Date post: | 20-Aug-2018 |
Category: |
Documents |
Upload: | phamkhuong |
View: | 215 times |
Download: | 0 times |
Important disclosures and certifications are contained from page 14 of this report. www.d anskeresearch.com
Investment Research — General Market Conditions
Market movers ahead
In the US, the data calendar is light and we expect focus to remain on Donald Trump’s
policy. One game changer may be confirmation of Steven Mnuchin as Treasury
Secretary.
The main event in the UK next week is the House of Commons vote on the Article 50
bill on Wednesday. The vote is expected to be passed and put the government on course
to trigger Article 50 on 9 March as planned.
In the euro area, we expect to see a decline the Sentix index after it reached very high
levels in January. Likewise, we expect to see a decline in German industrial production
after a solid showing in the autumn.
Chinese FX reserve data are likely to attract some attention, as we saw big movements
in the Chinese currency in January.
We expect next week’s inflation figures from both Norway and Denmark to increase.
In Denmark, this is due to base effects and rising food prices. In Norway, we do not
expect the increase to last, as the effect of the NOK depreciation eases .
Global macro and market themes
Data continues to look robust globally and most markets moved sideways.
The USD continues to weaken, as Trump’s team blames Germany, Japan and China for
currency manipulation.
Uncertainty remains high and a trade war could be brewing.
We expect the USD to strengthen over coming months as more details on Trump’s
fiscal policy plans are revealed.
German production has been trending
upward slowly
EUR/USD lower – then higher
Source: Macrobond Financial Source: Macrobond Financial
Contents
Market movers...............................................................2
Global Macro and Market Themes .............5
Scandi Update.................................................................8
Latest research from Danske Bank
Markets.................................................................................9
Macroeconomic forecast.................................10
Financial forecast ....................................................11
Calendar ...........................................................................12
3 February 2017
Editor
Senior Analyst
Louise Aggerstrøm Hansen +45 45 12 85 31 [email protected]
Weekly Focus
Heading for a trade war?
Financial views
Source: Danske Bank
Follow us on Twitter
@Danske_Research
Major indices
03-Feb 3M 12M
10yr EUR swap 0.82 0.80 1.30
EUR/USD 108 105 112
ICE Brent oil 57 53 59
03-Feb 6M 12-24M
S&P500 2281 5 -10% 10-15%
2 | 3 February 2017 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
Market movers
Global
In the US next week, the calendar is rather light. In our view, the only interesting release
is preliminary consumer confidence data from the University of Michigan. Consumer
confidence has risen significantly since Donald Trump’s election victory but we think
it will decline slightly from 98.5 to 97.5. However, this is still a high level, supporting
our view that private consumption continues to be the main growth engine in the US.
The Fed’s Patrick T. Harker, James Bullard and Charles Evans (all voting FOMC
members) are all due to speak next week, which is interesting given there were no major
changes to the FOMC statement this week (see also FOMC Review: No major changes
to the FOMC statement, 1 February).
We intend to continue following closely any news on Trump’s policy, especially if we
get any news in ‘Trumponomics’. One game changer could be the confirmation of
Steven Mnuchin as Treasury Secretary.
In the euro area, the first release of interest is Sentix investor confidence. Sentix
trended upwards in H2 16 and reached 18.2 in January 2017, its highest level since
August 2015. The current situation and expectations components have both risen to
historically high levels but we have seen a loss of momentum in both ZEW and ifo
expectations, which could be a drag on Sentix expectations. Therefore, we expect
Sentix to rise marginally to 19.0 in February, possibly dragged down by a declining
expectations component.
We are also due to get German factory orders for December on Monday. Factory orders
have followed a rising tendency since 2013 but have experienced large fluctuations,
with a 5% monthly increase in October and a 2.5% decline in November. We expect a
bounce back in December, with monthly growth of 2%. Our view of another increase
is supported by the manufacturing PMI in November and December, which showed
strength in the new orders indicator.
On Tuesday, German industrial production for December is set to be released. Industrial
production was solid throughout October and November, with 0.5% and 0.4% monthly
increases, respectively. However, factory orders saw a monthly decline in November,
following October’s strong increase, which indicates declining industrial production in
December. Thus, we expect the December figure to show a monthly decline of 0.4%.
In the UK, the main event next week is the House of Commons vote on the Article 50
bill and each of the possible amendments on Wednesday. We expect the House of
Commons to approve the bill and it to pass on to the House of Lords. There is no
programme detailing how much time the House of Lords intends to spend discussing
the bill but the Government hopes the House of Lords will pass the bill by 7 March (for
more on the process of Brexit legislation see Reuters). Prime Minister Theresa May is
expected to trigger Article 50 on 9 March.
In terms of data releases, the next week is relatively boring. Industrial production and
construction data for December should reveal whether we should expect revisions to
the first estimate of Q4 GDP growth of 0.6% q/q. The NIESR GDP estimate for January
is interesting, as it has been a quite good indicator for actual GDP growth.
