supply and bank lending figures are released on Thursday.
Growth in M3 has in the past months started to slow a bit, which could indicate that
economic growth will slow in the last part of H2 16. The bank lending figures could
also attract some attention in light of the current focus on bank credit. We saw some
weakness in lending growth in December, but as the figure can be quite volatile, we
suggest awaiting this number before starting to draw any conclusions.
On Friday, flash German HICP inflation numbers for February are released, and we
expect a decline back to 0.0% y/y. This is partly because the yearly inflation rate in
energy prices will head lower, although the oil price in monthly terms has increased a
bit from the lows in January. Core inflation is also expected to be a bit lower in
February compared to January. The development in the German figure should overall
be in line with the aggregate euro-area inflation rate, but given the current information
we only expect the euro HICP inflation figure to decline to 0.2% y/y (due for release
on 29 February)
Peter Praet, Chief Economist of the ECB, will be speaking in New York on Friday as
well, and investors will look for any new comments on possible further easing in the
light of Draghi’s comment this week that the ECB will not hesitate to act if the
financial turmoil affects the state of the monetary policy transmission.
Growth in M3 has started to slow a bit
Source: ECB, Eurostat
German inflation to head lower in
February
Source: Eurostat, Danske Bank Markets
On Friday, we also get data for economic confidence for February, where the focus
again will be on the degree of weakness from the recent financial turmoil.

In the UK, we do not expect any revisions to overall GDP growth in Q4 in the second
release which is due on Thursday, i.e. we expect an unchanged print of 0.5% q/q.
However, it is the first time the subcomponents from the expenditure side are
published and we expect them to show that private consumption was still the main
growth driver.
GfK consumer confidence for February is due on Friday. Although consumer
confidence is usually unchanged in February compared to January, we expect a small
decline from 4 in January to 3 in February as the financial turmoil and Brexit
uncertainties are likely to pull in the other direction. That said, this is still a high level
indicating that private consumption should continue to grow in 2016.

3|
Private consumption main growth
engine
Source: ONS
There are no big movers in China next week. The focus will continue to be on the
currency and stock markets but pressures have levelled off in both markets over the
past couple of weeks.
19 February 2016
www.danskeresearch.com
Weekly Focus
Scandi



4|
In Denmark Monday brings the monthly employment statistics for December. Given
the big increase of almost 5,000 people in November – the second-biggest since the
series began in 2008 – we expect a somewhat smaller rise in December than earlier in
the year. We predict that a further 2,000 people have found work, which would mean
a total increase of 40,000 over the year. Friday sees the release of manufacturing
confidence data for February. The indicator managed to climb from -7 to -4 in
January despite all the turmoil in financial markets.
In Sweden, the week ahead will provide further intelligence on how financial market
turmoil has affected the real economy. First out are the National Institute for
Economic Research’s (NIER:s) business and consumer confidence surveys (both
published on Thursday at 09.00 CET), where in particular the BCI came in very
strong last time around – time for a recoil perhaps? On the same day, but half an hour
later, Statistics Sweden (SCB) will publish producer prices and trade balance data
giving another hint on how our export markets are faring. On Friday, SCB will also
release retail trade data (at 09.30 CET) for January, which should continue to post
decent growth rates.
In Norway the most important release of the week, if not the quarter, is the February
oil investment survey on Wednesday. In November the oil companies revised down
their estimates for 2016 quite considerably, probably as a result of prices falling
further from around USD50/bl to just under USD45/bl. As prices have since dropped
again to around USD33/bl, there is a significant risk of their estimates coming down
further. We reckon exploration activity in particular will be hit by the latest slide in
prices and so expect the industry’s investment estimate to be cut to NOK165bn, which
is NOK5bn lower than in November. This would translate into a decrease in oil
investment this year of around 14%, which is more than the 11% Norges Bank
assumed in its December monetary policy report. We do believe, however, that the
chances of a serious downward revision are relatively small, given that there is little
to suggest any notable change in the investment estimate for the Johan Sverdrup field.
As oil investment continues to decline, so, presumably, will activity in the supply
sector, but it is entirely possible that the sector will cope with prices in the 30s far
better than many – including us – had feared. The week also brings unemployment
data from both Statistics Norway (in the form of the LFS due on Wednesday) and
NAV due on Friday. The latter are for February and are our preferred measure of
unemployment. We expect an unchanged jobless rate of 3.4%, indicating a slightly
weaker labour market. We expect this to be reflected in an increase in gross
unemployment of around 1,000 people m/m.
19 February 2016
Employment on the up
Source: Statistics Denmark
Few signs of weakness
Source: SCB, NIER
How much will oil investment be cut?
