Friday December 5, 2014 - 16:32:19 GMT
Share This Story
Lloyds TSB Financial Markets - www.lloydstsb.com/corporatemarkets
ECONOMIC DATA ANALYSIS - TLTRO2 WATCHED FOR SIGNS OF THE EFFECTIVENESS OF ECB POLICY ACTIONS
ANALYSIS FRIDAY 5 DECEMBER 2014
WATCHED FOR SIGNS OF THE EFFECTIVENESS OF ECB POLICY ACTIONS
of second TLTRO tranche will affect expectations of further ECB actions
purchases to boost US retail sales but lower oil price to hold down
Chinese data may provide trigger for further monetary policy easing
policy will again be the centre of attention next week with
the results of the second TLTRO. Key data in China will drive expectations of
the likelihood of further interest rate cuts and whether the demand for
commodities will continue to slide. In the US, November retail sales will
provide a reading on early Christmas shopping, while Congress has to agree on a
debt ceiling extension by Thursday to avoid another government shutdown.
Meanwhile, the first official UK data for the final quarter will provide some
initial evidence on whether Q4 GDP growth is holding up.
second tranche of the ECB’s TLTRO programme (Thurs) is expected to
be more widely taken up than September’s initial offering. The first operation
totalled just €82.6bn, less than a quarter of the €400bn that the ECB had
indicated was available over the two dates. The take-up is expected to be a lot
higher this time. We estimate a likely figure of around €200bn, somewhat in
excess of the consensus expectation of €150bn. Whether this is enough to
satisfy the ECB is unclear, but it will also be assessing the impact of its
current purchases of covered bonds and ABS. At his press conference following the
ECB’s latest policy meeting, President Draghi stated they would review policy
early next year once they had more indication of the impact of the measures
announced so far. The indications are that he has more work to do to build a
consensus on the Board for further action, in particular, for sovereign QE.
Chinese economic data over the coming week
include November inflation, retail sales, fixed investment and industrial
production. Most, if not all, of these are likely to signal a further slowing
in both inflation and economic activity from October. This may force the
Chinese authorities to consider further monetray policy easing even before year
end or by early next year at the latest. Indeed the recent, probably unwanted
tightening in market interest rates may already be pushing them in that
direction. There is also a risk that signs of weaker growth in the world’s
largest energy consumer will push oil prices even lower. Nevertheless, we still
expect a modest recovery in oil prices next year.
In the US, November retail sales (Thurs)
are likely to be seen as the data highlight of the week. Despite evidence that
US economic growth is accelerating, retail sales have been relatively
disappointing in the second half of the year. The signs are that this continued
to be the case in November. Dealers’ reports suggest that car sales were up
strongly, but initial indications suggest that “Black Friday” high street sales
disappointed. As the retail sales series is not adjusted for inflation, it will
also be held down by the fall in gasoline prices during the month. We expect a
solid monthly rise of 0.4%. Otherwise the most interesting data for the week
may be the October JOLTS measure of labour market turnover (Tues), a known
favourite of Fed Chair Yellen. This is expected to show further labour market
tightening. Politics could also impact on markets, as Congress must take action
to extend the compromise on the debt ceiling by Thursday to avoid a government
shutdown. They will probably do so, but the compromise may be short term until
the new Congress meets early next year.
It is a relatively quiet week in the UK. However,
industrial production (Tues), international trade (Wed) and construction output
(Fri) will provide the first official readings on economic activity in
the early part of Q4. All are expected to confirm the firm tone
noted in the PMIs recently and point to solid rises in activity, suggesting
that GDP growth in Q4 will be close to the 0.7% rise seen in Q3.
This document, its
contents and any related communication (altogether, the 'Communication') does
not constitute or form part of any offer to sell or an invitation to subscribe
for, hold or purchase any securities or any other investment. This
Communication shall not form the basis of or be relied on in connection with
any contract or commitment whatsoever. This Communication is not intended to
form, and should not form, the basis of any investment decision. This Communication
is not and should not be treated as investment research, a research
recommendation, an opinion or advice. Recipients should conduct their own
independent enquiries and obtain their own professional legal, regulatory, tax
or accounting advice as appropriate. Any transaction which a recipient of this
Communication may subsequently enter into may only be on the basis of such
enquiries and advice, and that recipient’s own knowledge and experience. This
Communication has been prepared by, and is subject to the copyright of, Lloyds.
This Communication may not, in whole or in part, be reproduced, transmitted,
stored in a retrieval system or translated in any other language in any form,
by any means without the prior written consent of Lloyds. This Communication is
provided for information purposes only, and is confidential and may not be
referred to, disclosed, reproduced or redistributed, in whole or in part, to
any other person. This Communication is based on current public information.
Whilst Lloyds TSB ank plc (“Lloyds TSB”) and
Bank of Scotland plc ("Bank of Scotland") have exercised reasonable
care in preparing this material and any views or information expressed or
presented are based on sources it believes to be accurate and reliable, no
representation or warranty, express or implied, is made as to the accuracy,
reliability or completeness of the facts and data contained herein.
This material has been
prepared for information purposes only and Lloyds TSB, Bank of Scotland, their
directors, officers and employees are not responsible for any consequences
arising from any reliance upon such information. Under no circumstances should
this material be treated as an offer or solicitation to offer, to buy or sell
any product or enter into any transaction. If you receive information from us
which is inconsistent with other information which you have received from us,
you should refer this to your Lloyds TSB or Bank of Scotland Relationship
Manager for clarification.
Lloyds Bank Corporate
Markets, Lloyds TSB Corporate Markets and Lloyds TSB are trading names of
Lloyds TSB Bank plc, Lloyds TSB Scotland plc and Bank of Scotland plc. Lloyds
TSB Bank plc. Registered Office: 25
Gresham Street, London EC2V 7HN. Registered in England and Wales no. 2065.
Lloyds TSB Scotland plc. Registered Office: Henry Duncan House, 120 George Street, Edinburgh EH2 4LH.
Registered in Scotland
no. 95237. Bank of Scotland plc. Registered Office: The Mound, Edinburgh EH1 1YZ. Registered in Scotland no.
SC32700. Authorised and regulated by the Financial Services Authority under
registration numbers 119278, 191240 and 169628 respectively.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."