Consumer confidence is very high
Source: University of Michigan
Production is trending slowly upwards
Source: German Federal Statistical Office, Danske
Bank Markets
3 | 3 February 2017 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
Next week it is time for trade balance and FX reserves data in China. We do not put
too much weigh on China’s trade figures, as they tend to be very volatile and distorted.
However, FX reserves for January are likely to attract attention, as we have seen big
moves in the Chinese currency. There were clear signs of intervention in the offshore
market, where liquidity was drained to push up money-market rates. It will be
interesting to see how much this has affected currency reserves. Offshore rates have
proven an effective tool in stopping depreciation pressure in the CNY.
Scandi
In Denmark, inflation figures for December are released on Friday. We expect a rate
of 0.1% m/m and 1.0% y/y, pushed up mainly by energy prices and the base effects of
food prices. Recent months have seen sharp increases in German food prices pulling up
Danish food prices too and we expect this effect to continue in January. Note that the
January figures contain a number of new prices that are updated only occasionally,
considerably increasing uncertainty about the overall level of inflation. Wednesday
brings figures for the balance of payments and exports for December. Denmark
continues to run a substantial current account surplus, although it has been pulled down
since the end of 2015 by a decline in the surplus on the balance of services, due largely
to falling freight rates and subdued world trade undermining earnings in the country’s
substantial shipping sector. Freight rates are quoted in US dollars, so the US dollar’s
appreciation over the past six months may give the surplus a bit of a boost. December
industrial production data are due out on Tuesday. Various technicalities have resulted
in some noise in recent months but the general trend has been upward.
In Sweden, the week ahead does not contain any data that normally has an effect on
financial markets. This is too bad, because both the household consumption indicator
and business sector production index have strong explanatory power for GDP
developments. As such, we expect them to post weakish consumption and strongish
production. After next week, we should have a clearer view on the Q4 16 GDP
outcome.
In Norway, core inflation fell surprisingly sharply in December on the back of lower
food prices. The annual rate of 2.5% was the lowest since May 2015 and 0.4pp less than
Norges Bank assumed in the December monetary policy report. We have long argued
that inflation will come down as the effects of the krone’s depreciation ease and
eventually reverse. However, we think the fall in December was due to seasonal
variations in food prices around Christmas and so we estimate a slight rebound in
January. We predict a moderate rise in core inflation to 2.6% y/y, with a slight risk to
the upside if anything. In contrast, we are not seeing any signs of lasting changes in
inflationary pressures, so we believe Norges Bank will be able to live with a bit of
volatility from month to month. Mainland GDP recovered gradually during 2016 but
growth is still modest, as headwinds from the oil shock persist. Based on the
stabilisation in unemployment rates, we are tempted to estimate that mainland growth
was at levels around trend growth in Q4, at around 0.5% q/q. However, the significant
drop in mainland exports implies a major drag on GDP. As a result, we estimate growth
in mainland GDP of 0.1 % q/q in Q4.
Well short of the 2% target
Source: Statistics Denmark
Pointing in different directions
Source: SCB, Riksbank. Danske Bank calculations
NOK-driven dip in inflation
Source: Macrobond Financial, Danske Bank
4 | 3 February 2017 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
Market movers ahead
Source: Bloomberg, Danske Bank Markets
Global movers Event Period Danske Consensus Previous
Fri 10-Feb 16:00 USD University of Michigan Confidence, preliminary Index Feb 97.5 97.8 98.5
Scandi movers
During the week
Mon 06-Feb 8:00 NOK Manufacturing production m/m|y/y Dec -0.1%|-4.2%
8:00 NOK Industrial production m/m|y/y Dec 0.5%|1.3%
Wed 08-Feb 9:30 SEK Household consumption m/m|y/y Dec 0.3%|3.3%
Thurs 09-Feb 8:00 NOK GDP (mainland) q/q 4th quarter 0.1% 0.2%
8:00 NOK GDP (total) q/q 4th quarter -0.5%
Fri 10-Feb 8:00 NOK Core inflation(CPI-ATE) m/m|y/y Jan …|2.6% -0.4%|2.5%
9:00 DKK CPI m/m|y/y Jan 0.1%|1.0% 0.0%|0.5%
5 | 3 February 2017 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
Global Macro and Market Themes
Self-defence or protectionism? Depends on who you ask
The past week provided few surprises. Data continues to look robust globally. The Fed
stands pat as it awaits Trump’s fiscal policy plans. Most markets moved mainly sideways.
The main exception was the USD, which continued to weaken following comments
from Donald Trump and his new head of the National Trade Council Peter Navarro. Both
of them lashed out at China, Germany and Japan, claiming they are using devaluations to
boost exports. Trump mentioned China for the first time since his inauguration when
he said: ‘Every other country lives on devaluation. You look at what China’s doing, you
look at what Japan has done over the years….They play the money market, they play the
devaluation market and we sit there like a bunch of dummies’. Navarro accused Germany
of using a ‘grossly undervalued currency’ to gain a competitive advantage and called the
euro an ‘implicit Deutsche Mark’.