Source: Macrobond Financial, Danske Bank
Markets
www.danskeresearch.com
Weekly Focus
Market movers ahead
Global movers
Event
During the week
Mon
Tue
Fri 26 - 27
22-Feb
23-Feb
Period
Previous
EUR PMI manufacturing, preliminary
Index
Feb
51.8
52.0
52.3
10:00
EUR PMI services, preliminary
Index
Feb
53.3
53.4
53.6
15:45
USD Markit manufacturing PMI, preliminary
Index
Feb
10:00
DEM IFO - expectations
Index
Feb
52.5
52.4
101.2
101.9
102.4
13:00
TRY
Central Bank of Turkey rate decision
%
7.50%
7.50%
7.50%
14:00
HUF
Central Bank of Hungary rate decision
%
1.35%
1.35%
1.35%
14:30
USD Fed's S.Fischer (voter, neutral) speaks
97.9
97.5
98.1
53.6
53.2
16:00
USD Conference Board consumer confidence
Index
Feb
24-Feb
15:45
USD Markit service PMI, preliminary
Index
Feb
Thurs
25-Feb
1:00
USD Fed's Bullard (voter, hawkish) speaks
10:00
EUR Money supply (M3)
11:00
EUR HICP inflation
26-Feb
Consensus
10:00
Wed
Fri
Danske
G20 G20 Finance Ministers' and Central Bank Governors' Meeting in Shanghai
11:00
EUR HICP - core inflation, final
14:30
USD Durable goods orders, preliminary
-
y/y
Jan
4.7%
4.7%
m/m|y/y
Jan
4.5%
-1.4%|0.4%
0.0%|0.2%
%
Jan
1.0%
1.0%
m/m
Jan
2.5%
-5.0%
G20 G20 Finance Ministers' and Central Bank Governors' Meeting in Shanghai
14:30
USD Advance goods trade balance
USD bn
Jan
-61.2
-61.5
16:00
USD Personal income
m/m
Jan
0.3%
0.4%
0.3%
16:00
USD Personal spending
m/m
Jan
0.5%
0.3%
0.0%
16:00
USD PCE core
m/m|y/y
Jan
0.1%|1.5%
0.1%|1.5%
0.0%|1.4%
16:15
USD Fed's Powell (voter, neutral) speaks
4.6%
4.6%
Scandi movers
Mon
22-Feb
9:30
SEK
Riksbank minutes from February 10 meeting
Wed
24-Feb
9:30
SEK
Debt Office releases new 2016-2017 borrowing projection
10:00
NOK Statistics Norway releases Q1 oil investment survey
10:00
NOK Unemployment (LFS)
10:00
NOK Wage index manufacturing
Fri
26-Feb
NOK bn
165
%
Dec
q/q
4th quarter
Source: Bloomberg, Danske Bank Markets
5|
19 February 2016
www.danskeresearch.com
1.0%
Weekly Focus
Global Macro and Market Themes
Short-term relief but risks persist
Financial markets have seen some relief over the past week. Global equities gained
around 4% and credit spreads have narrowed in both the US and Europe. Apart from
rebounding from technically stretched levels, there has also been some supportive news.


Chinese central bank governor Zhou Xiaochuan broke a long period of silence
when in a very comprehensive interview with Caixin magazine he reiterated the
Chinese view that there is no basis for a persistent CNY depreciation. He also
highlighted again that China is managing against a basket of currencies and not only
the USD. Devaluation fears have eased somewhat in the market lately with the
offshore CNH appreciating 2.5% against the USD, regaining some strength following
the slight panic in early January.
Central bank comments from the Fed and ECB have also soothed sentiment.
ECB president Mario Draghi was very clear that the ECB stands ready to act in
March. Also, one of the more hawkish Fed members James Bullard, who is voting
this year, has changed his tone in a much more dovish direction, saying that inflation
expectations have fallen ‘too far for comfort’ and that he ‘regards it as unwise to
continue a normalisation strategy in an environment of declining market-based
inflation expectations’. Focus now turns to the G20 meeting in Shanghai where
central banks and finance ministers meet on 26-27 February (next week).
Key points
 Short-term relief in markets on
dovish central banks, easing fears
over China and stabilisation in oil.
 However, we still see rising risk of
a systemic crisis.
 Sharp decline in inflation
expectations challenges central
banks.
Pressure on Chinese currency has
eased lately
Significant credit burst in China – some of it should feed through to activity
Source: Macrobond Financial
Source: Macrobond Financial
6|
19 February 2016
www.danskeresearch.com
Weekly Focus



Economic data has lent some support to sentiment. Fears about a US recession
eased after US retail sales last week surprised on the upside witnessing resilient
consumers gaining support from low gasoline prices. In addition, initial jobless claims
this week further reversed a rising trend that had given some cause for concern as a
sharp rise in claims is often seen ahead of US recessions. Initial jobless claims stayed
below 270,000 for the second week in a row after hitting 294,000 in mid-January.
In China, credit data showed another burst of lending in January. In particular,
the more policy-driven lending from bank loans and corporate bonds has been very
strong (note that corporate bonds in China are mostly from state-owned companies).
While this just increases the medium-term concern over high debt, wasteful credit and
rising bad assets, we believe it is likely to feed through to higher activity, easing fears
about a Chinese ‘collapse’ in the short term. A stabilisation of global metal prices and
the price of iron ore is also signalling a stabilisation/moderate recovery in Chinese
demand.
Finally, a stabilisation in oil prices has contributed to somewhat calmer waters
this week. Saudi Arabia, Russia, Venezuela and Qatar made an agreement to freeze
production. The deal as such was not worth much, as these countries already produce
close to their limits. However, that they are talking and even able to make an
agreement may be seen as good news.
