• Home
  • About
  • Subscribe
  • Conference
  • Events Calendar
  • Webcast151
  • MOTB
  • Log In
  • Register

Room 151

  • Treasury
  • Technical
  • Funding
  • Resources
  • LGPS
  • Development
  • 151 News
  • Blogs
    • David Green
    • Agent 151
    • Dan Bates
    • Richard Harbord
    • Stephen Sheen
    • James Bevan
    • Steve Bishop
    • Cllr John Clancy
    • David Crum
    • Graham Liddell
    • Ian O’Donnell
    • Jackie Shute
  • Interviews

Economic & market briefing: the week ahead

0
  • by James Bevan
  • in Blogs · James Bevan
  • — 10 Sep, 2012

At least in Europe, the German constitutional court ruling on Wednesday will be the main focus. Risks look to be significantly asymmetrical heading into the event: if the ESM laws are upheld, the event may well pass with only modest additional benefit for the Euro and risk sentiment generally. However, a ruling against the legislation would likely represent a major risk aversion and systemic stress event, with impact visible on charts for years to come.  We view a ruling against the treaty as very unlikely, although we wouldn’t be surprised to see more strings attached relating to parliamentary approval of future aid decisions.

Dutch elections are held on the same day, and there may be a prolonged period of coalition negotiations following the vote, and there may be some decline in support for austerity measures evident in the results. However, the Netherlands is one of few the surplus economies in Euroland, and it is currently funding itself at near-zero rates. As such, we see limited scope for this election to result in renewed sovereign stress.

Turning to the United States, the weak employment report last week makes it even more likely that the Fed will announce new quantitative easing measures as its meeting concludes on Thursday. This may reasonably take the form of an extension of forward guidance beyond 2014 and initiation of a new large-scale asset purchase programme, possibly open-ended in nature. Confirmation of new QE measures could be moderately negative for the US dollar, most notably against Japan’s Yen, but helpful for risk assets as should be the tide of data. Thus we’re US retail sales, expected by some to be unchanged at 0.8%mom on both the headline and core, vs. the more cautious consensus at 0.5%mom for both, whilst industrial production could be 0.6%mom vs. consensus of 0.1%mom. The market expect the preliminary University of Michigan September survey to be reported as 74.0, as against August’s 73.0 but this too could positively surprise. On the CPI front, this could be a slightly higher headline, but steady core at 0.2%mom.

Looking at the broader European picture, Switzerland’s SNB meet on Thursday and we should expect continued emphasis on deflation risks, CHF overvaluation, and, most importantly, its commitment to defending the EUR/CHF floor with “utmost determination.” We shouldn’t, against this backcloth, expect the SNB to make any material changes to inflation forecasts.  However, there is a possibility for the GDP growth forecast for the current year to be revised lower following the weak Q2 growth and the downward revisions to Q1 GDP estimates.

With an altogether different set of problems, the Hungarian parliament reconvenes today and the government willingness to comply with EU/IMF requirements will be tested.

For the UK, we are due the August employment report but this likely be somewhat muddled by the temporary boost from the Olympics and with so much else to focus on this week, markets are likely to overlook this release.

On the other side of the world, New Zealand’s Reserve Bank is widely expected to leave the cash rate unchanged at 2.5% on Thursday and keep its neutral guidance that rates remain appropriate.  The central bank will issue updated economic projections, and the market will pay close attention to the short-term interest rate projection and any currency related comments in the press conference. The recent delay in New Zealand’s efforts to privatize partially key government entities could push up government borrowing and threaten a rating downgrade. The challenges are truly global.

James Bevan is chief investment officer of CCLA, specialist fund manager for charities and the public sector. CCLA launched The Public Sector Deposit Fund in 2011 to meet the needs of local authorities and other public sector organisations. You can follow James on twitter @jamesbevan_ccla

——————————————————————————————————————————————–
The Local Authority Treasurers’ Investment Forum September 25th, 2012, London Stock Exchange

Share

You may also like...

  • Daniel Godfrey: LGPS and the cost of active management Daniel Godfrey: LGPS and the cost of active management 1 Feb, 2017
  • Governance on my mind Governance on my mind 30 Jul, 2012
  • Corporate confidence and the UK economy Corporate confidence and the UK economy 17 Oct, 2013
  • Financial sustainability: A corporate way of being even in a crisis 7 Dec, 2020

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 2 days ago

    All three days of #LATIF & FDs' Summit are available on our webcast channel gotostage.com/channel/room151

    Room151 5 days ago

    FDs’ Summit experts defend councils as MPs label property investment ‘risky’: As Room151’s FDs’ Summit conference explores local government’s investment in commercial property MPs once again lable it a “significant risk to government”. Once again MPs… dlvr.it/Rr7lZx pic.twitter.com/jPvcZjDAS4

    Room151 5 days ago

    Global macro outlook: Virus versus vaccine: Sponsored article: Salman Ahmed argues monetary policy, a global vaccine rollout and fiscal stimulus are likely to put “upward pressure” on bond yields. Much like the latter half of 2020,[...] dlvr.it/Rr60nt pic.twitter.com/qsymBWmKmV

    Room151 6 days ago

    ‘Chasing yield’ not the best strategy as negative rates loom: Recent speculation that the UK may be heading toward negative interest rates prompts questions for treasury officers managing local authority funds at LATIF. Speculation is rife that the UK… dlvr.it/Rr3Mrj pic.twitter.com/wtxYAB20PO