In a market that is very long the USD these comments raised fears that Trump will
aim for a weaker USD. Exactly how he would do that is not very clear. A fiscal expansion
could instead lead to higher rates and push in the direction of a stronger USD. However,
rather than a weaker USD the response from Trump may be an import border tax that
punishes countries he sees a ‘cheating’ in the global game of trade. Peter Navarro has been
very vocal that Germany not only has an undervalued currency but also cheats through its
taxation system because it puts VAT on US imports, whereas German companies can
deduct their VAT when exporting to the US. Having a current account surplus of 8% of
GDP in Germany is seen as reflecting a mercantilist and protectionist policy by the
Trump camp.
Trump and his team very vocal about USD strength
Source: Macrobond Financial
Key points
USD weaker as Trump team
blames Germany, Japan and China
for devaluing currencies
We still look for stronger USD on
1-3M horizon
A trade war could be brewing –
self-defence if you ask Trump,
protectionism if you ask trade
partners
More upside in yields and equities
in the medium term
Germany and Japan big net savers
Source: Danske Bank Markets
6 | 3 February 2017 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
On the issue of an import border tax Peter Navarro said recently in an interview that it’s
early days and that they are looking at several ways to protect US manufacturing.
Heading for a trade war?
While the rest of the world is accusing Trump of protectionism, the view from the US
administration is one of self-defence from other countries’ protectionist and
mercantilist policies. After the release of Navarro’s book ‘Death by China’ in 2012
Navarro said to Bloomberg: ‘There’s a big difference between self-defence against unfair
trade practices and protectionism. The biggest protectionist in the world now is China’
(link to Bloomberg interview, 22 August 2012).
Following Chinese president Xi Jinping’s speech at World Economic Forum in Davos in
which Xi Jinping defended free trade and globalisation, the incoming Secretary of
Commerce Wilbur Ross said that China speaks a lot about free trade but is the most
protectionist of large countries. In the same hearing he said that countries that do not
‘play by the rules’ should ‘get punished – and severely’.
It seems increasingly clear that the Trump team will take action to get what they call
a more fair deal for the US. They will likely talk to their trading partners first to find a
way to level the playing field – as they would see it. But if they do not see a change in
practice from trade partners in Europe and China we should expect Trump to implement
some kind of border tax. This could be flexible and be different for different countries and
goods. Regardless of how it is constructed, it could result in a trade war with retaliation
measures from Europe and/or China.
China is watching Trump with increasing anxiety. In a China Daily Editorial – which
tends to represent the Communist Party view – it said on Thursday: ‘Trump seems to have
proved that his campaign rhetoric was not just empty promises’ and ‘China needs to cast
aside any illusions it may have had that Trump was just mouthing off to attract votes and
instead be prepared for the worst’. China will wait to see what is coming, but it will not sit
back and watch if Trump ends up taxing Chinese goods.
Still positive on the USD in the short term
As we wrote last week, our view on the USD is for it to strengthen over the coming 1-
3 months as we get more details on Trump’s fiscal policy plans. In addition, if Trump’s
response to what he sees as undervalued currencies elsewhere is an import border tax, this
would be USD positive as it would support US exports and hurt imports. Hence the market
may be misinterpreting what Trump’s comments actually mean for the USD, when the USD
moves weaker in response to his remarks. The labour market in the US also seems to be
tightening faster in early 2017 and the market may start to price a higher probability of
three hikes rather than two. Our medium and long-term view remains one of USD
weakness, though. Gravitational forces should pull it weaker as current account flows
strongly favour the euro area and the USD is overvalued on our medium-term valuation
models.
More upside in bond yields and equities in medium term
In the bond market we still look for yields to move higher on a six-month horizon. A
stronger US job market, a further rise in inflation and more details on US fiscal plans,
should work in favour of higher yields. The sharp rise in euro area inflation from 1.1% in
The Trump camp sees weak US
manufacturing as a reflection of failed
US trade policies
Source: Danske Bank Markets
Manufacturing share much lower than
other high-tech nations
Source: Danske Bank Markets
EUR/USD lower – then higher
Source: Danske Bank Markets
German yields catching up with US
Source: Danske Bank Markets
7 | 3 February 2017 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
December to 1.8% in January week may also give some fuel to a tapering discussion in the
euro area – even if it was driven by food and energy. Interestingly yields were lower this
week despite good economic news, which may reflect that the market is already positioned
for higher yields. Nevertheless eventually, we believe fundamentals will win and push bond
yields higher. Some patience may be needed, though.
Similarly, stock markets are in a wait-and-see mode. The failure to show further increases
despite strong data (US ISM rose further this week) may also reflect that the market is
overweight equities. We may be in a waiting mode a bit longer but ultimately we expect
Trump’s tax plans and deregulation to give a boost to US equity markets.
The big unknown is of course if and when we could see a trade war involving the US
and China – and possibly other nations. Judging from comments from the incoming
Treasury Secretary Steven Mnuchin the US will use the annual US-China Strategic and
Economic Dialogue (SED) to get a new deal with China. This normally takes place in June
or July. House Speaker and Republican Paul Ryan told Fox News that the focus will be on
overhauling health care ahead of fiscal budget planning during spring. The Trump
administration will probably have its hands full with these things and wait for the SED to
talk to China. Hence it may take some time before we are wiser in this area, but it should
be watched carefully.