However, it was not all positive news this week. The German ZEW index, which has
historically served as a good leading indicator, fell sharply in January. Chinese trade data
also suffered a setback. However, in our view, the latter should be disregarded, as the
January and February data are very distorted in China due to the Chinese New Year.
Hence, we need to see trade data for February before we come to a conclusion on Chinese
trade.
Turn in US jobless claims eases
recession fears
Source: Macrobond Financial
Oil prices stabilising in tandem with
stocks
Source: Macrobond Financial
Risks are still in place
While the markets have seen relief, we do not believe risks of a systemic crisis have gone
away. As we argued in the presentation Market Turmoil, Policy responses and market
implications, 12 February, we do not believe we are in a systemic crisis yet but the risks
are rising. Hence, investors should look at using rallies to buy protection. There are three
main areas of risk in the world currently, all stemming from overinvestment in the
commodity sectors and Chinese housing. The areas where financial losses are likely to
rise are (1) the US energy sector, (2) emerging market countries such as Brazil, Russia,
Nigeria and South Africa and (3) Chinese companies with exposure to the battered
construction sector. The most exposed sectors are steel, cement, aluminium and
developers. Individually these may not be enough to cause a crisis but together the risks
add up. Recently we have also seen the crisis spread to new areas such as European
banks. The pattern of new areas of stress showing up is a typical pattern in a brewing
systemic crisis and, in our view, it has to be watched carefully.
7|
19 February 2016
German ZEW points to lower growth
Source: Macrobond Financial
www.danskeresearch.com
Weekly Focus
Central banks set to react to lower inflation expectations
A key concern for central banks currently is a sharp decline in inflation expectations
in bond markets. As seen in the chart to the right, long-term inflation expectations in both
the US and the euro area have trended lower for a long time and at 1.5% are clearly below
inflation targets (2% for the US and below but close to 2% for the euro area). As signalled
by the comments from the Fed’s James B. Bullard, above this is a serious challenge of
central bank credibility and we would expect it to trigger further aggressive easing from
the ECB in March and expect the Fed to go to the sideline and halt rate hikes over the
next six months.
The market is already pricing aggressive easing from the ECB and a Fed on hold until
2017, so in this regard it should not have a big impact. However, one way to interpret
market pricing is that it prices some risk of a new systemic crisis that warrants more
aggressive easing, which is not totally unreasonable, in our view.
Central banks set to react to deanchoring of inflation expectations
Source: Macrobond Financial, Bloomberg
EUR/USD has retraced a bit following the sharp rise recently. This is a natural response
to a turn in risk appetite, as the EUR is acting as a funding currency and tends to weaken
when sentiment turns more positive. Relative rates have also moved a bit in favour of the
EUR compared with the USD. We continue to look for a higher EUR/USD in the
medium term (see also Why EUR/USD is set to rally in 2016: Now is the time to
prepare, 3 February).
Global market views
Asset class
Main factors
Equities
Sho rt term: sell o n rallies
M edium term: mo derately po sitive
Sho rt term o ur stance is sell o n rallies. It will require co -o rdinated po licy actio n and/o r surprisingly stro ng datapo ints
to end the sell-o ff. Lo o k to the G20 meeting in Shanghai o n 26-27 February as the first po tential event.
We expect the B ank o f Japan (B o J) and ECB to ease further in M arch but the Fed to tilt its view o nly to wards a do vish
stance. This sho uld mark the bo tto m o f the current sell-o ff.
Bond market
Co re yields: B und yields clo se to bo tto ming o ut, higher medium term
The ECB is set to cut the depo sit rate again and upward pressure o n the lo ng-end fro m the US is no w much less.
US-euro spread: wider
P o licy divergence is no w mcuh less evident, as the market has priced o ut hikes fro m the Fed
P eripheral spreads set to tighten further fro m here
QE, impro ving fundamentals and search fo r yield. Ho wever, vulnerable to risk semtiment and po litical uncertainties.
Credit spreads set to co ntinue widening so mewhat
ECB suppo rtive but o utweighed by the o il ro ut and asso ciated turbulence.
FX
EUR/USD – range bo und sho rt-term, rebo und further o ut
Fundamental facto rs suppo rt the cro ss medium to lo ng term, sho rt term driven by risk sentiment and US rates.
USD/JP Y – range bo und with risks skewed o n the do wnside
Undervalued JP Y vulnerable to glo bal risk sentiment, B o J likely to be less to lerant to further JP Y appreciatio n.
EUR/SEK – stuck between 9.10 and 9.50 near term, lo wer medium term
B attle between the Riksbank and the market fo r no w, further o ut EUR/SEK set to fall o n stro ng Swedish fundamentals.
EUR/NOK – higher sho rt term, then lo wer as cycle turns
Oil and risk sentiment co nnectio n leaves cro ss vulnerable to upside, fundamentals po int to lo wer EUR/NOK in H2 16.
Commodities
Oil prices – range-bo und near term, subdued reco very in 2016
P rice suppo rt fro m OP EC is go ne; no w awaiting no n-OP EC supply cuts and a weaker US do llar.
