Top Economic Reports
June 04, 2013
By Global Economic Team|
U.S. Economics: Fed Focus: At the Movies with Ben Bernanke: We believe the Fed is going to need to see four employment reports averaging net gains in nonfarm payrolls of at least 200,000 to justify reducing the pace of its asset purchases. The arithmetic of the calendar would then put the earliest date of tapering/tightening in September, which conveniently for the Fed is a meeting followed by a press conference. Vincent Reinhart.
Sunday Start: What Next in the Global Economy (MAY 26, 2013): The participants in our memorable Florence CIO Summit last weekend had barely returned to their offices in the world's financial centres when their biggest concern seemed to be materializing much earlier than expected. As I described last Sunday, the Florence iniziati, while being fairly downbeat on global growth, confessed to have surrendered to the lure of liquidity and were upbeat on risky assets. Given the bullish positioning, their main concern was naturally about the ‘if, when and how' of the exit from ueber-expansionary monetary policies. And so, almost as if he had heard about the Florence consensus, along came Ben Bernanke on Wednesday and rattled global financial markets by testifying that the Fed could dial down the pace of purchases ‘in the next few meetings'. Joachim W Fels.
Asia Pacific Economics: Rise in Real Rates - What Does It Mean For AXJ? Decline in AXJ excess savings - A systematic trend: While AXJ's excess savings (savings less investment or current account balance) had been steadily increasing in the years before the credit crisis, rising to a peak of 7.2% of GDP in 2007, the trend has been reversing post credit crisis period. Chetan K Ahya.
Japan Macro Hour: The Growing Pains of Abenomics:
BoJ rhetoric changes suggest progress in reducing market volatility, but not immediately.
Real yields are likely to converge across countries. Different economic scenarios imply different combinations of nominal yield and inflation rate changes.
The JGB market is torn between lower risk premia from lower net bond supply to the market vs. higher risk premia from higher volatility.
If world equities are indeed normalizing from a liquidity market eventually to an earnings market, then Japan equities are likely to enter a transition phase of stagnation in an interim "reverse-liquidity" market. The length of the transition phase will depend on the speed of progress in Abenomics.
Media headlines on Japan growth strategy will likely disappoint investors, but the details are better than the headlines. Progress will be more apparent in the autumn.
Key events over the next few months include the June growth and fiscal reports, the July Upper House election, the August social security reform report, and the October decision on implementing the consumption tax hike. Robert Alan Feldman
China Economics: Reading the Policy Tea Leaves (5-13): Detailed Reform Measures Tied to Ministries?: State Council approved the NDRC suggestions on deepening economic reforms in multiple areas in 2013. As the follow-up to the State Council announcement on May 6, this document included more details on reform measures in areas ranging from fiscal budget to urbanization. Helen Qiao, Yuande Zhu, Yin Zhang.
U.S. Economics: Consumer Confidence:
* Much better than expected report, with the Conference Board's consumer confidence index jumping another 7 points in May to 76.1 after a 7-point rebound in April from a soft March result.
*In a positive sign for the upcoming employment report, the percentage of respondents saying jobs are currently "plentiful" rose to 10.8% from 9.7%, and the percentage saying jobs are "hard to get" fell to 36.1% from 36.9%.
* In addition to the improved assessment of current labor market conditions, views of current business conditions (net -7.2% good v. bad compared to -10.1% last month), expectations for job growth in the next six months (net -2.9% v. -7.5%) and expectations for business conditions in six months (net 7.1% v. 2.4%) all improved significantly. Expectations for income growth (net 1.3% v. 0.9%) showed less improvement as consumer continue to deal with higher taxes. Ted Wieseman.
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