Global market views
Source: Danske Bank Markets
Asset class Main factors
Equities
Overweight stocks short and medium term Global recovery and Trump's fiscal boost support equities.
Underweight DM , overweight EM
Overweight US, Japan, Nordics and Russia/Eastern Europe; underweight Europe and LatAm; neutral on
China
Bond market
Higher yields, further steepening 2Y10Y curve
US-euro spread: slightly wider in 2017
Peripheral spreads: tightening, but clear risk factors to watch
Credit spreads: neutral
FX
EUR/USD – lower over coming months on momentum, relative rates USD set to remain supported by Trump and the Fed in the near term. EUR/USD to head higher beyond 3M .
EUR/GBP – risk skewed on the upside in run-up to when the UK is likely to trigger Article 50 Longer term, we expect EUR/GBP to settle in the 0.83-0.88 range. Short-term risk skewed to the upside on 'hard' Brexit risks.
USD/JPY – short-term risks skewed to upside on higher US rates USD/JPY set to remain supported near term by relative monetary policy and risk appetite.
EUR/SEK – range near term after recent decline, gradually lower medium term Gradually lower on relative fundamentals and valuation in 2017 but near-term potential limited.
EUR/NOK – gradually lower, but technicals are near-term support factors Cross set to move lower on valuation and growth, real rate differentials normalising.
Commodities
Oil price – OPEC hesitant about extending deal through H2, crude stocks remain high Support from positive growth and inflation sentiment; near-term focus implementation of OPEC deal, US crude stocks.
M etal prices – focus turns to Trump's plans on infrastructure and defence spending Underlying support from consolidation in mining industry; recovery in global manufacturing and US fiscal spending.
Gold price – hawkish Fed weighing on gold price Rising yields and USD pushing gold price down.
Agriculturals – abundant supply keeping a lid on prices Attention has turned to La Niña weather risks over the winter, consolidation seen in some parts of the market.
M ore expansive fiscal policy in the US and the Fed outlook add to the steepening trend in Europe. Higher inflation prints in Q1, tapering
fears later in 2017 and a global recovery also point to a steeper curve. However, the ECB's QE mitigates some of the effects.
The US FI market is now more or less priced according to our view for 2017 and after the recent spike in US yields the upside potential for
the next three months should be limited. As we move further into 2017 we could in fact see a tightening of the USD-EUR spread in the 10Y
segment as the strong USD caps the upside for longer US yields and as an end to ECB QE is coming closer.
Economic recovery and QE should mean further tightening, but politics, banking recapitalisation plans and a potential new move higher in
eurozone yields remain clear risk factors. Periphery spreads often widen when core yields move higher.
Stock markets treading water
Source: Danske Bank Markets
8 | 3 February 2017 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
Scandi Update
Denmark – Nationalbank did not intervene in January
January was a quiet month for the krone without any intervention in the currency market
by the central bank. Otherwise, the week's confidence data for January showed December's
budding optimism has continued into the New Year, with rises in both the services and
construction indicators. Although there was a slight dip in manufacturing confidence, it
remains at healthy levels relative to the past 2.5 years. Unemployment edged up from 4.2%
in November to 4.3% in December but this was due to an increase in the labour force rather
than a decrease in employment. The rise in the jobless rate was driven particularly by
immigrants previously on integration benefit being declared available to work and so
classified as unemployed. Since September, this effect in isolation has pushed up gross
unemployment by 5,100 FTEs. Finally, housing prices fell 0.9% in November. This is a
relatively big drop, but it has to be borne in mind that prices normally fall in November, so
the true picture is probably that prices were flat and have been since the summer.
Sweden – diverging data
Indeed, Swedish data has by and large been very strong over the past few weeks. That said,
the strength is confined mainly to survey data such as PMI and BCI, with the past week’s
data proving to be no exception. Real data such as industrial production, retail sales etc. has
not proved as buoyant. In particular, retail sales data has proved to be a disappointment.
With the above in mind, we can make a first – uncertain – estimate for Q4 16 GDP growth,
due to be released on 28 February. According to our preliminary – uncertain – calculations,
GDP growth could come in as low as 1% y/y. This would be nothing less than shockingly
low. We will monitor these developments closely over the next few weeks.
Norway – manufacturing downturn coming to an end
Two indicators during the week suggest that the oil-driven downturn in Norwegian
manufacturing may be coming to an end. Statistics Norway's confidence indicator for Q4
climbed to -0.4, its highest since Q3 14. Although the underlying data reveals there is a still
negative outlook in some oil-related industries, the main indices suggest that manufacturing
activity as a whole is bottoming out after falling for more than two years. The PMI for
January, meanwhile, points to continued moderate improvement in the first part of 2017.
What is particularly encouraging is that the employment index climbed above 50, signalling
increased employment in manufacturing for the first time in 25 months.
No currency intervention in January
Source: Danmarks Nationalbank
Surprisingly weak activity during Q4?
Source: Macrobond Financial, Danske Bank
calculations.