M etal prices – staying lo w
Chinese manufacturing slo wdo wn set to cap upside; co nso lidatio n in mining industry puts a flo o r under prices.
Go ld prices – flat near term
Sho rt-term suppo rt fro m repricing o f Fed rate hikes.
A griculturals – risks remain o n the upside
A ttentio n has turned to La Niña weather risks in H2 16.
Source: Danske Bank Markets
8|
19 February 2016
www.danskeresearch.com
Weekly Focus
Scandi update
Denmark – big increase in LFS employment in Q4
Statistics Denmark’s Labour Force Survey (LFS) shows a rise in the number of people in
work of 28,000 from Q3 to Q4 15. This is a big increase in a single quarter but the figures
do have a tendency to fluctuate quite widely from quarter to quarter. The LFS painted a
less positive picture of the labour market in 2015 than other measures, so this jump
should probably be seen partly as a catch-up. However, the figures confirm that the labour
market – and the Danish economy in general – is improving, albeit far from booming.
While economic growth is not strong, it has been enough for more people to find work.
Despite the financial turmoil at the start of this year, we expect this moderate recovery in
the Danish economy to continue in coming years. Therefore, we also expect employment
to continue to move in the right direction.
Employment growth now showing up
in Labour Force Survey data
Source: Nets
Sweden – inflation in a cold snap
Measured in terms of CPI, CPIF and CPIF ex. Energy, January inflation was 0.2, 0.1 and
0.1 percentage points, respectively, higher than the Riksbank’s forecasts. A big chunk of
this was due to a surge in electricity prices, just as we had feared. A surprise item was the
much higher cost of financial services but this is probably compensation for weaker
interest rate margins in the Swedish banking sector on the back of negative interest rates.
Nonetheless, we expect a complete reversal of electricity prices in February. Looking
ahead, we believe inflation will again undershoot the Riksbank’s forecasts. In particular,
March appears to be a diverging point.
Short term, the market is likely to focus on the run-up to wage negotiations. We doubt
strongly that they will provide any ammunition for a sustained rise in inflation, as they are
likely to be quite close to existing deals. Longer term, there is now a significant spread
between CPIF and CPIF-CT (constant tax). Over the past two years, the government’s tax
hikes have added around 0.6 percentage points to inflation. Unless these tax hikes are
repeated next year, we expect CPIF to fall by the same amount in January 2017.
Brief relief for the Riksbank
Source: Statistics Sweden, Riksbank. Danske Bank
calculations
Norway – weaker growth
Our growth forecast took two direct hits this week. First, Statistics Norway revised its
GDP figures for the first three quarters of 2015, with the result that growth in the
mainland economy ended up at just 1.0% for the year as a whole, against the expected
1.3-1.4%. Put simply, this means there was no growth in H2 15 and the output gap at the
beginning of 2016 is larger than expected. However, we were somewhat reassured by
Statistics Norway reporting that the downward revision was due mainly to construction
activity. Given the figures for housing and other building starts and for construction
orders, we are not at all worried about activity in the sector in 2016. Second,
manufacturing orders showed no sign of improving despite Statoil awarding a number of
contracts for the Johan Sverdrup field in Q4, which points to a more protracted decline in
manufacturing than we had expected. This all suggests that we need to revise down our
forecast for mainland growth in 2016 but we intend to hold fire until we have the results
of the oil investment survey on Wednesday (see Market movers).
9|
19 February 2016
Flattish growth in Norway
Source: Statistics Norway, Bank of Norway
www.danskeresearch.com
Weekly Focus
Latest research from Danske Bank Markets
17/2 FOMC minutes - Soft minutes support uncertain Fed on hold
While it was unclear exactly how to interpret the statement as per usual, the minutes were
definitely to the dovish side and based on the minutes it is hard to see another hike at least
until June.
17/2 FX Forecast Update: Central bank fatigue
EUR/NOK. Although the NOK is substantially undervalued from a long-term
perspective, the short-term outlook continues to be tied closely to how the economy is
doing, to oil price developments and to global risk sentiment.
16/2 UK: Inflation remains low
UK CPI inflation increased to 0.3% y/y in January 2016 from 0.2% y/y in December
2015 (Danske Bank: 0.4% y/y, consensus: 0.3% y/y).