    Room151 1 week ago

    Will new public procurement rules offer the best commercial results?: The government has issued a green paper on reforming procurement rules. Helen Randall and Rebecca Rees examine the proposals and argue they may not go far enough. The Cabinet… dlvr.it/Rqtw6T pic.twitter.com/9GiVTkL08U

    Room151 2 weeks ago

    The vaccine may help settle cash flows but inflation remains a risk: Sponsored article: Lauren Sewell examines the prospects for long-term borrowing as Brexit settles and vaccines are deployed against Covid-19. On the 9th October 2019 Whitehall sent… dlvr.it/RqZXCr pic.twitter.com/PzgOZOGQ0k

    Room151 2 weeks ago

    ESG in liquidity: Sponsored article: Gavin Haywood looks at the integration of ESG in Federated Hermes’ money market funds. Federated Hermes has over 300 public sector clients invested in our AAA rated money[...] dlvr.it/RqZX5f pic.twitter.com/E87sBXsay8

    Room151 2 weeks ago

    New realities of investing cash and liquidity: “What to do now?”: Sponsored article: Brian Buck looks at the “unique challenge” for cash management strategies. As investors assess the ongoing impact of the pandemic on their business, levels of cash and… dlvr.it/RqVbk9 pic.twitter.com/ZElVASmEUV

    Room151 2 weeks ago

    Extra finance promised by the government receives a broad welcome: Sponsored article: The financial pressures facing local authorities this year continue to pose challenges for council treasurers. While the launch of the UK’s Covid-19 vaccination… dlvr.it/RqTzTF pic.twitter.com/HCjH0pyHR5

    Room151 2 weeks ago

    A savvy approach to managing your cash: Sponsored article: Caroline Hedges examines the need for active cash management to achieve a higher than average return. Last year saw the already mountainous pile of negative-yielding debt around the[...] dlvr.it/RqTzMK pic.twitter.com/uP0RQYTJLt

    Room151 2 weeks ago

    Putting alternatives at the heart of multi-asset portfolios: Sponsored article: Nick Edwardson looks at the assets that provide the “most attractive opportunities”. We believe that asset allocation is the primary driver of investment returns and that the… dlvr.it/RqQ2Qt pic.twitter.com/WLBzvRRRUQ

    Room151 2 weeks ago

    Thriving in the pandemic: Avoiding the stragglers: Sponsored article: George Crowdy looks at the sectors providing opportunities for sustainable investment. Throughout much of 2020, we talked about why sustainable investing has thrived in the pandemic,… dlvr.it/RqQ2NQ pic.twitter.com/dxiPWKFsPl

    Room151 2 weeks ago

    The development of CCLA’s mental health benchmark: Sponsored article: Amy Browne examines the importance of investing in mental health in the workplace. We are living through a public health emergency in more ways than one. Physical health[...] dlvr.it/RqQ2Jx pic.twitter.com/o6yRSCX3oF

    Room151 2 weeks ago

    Brexit: What the EU trade deal means for the UK economy: Sponsored article: Hetal Mehta looks at the impact of Brexit on economic prospects. Four and a half years after voting to leave the EU, on Christmas Eve the UK finally[...] dlvr.it/RqLBDt pic.twitter.com/No62srfE8h

    Room151 2 weeks ago

    Cash dethroned: The quest for liquid yield: Sponsored article: Peter Hunt and George Carne ask how treasury departments can balance the need for yield and liquidity. The massive stimulus and waves of liquidity provided by central banks[...] dlvr.it/RqLBDj pic.twitter.com/05g6Zhu1kU

    Room151 2 weeks ago

    Richard Harbord: Delayed “capital determinations” make section 25 opinions a new crunch point: The severe pressure on local government budgets now means section 151 officers confront a tricky call on  whether they can make a judgement on the robustness… dlvr.it/RqLBDV pic.twitter.com/vTAbDKFzkI

    Room151 1 month ago

    PWLB Consultation: Analysis straight from Dickens: Helen Radall and Paul McDermott present a legal examination of the new PWLB borrowing rules as Charles Dickens might have imagined it. Free and easy PWLB (“Marley” to his friends)[...] dlvr.it/RnmwLq pic.twitter.com/yFxcPrQqEG

  • Categories

    • 151 News
    • Agent 151
    • Blogs
    • Chris Buss
    • Cllr John Clancy
    • Dan Bates
    • David Crum
    • David Green
    • Development
    • Forum
    • Funding
    • Graham Liddell
    • Ian O'Donnell
    • Interviews
    • Jackie Shute
    • James Bevan
    • Jobs
    • LGPSi
    • Mark Finnegan
    • Recent Posts
    • Resources
    • Richard Harbord
    • Stephen Fitzgerald
    • Stephen Sheen
    • Steve Bishop
    • Technical
    • Treasury
    • Uncategorized
  • Archives

    • 2021
    • 2020
    • 2019
    • 2018
    • 2017
    • 2016
    • 2015
    • 2014
    • 2013
    • 2012
    • 2011
  • Previous story FTSE100 to finish year above 6000?
  • Next story Are markets rational?

© Copyright 2021 Room 151. Typegrid Theme by WPBandit.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we'll assume that you are happy to receive all cookies from this website.OK