Manufacturing outlook improving
Source: Macrobond Financial, Danske Bank
Markets
9 | 3 February 2017 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
Latest research from Danske Bank Markets
3/2 CNB Review: CNB revises inflation forecast up significantly
The CNB has revised its inflation forecast up significantly, raising the risk of an exit from
the EUR/CZK floor as early as Q2 17
2/2 Bank of England Review: BoE maintains neutral bias despite increasing inflation
As widely expected, the Bank of England (BoE) made no policy changes at its February
meeting.
1/2 CBR rate decision preview: no cut on looming FX purchases
We expect the Central Bank of Russia (CBR) to hold the key rate unchanged on 3 February,
while the main focus will be on the statement’s tone in light of planned FX purchases by
the Ministry of Finance (Minfin).
1/2 FOMC review: No major changes to the FOMC statement
As expected, the Fed maintained the target range unchanged at 0.50%-0.75% and made no
major changes to the FOMC statement.
31/1 Euro area inflation surprises on the upside - will core inflation follow the upward
trend?
Euro area inflation increased to 1.8% y/y in January, which is the highest rate since
February 2013 and above consensus at 1.5% y/y.
10 | 3 February 2017 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
Macroeconomic forecast
Source: OECD and Danske Bank. 1) % y/y. 2) % contribution to GDP growth. 3) % of labour force. 4) % of GDP.
Macro forecast, Scandinavia
Denmark 2016 1.0 1.8 1.3 3.9 -0.4 0.1 1.3 0.3 4.2 -1.7 38.0 7.42017 1.5 1.6 1.0 3.2 0.2 2.2 3.4 1.3 4.1 -1.3 37.2 7.32018 1.8 2.0 0.5 3.7 0.1 2.7 3.4 1.5 3.9 -0.7 36.2 7.3
Sweden 2016 3.3 2.1 3.5 6.5 0.2 3.1 4.3 1.0 7.0 -0.6 42.0 4.62017 1.7 1.5 2.0 1.9 -0.1 3.5 3.4 1.3 7.2 -0.7 41.8 4.52018 1.9 2.0 1.3 2.1 0.1 4.1 4.4 1.4 7.1 -0.5 40.7 4.5
Norway 2016 0.8 1.5 2.3 -0.3 0.2 -1.5 1.0 3.6 3.0 - - -2017 1.8 2.0 2.0 1.0 0.0 1.3 1.9 2.2 3.0 - - -2018 2.2 2.2 2.3 2.5 0.0 1.3 2.3 2.1 3.0 - - -
Macro forecast, Euroland
Euroland 2016 1.7 1.7 1.9 3.0 - 2.3 3.0 0.2 10.1 -1.8 91.6 3.72017 1.5 1.1 1.2 2.7 - 3.0 3.1 1.6 9.5 -1.5 90.6 3.52018 1.5 1.1 1.1 3.6 - 3.6 4.0 1.2 9.1 -1.5 89.6 3.3
Germany 2016 1.8 1.7 4.2 2.1 - 2.3 3.0 0.4 4.3 0.6 68.1 9.02017 1.9 1.4 2.2 2.0 - 3.3 3.1 1.8 4.1 0.4 65.7 8.72018 1.9 1.4 1.8 4.0 - 4.0 4.8 1.5 4.1 0.3 63.1 8.5
France 2016 1.1 1.7 1.5 2.8 - 0.8 3.5 0.3 10.1 -3.3 96.4 -2.12017 1.0 0.8 1.2 2.1 - 2.8 3.6 1.2 10.0 -2.9 96.8 -2.32018 1.2 1.0 1.1 3.0 - 3.0 3.5 1.3 9.8 -3.1 97.4 -2.6
Italy 2016 0.9 1.4 0.6 2.0 - 1.3 1.7 -0.1 11.6 -2.4 133.0 2.82017 1.0 0.7 0.6 2.1 - 3.3 3.3 1.2 11.5 -2.4 133.1 2.52018 1.3 0.8 0.7 3.6 - 3.5 3.5 1.2 11.4 -2.5 133.1 2.1
Spain 2016 3.2 3.0 1.3 3.6 - 4.0 3.0 -0.3 19.7 -4.6 99.5 1.72017 2.3 2.1 1.4 2.9 - 2.6 2.1 1.8 18.3 -3.8 99.9 1.52018 2.3 2.0 1.3 4.7 - 3.6 4.6 1.1 17.1 -3.2 100.0 1.5
Finland 2016 1.6 2.2 0.2 3.0 - 0.8 1.5 0.4 8.8 -2.5 65.0 -0.72017 1.3 0.8 0.0 3.5 - 3.0 2.5 1.3 8.3 -2.4 66.5 -0.72018 1.3 1.0 0.2 2.5 - 3.5 3.0 1.5 8.0 -2.2 67.0 -0.7
Macro forecast, Global
USA 2016 1.6 2.6 0.8 0.4 -0.4 0.7 0.7 1.3 4.9 -2.6 105 -2.72017 2.2 2.2 0.6 2.8 0.1 3.2 2.3 2.4 4.7 -2.9 105 -2.92018 2.8 2.0 2.9 6.1 0.0 3.0 3.0 2.5 4.4 -2.8 103 -3.3
China 2016 6.7 - - - - - - 2.0 4.1 -3.0 46.3 2.42017 6.6 - - - - - - 2.0 4.3 -3.3 49.9 2.12018 6.3 - - - - - - 2.0 4.3 -3.0 53.3 1.5
UK 2016 2.0 2.8 0.8 0.9 0.5 1.0 2.7 0.7 4.9 -3.6 88.7 -5.02017 1.2 1.7 0.2 0.3 0.3 1.7 2.4 2.3 5.0 -2.9 89.2 -4.92018 1.0 1.0 0.4 0.7 0.0 2.8 2.0 2.6 5.3 -2.2 88.7 -3.3