16/2 Yield Forecast Update: Waiting for the central bank response
Monthly yield forecast update
10 |
19 February 2016
www.danskeresearch.com
Weekly Focus
Macroeconomic forecast
Macro forecast, Scandinavia
Year
GDP 1
Private
cons.1
Public
cons.1
Fixed
inv.1
Stock
build.2
Exports1
Imports1
Inflation1
Unemploym.3
Public
budget4
Public
debt4
Current
acc.4
Denmark
2015
2016
2017
1.2
1.5
1.8
2.2
2.3
2.2
1.0
0.6
0.1
0.2
2.1
2.7
-0.4
0.3
0.0
-0.7
1.7
4.2
-1.2
2.8
4.2
0.5
0.9
1.7
4.7
4.4
4.1
-2.0
-2.2
-1.4
40.0
37.6
38.1
7.2
7.2
7.2
Sweden
2015
2016
2017
3.7
3.3
2.5
2.4
2.1
1.6
2.1
3.6
2.5
7.3
4.3
3.1
0.0
0.0
0.0
5.0
5.5
4.6
4.6
5.2
4.0
0.0
0.8
0.9
7.4
7.2
7.1
-1.1
-1.3
-1.1
44.5
44.8
45.0
7.0
7.3
6.9
Norway
2015
2016
2017
1.4
1.5
2.0
2.3
1.6
2.0
2.5
3.1
2.6
-3.2
-1.4
1.0
0.1
-0.3
0.0
4.1
2.5
1.0
1.1
1.6
2.2
2.2
2.7
2.4
3.0
3.3
3.3
-
-
-
Macro forecast, Euroland
Year
GDP 1
Private
cons.1
Public
cons.1
Fixed
inv.1
Stock
build.2
Exports1
Imports1
Inflation1
Unemploym.3
Public
budget4
Public
debt4
Current
acc.4
Euroland
2015
2016
2017
1.5
1.8
1.9
1.7
1.3
1.2
1.5
1.5
1.1
2.1
2.3
4.3
-
4.9
4.2
4.3
5.2
4.2
4.5
0.1
0.4
0.0
10.9
10.0
9.2
-2.1
-1.7
-1.5
91.8
90.6
89.5
3.7
3.6
3.4
Germany
2015
2016
2017
1.5
2.3
2.3
1.9
1.6
1.6
2.5
2.1
1.0
1.7
4.3
6.1
-
5.2
4.6
4.5
5.6
5.0
5.3
0.1
0.5
1.7
4.6
4.5
4.5
0.9
0.5
0.4
71.5
68.2
65.0
8.7
8.6
8.4
France
2015
2016
2017
1.1
1.1
1.4
1.5
1.0
1.0
1.5
0.9
0.8
-0.2
2.2
4.0
-
5.6
3.4
3.5
5.7
4.3
4.1
0.1
0.4
1.3
10.6
10.6
10.3
-3.8
-3.4
-3.0
96.4
97.1
97.3
-1.3
-1.6
-2.2
Italy
2015
2016
2017
0.7
1.3
1.4
0.9
1.0
0.8
0.3
0.4
0.4
0.6
2.7
4.1
-
4.0
3.5
4.2
5.4
3.9
4.1
0.1
0.8
1.5
11.9
10.6
10.0
-2.6
-2.2
-1.5
133.1
132.0
129.5
2.2
1.9
1.9
Spain
2015
2016
2017
3.2
2.8
2.4
3.0
2.5
1.8
2.4
0.9
0.4
6.3
6.2
6.1
-
6.0
5.4
4.2
7.8
6.4
4.9
-0.6
0.0
1.3
22.2
20.5
19.0
-4.5
-3.5
-2.5
100.4
101.4
100.4
1.4
1.3
1.4
Finland
2015
2016
2017
0.0
0.6
1.1
1.1
0.4
0.5
0.0
-0.2
-0.5
-2.5
2.0
3.5
-
-1.0
2.0
4.0
-1.5
2.0
3.5
-0.2
1.0
1.2
9.4
9.8
9.5
-3.4
-3.1
-2.8
62.7
65.0
67.0
0.2
0.2
0.5
Macro forecast, Global
Year
GDP 1
Private
cons.1
Public
cons.1
Fixed
inv.1
Stock
build.2
Exports1
Imports1
Inflation1
Unemploym.3
Public
budget4
Public
debt4
Current
acc.4
USA
2015
2016
2017
2.5
2.5
2.4
3.1
2.8
2.2
0.8
1.0
0.8
4.3
4.5
5.0
0.2
-0.2
0.0
1.4
3.9
4.9
5.2
4.2
5.0
0.2
1.6
2.4
5.3
4.8
4.5
-4.1
-2.9
-2.6
101.0
104.0
103.0
-2.3
-2.5
-2.6
China
2015
2016
2017
6.8
6.7
6.6
-
-
-
-
-
-
1.7
2.3
2.0
4.2
4.2
4.3
-0.8
-0.8
-1.0
41.8
42.8
43.5
2.4
2.3
2.5
UK
2015
2016
2017
2.2
2.4
2.3
2.9
3.1
2.6
1.6
0.8
0.1
4.5
4.4
4.3
-0.4
-0.2
0.0
5.3
3.1
4.1
5.7
3.6
4.2
0.0
0.7
1.9
5.4
5.1
4.8
-3.9
-2.5
-1.3
87.1
86.5
84.8
-4.5
-4.0
-3.5
Source: OECD and Danske Bank. 1) % y/y. 2) % contribution to GDP growth. 3) % of labour force. 4) % of GDP.
