Friday December 19, 2014 - 18:27:16 GMT
Share This Story
Lloyds TSB Financial Markets - www.lloydstsb.com/corporatemarkets
ECONOMIC DATA ANALYSIS - GLOBAL UPSWING TO CONTINUE IN 2015
ANALYSIS FRIDAY 19 DECEMBER 201
GLOBAL UPSWING TO CONTINUE IN 2015
- Data releases likely to keep
markets interested throughout festive period
- Falling oil price expected to boost
global growth in 2015
- US and UK policy rates set to rise
in 2015, while ECB could embark on QE in Q1
the upcoming seasonal slowdown in the pace of new economic data there are still several
noteworthy releases for markets to chew over, especially given the backdrop of
the current softness of oil prices. For the US, these include the third
estimate of Q3 GDP, which we expect to be revised upwards to an
annualised 4.3% on the back of stronger household spending and
inventories, as well as November PCE inflation, durable goods
orders and several housing market indicators. Elsewhere, euro area money supply
figures for November and consumer confidence (Dec), as well as December Chinese
manufacturing PMIs will be watched for signs of underlying momentum. On the
domestic front, the final estimate of UK Q3 GDP is expected to show a 0.8%
will take the opportunity to take stock of several
contrasting impulses on global activity which are likely to linger well
into 2015. On the downside are deflationary pressures in the euro
area, intensified geopolitical tensions, and a challenging outlook for
several important emerging markets. However, robust US activity, as
well as the fall in crude oil prices, which we see as being primarily supply-side
driven, are helping to support global growth. The net boost to worldwide
spending arising from the decline in oil prices, which is akin to a tax
cut for oil importers, is expected to raise global growth to 3.4% in 2015,
after a projected 3.2% outturn this year. In particular, growth will rise in
the major developed economies, while momentum slows across emerging markets,
notably in China. Russian GDP is expected to contract by 3.6% next year.
Fed and BoE are both expected to raise their policy rates during 2015.
The recent fall in oil prices is anticipated to push headline inflation
in both the US and UK below 1% over the next few months. However, both central
banks are likely to focus on the robust pace of economic growth and falls in
unemployment as signalling a rapid narrowing in the amount of spare capacity.
This week’s FOMC policy statement and Chairwoman Yellen’s accompanying press
conference have reinforced our expectation that the Committee is likely to
start raising its key rate in June. Recent pronouncements from the MPC have
emphasised the mounting downside risks to UK activity, particularly from the
euro area. However, we do not expect these headwinds to be strong enough to
significantly slow growth. Consequently, amidst signs of a tightening labour
market and a long-awaited pickup in wage growth, we anticipate a 25bp rise in
the Bank Rate in August, slightly earlier than the current market consensus. In
both cases, we expect the rate hike to be flagged well in advance.
We expect the ECB to
opt for QE in an attempt to stave off a deflationary
spiral. Against a backdrop of persistently weak euro area growth and falling
oil prices, the risks of euro area inflation, currently at 0.3% y/y, turning
negative over the next few months are rising. This could entrench inflation
expectations below the level consistent with the ECB’s inflation target of
“close to but below 2%” which could further undermine growth. A recent
flurry of ECB stimulus measures, such as the TLTRO lending facility, purchases
of covered bonds and asset-backed securities have, so far, had
less-than-hoped-for impacts on boosting demand. In the absence of a rapid
improvement in the data, which looks unlikely, we expect the ECB to embark
upon a full-blown sovereign QE programme as early as 2015Q1.
wish all our readers a joyous festive season and a prosperous New Year.
Our next Weekly will be
published on 2 January 2015.
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."