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
11 | 3 February 2017 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
Financial forecast
Source: Danske Bank Markets
Bond and money markets
Currencyvs USD
Currencyvs DKK
USD 03-Feb - 691.3
+3m - 708.1
+6m - 688.9+12m - 664.3
EUR 03-Feb 107.6 743.8
+3m 105.0 743.5
+6m 108.0 744.0+12m 112.0 744.0
JPY 03-Feb 113.1 6.11
+3m 118.0 6.00
+6m 118.0 5.84+12m 118.0 5.63
GBP 03-Feb 125.2 865.4
+3m 119.3 844.9
+6m 125.6 865.1+12m 130.2 865.1
CHF 03-Feb 99.4 695.9
+3m 101.9 694.9
+6m 101.9 676.4+12m 100.9 658.4
DKK 03-Feb 691.3 -
+3m 708.1 -
+6m 688.9 -+12m 664.3 -
SEK 03-Feb 875.3 79.0
+3m 895.2 79.1
+6m 861.1 80.0+12m 821.4 80.9
NOK 03-Feb 824.9 83.8
+3m 847.6 83.5
+6m 814.8 84.5+12m 776.8 85.5
Equity Markets
Regional
Price trend12 mth
Regional recommen-dations
USA (USD) Growth boost: fisc. expansion, tax cuts, infl./growth-impulse 10-15% Overweight
Emerging markets (local ccy) Hurt by stronger USD and increased protectionism -5-+5% Underweight
Japan (JPY) Valuation and currency support 10-15% Overweight
Euro area (EUR) Weaker growth and EPS momentum than USA 0-5% Underweight
UK (GBP) Currency support, stronger infl. exp. o ff-set Brexit negativity 5-10% NeutralNordics (local ccy) Currency support on earnings, continued domestis demand 5-10% Neutral
Commodities
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2017 2018
NYMEX WTI 51 53 57 59 60 60 61 61 55 61
ICE Brent 53 55 57 59 60 60 61 61 56 61
Copper 5,850 5,900 5,950 6,000 6,025 6,050 6,075 6,100 5,925 6,063
Zinc 2,700 2,400 2,200 2,200 2,225 2,250 2,275 2,300 2,375 2,263
Nickel 10,500 11,000 11,400 11,500 11,600 11,700 11,800 11,900 11,100 11,750
Aluminium 1,770 1,760 1,770 1,780 1,790 1,800 1,810 1,820 1,770 1,805
Gold 1,150 1,100 1,140 1,160 1,170 1,180 1,190 1,200 1,138 1,185
Matif Mill Wheat (€/t) 170 164 168 170 170 169 168 168 168 169
Rapeseed (€/t) 430 440 440 430 425 425 425 425 435 425
CBOT Wheat (USd/bushel) 435 465 500 510 520 530 540 550 478 535CBOT Soybeans (USd/bushel) 1,050 1,100 1,100 1,100 1,125 1,125 1,150 1,150 1,088 1,138
Average
1.03
-0.33
0.00
0.36
413
-0.60
-0.73
-
--
-0.20
-0.20
-0.20
1.12
1.251.52
-0.35
-0.35
-
-
Key int.rate
0.75
0.75
1.001.25
0.50
-0.75
0.00
0.00
-0.10-0.10
0.25
0.50
-0.50
0.25
-0.50-0.50
0.00
0.25
-
-0.60
10-yr swap yield
-0.55
0.05
0.050.05
3m interest rate
1.00
0.00
-0.10
0.25
-0.75
0.05
-0.35
0.40
0.400.40
0.50
0.50
1.00
-0.75-0.75
-0.50
-0.10
-0.23
1.752.15
0.65
0.700.60
-
-
1.30
-0.30
-
1.25
0.10
0.100.20
-
--
-0.28
-0.40
1.40
-0.35
1.271.00
1.00
-0.60
107.6
-
-
--
121.7
743.5
744.0744.0
941.7
887.5
870.0
940.0
880.0
930.0920.0
890.0
106.9
743.8
88.0
86.0
107.0
110.0113.0
105.0
108.0112.0
123.9
127.4132.2
Currencyvs EUR
2-yr swap yield
Risk profile3 mth
Price trend3 mth
2.40
2.40
2.50
1.51
-0.15
0.05
0.67
-0.65
0.04
-0.10
-0.100.00
1.45
85.9
2.90
86.0
1,214
170
57
1,829
2017
03-Feb
54
10,395
5,886
2,851
2018
Medium
Medium
Medium 5 -10%
Medium 5 -10%
-5 -0%
0 -5%
Medium 3-8%Medium 3 -8%
0.80
0.901.30
-
--
1.44
1.40
0.29
1,040433
0.82
1.201.60
2.03
1.90
2.00
1.501.75
0.21
-
--
2.40
1.151.55
1.10
1.23
1.20
1.09
12 | 3 February 2017 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
Calendar
Source: Danske Bank Markets
Key Data and Events in Week 6
During the week Period Danske Bank Consensus Previous
Monday, February 6, 2017 Period Danske Bank Consensus Previous
1:00 JPY Labor cash earnings y/y Dec 0.4% 0.5%