11 |
19 February 2016
www.danskeresearch.com
Weekly Focus
Financial forecast
Bond and money markets
USD
19-Feb
+3m
+6m
+12m
19-Feb
+3m
+6m
+12m
19-Feb
+3m
+6m
+12m
19-Feb
+3m
+6m
+12m
19-Feb
+3m
+6m
+12m
19-Feb
+3m
+6m
+12m
19-Feb
+3m
+6m
+12m
19-Feb
+3m
+6m
+12m
EUR
JPY
GBP
CHF
DKK
SEK
NOK
Key int.
rate
0.50
0.50
0.50
1.00
0.05
0.05
0.05
0.05
-0.10
-0.30
-0.30
-0.30
0.50
0.50
0.50
0.75
-0.75
-0.75
-0.75
-0.75
0.05
0.05
0.05
0.05
-0.50
-0.50
-0.50
-0.50
0.75
0.50
0.50
0.50
3m interest rate 2-yr swap yield
0.62
0.62
0.78
1.14
-0.20
-0.23
-0.23
-0.23
0.00
0.15
0.20
0.20
0.59
0.59
0.59
0.86
-0.78
-0.10
-0.13
-0.13
-0.13
-0.46
-0.50
-0.50
-0.50
1.06
0.90
0.90
0.90
0.78
0.85
1.40
1.65
-0.17
-0.15
-0.10
-0.10
-0.15
0.77
0.90
1.10
1.50
-0.82
0.11
0.10
0.15
0.10
-0.39
-0.40
-0.40
-0.40
0.88
1.00
1.10
1.10
10-yr swap yield
Currency
vs EUR
1.61
1.65
2.00
2.25
0.57
0.55
0.65
0.95
0.16
1.41
1.70
1.85
2.10
-0.11
0.93
0.90
0.95
1.20
1.17
1.00
1.10
1.25
1.59
1.90
2.00
2.30
110.8
108.0
110.0
116.0
125.1
125.3
130.9
138.0
77.6
80.0
74.0
73.0
110.4
108.0
111.0
115.0
746.3
745.5
745.5
745.5
938.2
930.0
930.0
910.0
951.9
970.0
940.0
910.0
Currency
vs USD
110.8
108.0
110.0
116.0
112.9
116.0
119.0
119.0
142.8
135.0
148.7
158.9
99.6
100.0
100.9
99.1
673.4
690.3
677.7
642.7
846.6
861.1
845.5
784.5
859.0
898.1
854.5
784.5
Currency
vs DKK
673.4
690.3
677.7
642.7
746.3
745.5
745.5
745.5
5.96
5.95
5.70
5.40
961.7
931.9
1007.4
1021.2
676.3
690.3
671.6
648.3
79.5
80.2
80.2
81.9
78.4
76.9
79.3
81.9
Risk profile
3 mth.
Price trend
3 mth.
Price trend
12 mth.
Regional recommendations
Medium
High
High
High
Medium
0-3%
-3 -+3%
0-3%
0-3%
0-3%
5-8%
0-3%
8-10%
8-10%
5-8%
Underweight
Underweight
Overweight
Overweight
Overweight
Equity Markets
Regional
USA (USD)
Emerging markets (local curr)
Japan (JPY)
Europe (ex. Nordics)
Nordics
Weak USD, but pro fit recessio n lo o ming
EM under pressure fro m change in China's FX po licy
Reflatio n, stro ng earn. gro wth, B o J easing, weakening JP Y
Reflatio n, earnings gro wth, ECB easing, weakening EUR
Earnings gro wth, expensive valuatio n
Commodities
2016
NYMEX WTI
ICE Brent
Copper
Zinc
Nickel
Aluminium
Gold
Matif Mill Wheat (€/t)
Rapeseed (€/t)
CBOT Wheat (USd/bushel)
CBOT Corn (USd/bushel)
CBOT Soybeans (USd/bushel)
19-Feb
31
34
4,576
1,697
8,350
1,517
1,225
153
356
462
366
881
Q1
30
30
4,400
1,500
8,500
1,450
1,075
165
360
480
365
870
Q2
Q3
Q4
30
40
44
30
40
44
4,400 4,800 5,000
1,500 1,700 1,800
8,500 10,000 11,000
1,450 1,600 1,700
1,075 1,115 1,130
180
175
175
395
390
390
480
500
520
365
390
400
870
900
910
2017
Q1
46
46
5,100
1,850
11,200
1,750
1,140
175
395
525
405
915
Q2
48
48
5,200
1,900
11,400
1,800
1,145
170
385
530
410
920
Q3
50
50
5,300
1,950
11,600
1,850
1,150
170
385
535
415
925
Average
Q4
52
52
5,400
2,000
11,800
1,900
1,155
170
390
540
420
930
2016
36
36
4,650
1,625
9,500
1,550
1,099
174
384
495
380
888
2017
49
49
5,250
1,925
11,500
1,825
1,148
171
389
533
413
923
Note: We have recently published new estimates for a number of central banks. Our long-term yield estimates will be updated in connection with our February yield
forecast update, which is due to be published in the coming week. Consequently, there could be inconsistencies between the central bank and long-term yield estimates in
the above table.