8:00 NOK Manufacturing production m/m|y/y Dec -0.1%|-4.2%
8:00 NOK Industrial production m/m|y/y Dec 0.5%|1.3%
8:00 DEM Factory orders m/m|y/y Dec 2.0%|… 0.5%|4.1% -2.5%|3.0%
9:00 DKK Forced sales (s.a.) Number Jan
9:00 DKK Bankruptcies (s.a.) Number Jan
10:30 EUR Sentix Investor Confidence Index Feb 19.0 16.5 18.2
22:30 USD Fed's Harker (voter, hawkish) speaks
Tuesday, February 7, 2017 Period Danske Bank Consensus Previous
- CNY Foreign exchange reserves USD bn Jan 3000 3010.5
2:45 CNY Caixin PMI service Index Jan 53.4
4:30 AUD Reserve Bank of Australia rate decision % 1.5% 1.5% 1.5%
6:00 JPY Leading economic index, preliminary Index Dec 105.5 102.8
8:00 DEM Industrial production m/m|y/y Dec -0.4%|… 0.4%|2.5% 0.4%|2.2%
9:00 DKK Industrial production m/m Dec 6.6%
9:00 CHF SNB balance sheet, intervention CHF bn Jan 645.3
9:30 SEK Budget balance SEK bn Jan -75.2
14:30 USD Trade balance USD bn Dec -45.0 -45.2
17:35 EUR ECB's Weidmann speaks in Mainz
21:00 USD Consumer credit USD bn Dec 20.0 24.5
Wednesday, February 8, 2017 Period Danske Bank Consensus Previous
- GBP House of Commons to hold final vote on Article 50 bill
- PLN Polish central bank rate decision % 1.5% 1.5% 1.5%
9:00 DKK Trade balance ex ships DKK bn Dec 5.7
9:00 DKK Exports m/m Dec
9:00 DKK Current account (nsa|sa) DKK bn Dec ...|16.7
9:30 SEK Household consumption m/m|y/y Dec 0.3%|3.3%
16:30 USD DOE U.S. crude oil inventories K 6466
21:00 NZD Reserve Bank of New Zealand (cash rate decision) % 1.8% 1.8% 1.8%
Thursday, February 9, 2017 Period Danske Bank Consensus Previous
1:01 GBP RICS house price balance Index Jan 0.2 0.2
7:45 CHF Unemployment % Jan 3.3%
8:00 NOK GDP (mainland) q/q 4th quarter 0.1% 0.2%
8:00 NOK GDP (total) q/q 4th quarter -0.5%
8:00 DEM Trade balance EUR bn Dec 19.7 22.7
9:30 SEK Average house prices SEK m Jan 2.887
14:30 USD Initial jobless claims 1000 246
15:10 USD Fed's Bullard (non-voter, dove) speaks
19:10 USD Fed's Evans (voter, dovish) speaks
13 | 3 February 2017 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
Calendar — continued
Source: Danske Bank Markets
Friday, February 10, 2017 Period Danske Bank Consensus Previous
- ITL Moody's may publish Italy's debt rating
- EUR Moody's may publish France's debt rating
- EUR Moody's may publish Italy's debt rating
- CNY Trade balance USD bn Jan 58.9 40.7
- FRF Moody's may publish France's debt rating
- CNY Money supply M2 y/y Jan 11.3% 11.3%
- CNY Aggregate financing CNY bn Jan 3085 1626
1:30 AUD RBA Statement of Monetary Policy
8:00 NOK Core inflation(CPI-ATE) m/m|y/y Jan …|2.6% -0.4%|2.5%
8:00 NOK CPI m/m|y/y Jan -0.5%|3.5%
8:00 NOK PPI m/m|y/y Jan 5.1%|7.2%
8:45 FRF Industrial production m/m|y/y Dec 2.2%|1.8%
9:00 DKK CPI m/m|y/y Jan 0.1%|1.0% 0.0%|0.5%
10:30 GBP Construction output m/m|y/y Dec 1.0%|-0.4% -0.2%|1.5%
10:30 GBP Industrial production m/m|y/y Dec -0.2%|2-9% 2.1%|2.0%
10:30 GBP Manufacturing production m/m|y/y Dec 0.2%|1.6% 1.3%|1.2%
10:30 GBP Trade balance GBP mio. Dec -3500 -4167
11:00 EUR ECB's Weidmann speaks in Hamburg
14:30 USD Import prices m/m|y/y Jan 0.4%|3.5% 0.4%|1.8%
14:30 CAD Net change in full time employment 1000 Jan 81.3
16:00 USD University of Michigan Confidence, preliminary Index Feb 97.5 97.8 98.5
16:00 GBP NIESR GDP estimate q/q Jan 0.5%
20:00 USD Budget statement USD bn Jan 33.0 -27.5
The editors do not guarantee the accurateness of figures, hours or dates stated above
For furher information, call (+45 ) 45 12 85 22.