Source: Danske Bank Markets
12 |
19 February 2016
www.danskeresearch.com
Weekly Focus
Calendar
Key Data and Events in Week 8
During the week
Calendar
Fri 26 - 27
G20
Period
Danske Bank
Consensus
Previous
Period
Danske Bank
Consensus
Previous
G20 Finance Ministers' and Central Bank Governors' Meeting in Shanghai
Monday, February 22, 2016
Source: Danske Bank Markets
3:00
JPY
Nikkei Manufacturing PMI, preliminary
9:00
DKK
Employment (monthly)
9:00
DKK
Retail sales
9:00
Continued
FRF
PMI manufacturing, preliminary
9:00
FRF
PMI services, preliminary
Index
Feb
1.000|m/m
Dec
52.3
m/m|y/y
Jan
0.3%|…
-0.8%|0.0%
Index
Feb
49.7
49.9
50.0
Index
Feb
49.8
50.3
50.3
52.3
52.0
2.0
5.0|0.2%
9:30
SEK Markets
Riksbank minutes from February 10 meeting
Source:
Danske Bank
9:30
DEM
PMI manufacturing, preliminary
Index
Feb
51.7
52.0
9:30
DEM
PMI services, preliminary
Index
Feb
54.8
54.8
10:00
ITL
HICP inflation, final
m/m|y/y
Jan
10:00
EUR
PMI manufacturing, preliminary
Index
Feb
10:00
EUR
PMI composite, preliminary
Index
Feb
10:00
EUR
PMI services, preliminary
Index
Feb
15:45
USD
Markit manufacturing PMI, preliminary
Index
Feb
Calendar
Tuesday,
February
23,
Source:
Danske
Bank Markets
2016
55.0
...|0.4%
51.8
53.3
52.0
52.3
53.3
53.6
53.4
53.6
52.5
52.4
Period
Danske Bank
Consensus
Previous
0.3%|…
8:00
DEM
GDP, final
q/q|y/y
4th quarter
0.3%|1.3%
0.3%|1.3%
8:00
DEM
Private consumption
q/q
4th quarter
0.4%
0.6%
8:00
DEM
Government consumption
q/q
4th quarter
1.1%
1.3%
Continued
8:00
DEM
Gross fixed investments
q/q
4th quarter
0.6%
-0.3%
8:45
FRF
Business confidence
Index
Feb
102.0
102.0
Index
Feb
107.0
106.9
107.3
112.5
Source:
Danske Bank
10:00
DEMMarkets
IFO - business climate
10:00
DEM
IFO - current assessment
Index
Feb
112.1
112.1
10:00
DEM
IFO - expectations
Index
Feb
101.2
101.9
102.4
13:00
TRY
Central Bank of Turkey rate decision
%
7.50%
7.50%
7.50%
14:00
HUF
Central Bank of Hungary rate decision
%
1.35%
1.35%
1.35%
14:30
USD
Fed's S.Fischer (voter, neutral) speaks
15:00
USD
S&P Case Shiller House prices
16:00
USD
Existing home sales
5.25 (-3.8%)
5.4
5.46 (14.7%)
16:00
USD
Conference Board consumer confidence
Index
Dec
m (m/m)
Jan
Index
Wednesday, February 24, 2016
182.9
Feb
97.9
97.5
98.1
Period
Danske Bank
Consensus
Previous
6:00
JPY
Leading economic index, final
Index
Dec
6:00
JPY
Small business confidence
Index
Feb
47.1
47.2
8:45
FRF
Consumer confidence
Index
Feb
97.0
97.0
9:30
SEK
Debt Office releases new 2016-2017 borrowing projection
10:00
NOK
Statistics Norway releases Q1 oil investment survey
10:00
NOK
Unemployment (LFS)
%
Dec
4.6%
4.6%
13:00
USD
MBA Mortgage Applications
%
15:45
USD
Markit service PMI, preliminary
Index
Feb
53.6
53.2
15:45
USD
Markit composite PMI, preliminary
Index
Feb
16:00
USD
New home sales
1000 (m/m)
Jan
520
544.0 (10.8%)
16:30
USD
DOE U.S. crude oil inventories
19:15
USD
Fed's Kaplan (non-voter, unknown) speaks
NOK bn
102.0
165
8.2%
53.2
513 (-5.8%)
K
2147
Source: Danske Bank Markets
13 |
19 February 2016
www.danskeresearch.com
Weekly Focus
Calendar — continued
Thursday, February 25, 2016
Period
Danske Bank
Consensus
Previous
1:00
USD
Fed's Bullard (voter, hawkish) speaks
8:00
DEM
HICP inflation, final
m/m|y/y
Jan
8:00
DEM
GfK consumer confidence
Net. Bal.
Mar
9.3
9.4
9:00
ESP
GDP, final
q/q|y/y
4th quarter
0.8%|3.5%
0.8%|3.5%
9:00
SEK
Consumer confidence
Index
Feb
96.8
97.5
9:00
SEK
Economic Tendency Survey
Index
Feb
109.1
111.9
9:00
SEK
Manufacturing confidence
Index
Feb
115
115
120.8
9:30
SEK
Household lending
y/y
Jan
9:30
SEK
Trade balance
SEK bn
Jan
2.0
1.0
9:30
SEK
PPI
m/m|y/y
Jan
10:00
EUR
Money supply (M3)
10:00
ITL
Business confidence
10:30
GBP
GDP, second release
10:30
GBP
Index of services
11:00
EUR
HICP inflation
11:00
EUR
HICP - core inflation, final
14:15
USD
Fed's Lockhart (non.voter, neutral) speaks
14:30
USD
Capital goods orders, non-defense ex air, preliminary
14:30
USD
Durable goods orders, preliminary
14:30
USD
Initial jobless claims
1000
15:00
USD
FHFA house price index
m/m
18:00
USD
Fed's Williams (non-voter, neutral) speaks
22:45
NZD
Trade balance
y/y
Jan
Index
Feb
-1.0%|0.4%
7.5%
4.7
-0.7%|-1.9%
4.5%
4.7%
4.7%
103.2
q/q|y/y
4th quarter
0.5%|1.9%
0.5%|1.9%
m/m|3m/3m
Dec
0.5%|1.9%
0.003|0.007
0.002|0.006
m/m|y/y
Jan
-1.4%|0.4%
0.0%|0.2%
%
Jan
1.0%
1.0%
%
Jan
1.0%
-4.3%
m/m
Jan
2.5%
-5.0%
Dec
0.5%
0.5%
262
NZD M
Jan
Friday, February 26, 2016
Period
Danske Bank
-250
-53
Consensus
Previous
0.1%
-
EUR
Moody's may publish Germany's debt rating
-
EUR
Moody's may publish Greece's debt rating
-
EUR
Moody's may publish Austria's debt rating
-
G20
G20 Finance Ministers' and Central Bank Governors' Meeting in Shanghai
0:30
JPY
CPI - national ex. fresh food
y/y
Jan
0.0%
0:30
JPY
CPI - national ex. fresh food and energy
y/y
Jan
0.7%
0.8%
0:30
JPY
CPI- Tokyo
y/y
Feb
-0.3%
-0.3%
0:30
JPY
CPI - Tokyo ex fresh food
y/y
Feb
-0.2%
-0.1%
0:30
JPY
CPI - national
y/y
Jan
0.0%
0.2%
1:05
GBP
GfK consumer confidence
Index
Feb
3.0
4.0
2:30
CNY
Property prices
8:45
FRF
Household consumption
m/m|y/y
Jan
0.6%|0.3%
0.7%|0.3%
8:45
FRF
HICP inflation, preliminary
m/m|y/y
Feb
0.4%|0.1%
-1.1%|0.3%
8:45
FRF
GDP, preliminary
0.2%|1.3%
0.2%|1.3%
9:00
DKK
Confidence indicator, industry, s.a.
9:00
ESP
HICP inflation, preliminary
-0.1%|-0.6%
-2.5%|-0.4%
9:00
DKK
CB's securities statistics
9:00
DKK
Foriegn portfolio investments
9:30
SEK
Retail sales s.a.
1.5%|3.7%
1.5%|3.7%
-1.5%|3.4%
10:00
NOK
Wage index manufacturing
10:00
NOK
Unemployment
3.4%
3.3%
11:00
EUR
11:00
3.0
y/y
q/q|y/y
4th quarter
Net balance
Jan
m/m|y/y
Feb
-4
Jan
Jan
m/m|y/y
Jan
q/q
4th quarter
%
Feb
Business climate indicator
Net bal.
Feb
0.3
0.3
EUR
Industrial confidence
Net bal.
Feb
-3.5
-3.2
11:00
EUR
Economic confidence
Index
Feb
104.5
105.0
11:00
EUR
Consumer confidence
Net bal.
Feb
11:00
EUR
Service confidence
Net bal.
Feb
14:00
DEM
HICP inflation, preliminary
m/m|y/y
Feb
14:30
USD
PCE core
q/q
4th quarter
14:30
USD
Personal consumption
q/q
4th quarter
2.2%
2.2%
14:30
USD
GDP price deflator, second release
q/q
4th quarter
0.8%
0.8%
14:30
USD
GDP, second release
q/q ann.
4th quarter
0.5%
0.7%
14:30
USD
Advance goods trade balance
USD bn
Jan
-61.2
-61.5
16:00
USD
Personal income
m/m
Jan
0.3%
0.4%
0.3%
16:00
USD
Personal spending
m/m
Jan
0.5%
0.3%
0.0%
16:00
USD
University of Michigan Confidence
Index
Feb
89.0
91.0
90.7
16:00
USD
PCE core
m/m|y/y
Jan
0.1%|1.5%
0.1%|1.5%
0.0%|1.4%
16:00
USD
PCE deflator
m/m|y/y
Jan
0.0%|1.0%
0.0%|1.0%
-0.1%|0.6%
16:15
USD
Fed's Powell (voter, neutral) speaks
19:30
USD
Fed's Brainard (voter, dovish) speaks
1.0%
...|0.0%
3.4%
11.5
11.6
0.6%|0.1%
-0.8%|0.5%
1.2%
19:30
EUR
ECB's Praet Speaks in New York
The editors do not guarantee the accurateness of figures, hours or dates stated above
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Source: Danske Bank Markets
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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 Las Olsen, Senior Analyst.
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Each research analyst responsible for the content of this research report certifies that the views expressed in the
research report accurately reflect the research analyst’s personal view about the financial instruments and issuers
covered by the research report. Each responsible research analyst further certifies that no part of the compensation
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in the research report.
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See the front page of this research report for the date of first publication.
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