14 | 3 February 2017 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 author of the research report is Louise Aggerstrøm Hansen, Senior Analyst.
Analyst certification
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
of the research analyst was, is or will be, directly or indirectly, related to the specific recommendations expressed
in the research report.
Regulation
Danske Bank is authorised and subject to regulation by the Danish Financial Supervisory Authority and is subject
to the rules and regulation of the relevant regulators in all other jurisdictions where it conducts business. Danske
Bank is subject to limited regulation by the Financial Conduct Authority and the Prudential Regulation Authority
(UK). Details on the extent of the regulation by the Financial Conduct Authority and the Prudential Regulation
Authority are available from Danske Bank on request.
The research reports of Danske Bank are prepared in accordance with the recommendations of the Danish Securities
Dealers Association.
Conflicts of interest
Danske Bank has established procedures to prevent conflicts of interest and to ensure the provision of high-quality
research based on research objectivity and independence. These procedures are documented in Danske Bank’s
research policies. Employees within Danske Bank’s Research Departments have been instructed that any request
that might impair the objectivity and independence of research shall be referred to Research Management and the
Compliance Department. Danske Bank’s Research Departments are organised independently from and do not report
to other business areas within Danske Bank.
Research analysts are remunerated in part based on the overall profitability of Danske Bank, which includes
investment banking revenues, but do not receive bonuses or other remuneration linked to specific corporate finance
or debt capital transactions.
Financial models and/or methodology used in this research report
Calculations and presentations in this research report are based on standard econometric tools and methodology as
well as publicly available statistics for each individual security, issuer and/or country. Documentation can be
obtained from the authors on request.
Risk warning
Major risks connected with recommendations or opinions in this research report, including a sensitivity analysis of
relevant assumptions, are stated throughout the text.
Expected updates
None.
Date of first publication
See the front page of this research report for the date of first publication.
General disclaimer This research has been prepared by Danske Bank Markets (a division of Danske Bank A/S). It is provided for
informational purposes only. It does not constitute or form part of, and shall under no circumstances be considered
as, an offer to sell or a solicitation of an offer to purchase or sell any relevant financial instruments (i.e. financial
instruments mentioned herein or other financial instruments of any issuer mentioned herein and/or options,
warrants, rights or other interests with respect to any such financial instruments) (‘Relevant Financial Instruments’).
The research report has been prepared independently and solely on the basis of publicly available information that
Danske Bank considers to be reliable. While reasonable care has been taken to ensure that its contents are not untrue
or misleading, no representation is made as to its accuracy or completeness and Danske Bank, its affiliates and
subsidiaries accept no liability whatsoever for any direct or consequential loss, including without limitation any
loss of profits, arising from reliance on this research report.
The opinions expressed herein are the opinions of the research analysts responsible for the research report and
reflect their judgement as of the date hereof. These opinions are subject to change, and Danske Bank does not
undertake to notify any recipient of this research report of any such change nor of any other changes related to the
information provided in this research report.
This research report is not intended for, and may not be redistributed to, retail customers in the United Kingdom or
the United States.
This research report is protected by copyright and is intended solely for the designated addressee. It may not be
reproduced or distributed, in whole or in part, by any recipient for any purpose without Danske Bank’s prior written
consent.
15 | 3 February 2017 www.danskeresearch.com
Weekly Fo
cus
Weekly Focus
Disclaimer related to distribution in the United States This research report was created by Danske Bank A/S and is distributed in the United States by Danske Markets
Inc., a U.S. registered broker-dealer and subsidiary of Danske Bank A/S, pursuant to SEC Rule 15a-6 and related
interpretations issued by the U.S. Securities and Exchange Commission. The research report is intended for
distribution in the United States solely to ‘U.S. institutional investors’ as defined in SEC Rule 15a-6. Danske
Markets Inc. accepts responsibility for this research report in connection with distribution in the United States solely
to ‘U.S. institutional investors’.
Danske Bank is not subject to U.S. rules with regard to the preparation of research reports and the independence of
research analysts. In addition, the research analysts of Danske Bank who have prepared this research report are not
registered or qualified as research analysts with the NYSE or FINRA but satisfy the applicable requirements of a
non-U.S. jurisdiction.
Any U.S. investor recipient of this research report who wishes to purchase or sell any Relevant Financial Instrument
may do so only by contacting Danske Markets Inc. directly and should be aware that investing in non-U.S. financial
instruments may entail certain risks. Financial instruments of non-U.S. issuers may not be registered with the U.S.
Securities and Exchange Commission and may not be subject to the reporting and auditing standards of the U.S.
Securities and Exchange Commission.