• 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

Treasurers weekly briefing #7

0
  • by James Bevan
  • in James Bevan
  • — 13 Jan, 2014

jb-banner-grey
Today in the US, Atlanta Fed President Lockhart (non-voter, neutral) will speak on the economy at 12:40 p.m. and the Fed will be in the market buying about $1.2bn TIPS, about a $1.6bn reduction in 10y equivalent supply.

Over in Euroland, Italian November Industrial Production data are published today and we expect an increase of 0.5%mom, after a solid rebound of 0.5% mom in October. Also Greek and Portuguese inflation figures will be in focus. It will be interesting to see whether the deflation in these two countries will print new record highs (last month -2.9% in Greece and -0.2% in Portugal). Meanwhile, Italy will auction 2y, 7y and 15y bonds today for around €7bn in total. This is the first 7y auction, following the bond’s launch by syndication last year.

For the rest of the week, for the UK we’re due inflation data on Tuesday, with CPI expected to be reported as up 2.3% but it’s not entirely clear what the impact of energy bills will mean for the December number. Thus, energy companies have been altering price hike schedules after the government’s decision in the Autumn Statement to reduce green levies. We still anticipate that there will be a positive contribution from electricity and gas of around 20bp. More broadly, we will monitor core inflation pressures, and after reaching a trough in the middle of 2013, it appears that core inflation pressures could be increasing again. We expect the retail sales figure to increase by 0.6% mom in December, after +0.4% mom in November.

Also on the home front, the DMO will auction £2bn of 2044s on Thursday and the rapid decline in unemployment and strong surveys have made some commentators increasingly bullish on the prospects for the pound.

Over in Euroland we’re due IP data on Tuesday and the HICP numbers on Thursday. We expect November Industrial Production to increase strongly, up c1.0% on the month, supporting the view of GDP growth around 1.0%qoq annualized in Q4. However, on the back of the strong numbers in France, Spain, Germany, Portugal, the Netherlands, Finland, Slovenia and Ireland we see significant upside risks to 1.0%mom call. A weighted average of the IP data released so far, coupled with modest monthly growth in Italy, points to Euroland IP up 1.5% mom. If Italy were to perform as well as the other economies, Euroland IP could be as strong as 1.6/1.7% mom. Meanwhile Euroland inflation is likely to be unrevised from the flash estimate at 0.8%yoy in December, after 0.9% in November. The final report will be interesting in do far as it will shed light on the weakness in services inflation. Services inflation fell to 1% in December from 1.4% and Euroland core inflation fell to an all-time low, down to 0.7%. At the national level, inflation data will be released in France and Italy on Tuesday, in Spain on Wednesday and in Austria on Thursday.

On bond market supply, the Netherlands will sell 3y bonds on Tuesday. On Wednesday, Germany sells €1bn of the 23s linker and €5bn of a new Bobl. Spain will auction 3y bonds (17s) as well as two bonds from the 15y sector (26s and 27s) on Thursday, following their well-received auction of 5y and one of the 15-years (28s) last week..

For the US, we’re due Retail Sales data on Tuesday, the Beige Book on Wednesday, Inflation numbers on Thursday and IP on Friday. We expect headline retail sales rose 0.3% in December as vehicle sales declined following November’s high. The Fed’s Beige Book may describe “moderate” growth in the US. If so, this would be an upgrade from the “modest-to-moderate” language used in the crucial lead sentence of each of the previous five reports. Unadjusted gasoline prices rose slightly in December (4 cents nationwide) but with seasonal adjustment, gasoline could be up almost 4% on the month. That would add 0.2pp to headline on its own, which would raise the headline CPI forecast to 0.3%. We expect core at 0.1%. We estimate housing starts in December retraced about half their November gains, falling 10.6% to an annualized rate of 975K. Our preliminary IP estimate is 0.3%. We look for a preliminary Consumer Sentiment index reading of 83.0 in January, up from a final December level of 82.5.

Elsewhere, we’re due inflation number for Sweden on Tuesday and we expect CPI to fall 0.2% in December, down from 0.1% in November. Our view is slightly below consensus because of downside risks on electricity prices, which fell sharply in December and also contributed to surprisingly low inflation in Norway last week. If inflation surprises on the downside, further actions from the Riksbank could be expected.

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

Share

You may also like...

  • Five reasons to worry about China Five reasons to worry about China 22 Nov, 2011
  • Treasurers weekly briefing #5 Treasurers weekly briefing #5 6 Dec, 2013
  • European Bank Recovery and Resolution Directive: the key issues European Bank Recovery and Resolution Directive: the key issues 27 Sep, 2013
  • Country data, trade and deflation Country data, trade and deflation 30 Jul, 2012

Leave a Reply Cancel reply

You must be logged in to post a comment.

  • Register to become a Room151 user

  • Latest tweets

    Room151 4 hours 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 4 hours 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 1 day 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 1 day 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 1 day 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 days 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 days 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 days 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 3 days 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 3 days 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 3 days 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 4 weeks 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

    Room151 4 weeks ago

    Room151’s top stories from a momentous year: 2020 was the year in which local government grappled with Covid-19, funding strains, controversy over borrowing rules and the threat of financial collapse. It has been an exhausting and historic[...] dlvr.it/RnlpZg pic.twitter.com/g3myNyox6J

    Room151 4 weeks ago

    Tracy Bingham: 2020, a year best forgotten but also one of learning: Many will rush to erase 2020 from their memories but, writes Tracy Bingham, there were also many lessons about finance teams, strategic planning and leadership. 2020: A year we’d… dlvr.it/RnlpY2 pic.twitter.com/m7G1krrtCu

    Room151 1 month ago

    Settlement must address ‘precarious’ local government finances: Dan Bates crosses his fingers for “no nasty surprises” in this week’s funding settlement but argues the “bigger prize” is post-Covid financial certainty. Thursday (17 December) should be the… dlvr.it/Rnj9dG pic.twitter.com/KLKjjuBqJE

    Room151 1 month ago

    PWLB consultation: Big change on the way but there are ‘grey areas’ and opportunities: The consultation on PWLB borrowing has concluded creating a new landscape for funding property acquisition. Our experts look at the implications. Tracie Langley The… dlvr.it/RndRvJ pic.twitter.com/KEqXEBmEfq

    Room151 1 month ago

    2021: Better income outcomes?: Sponsored article: Investors should be mindful of structural challenges posed to income generation as a result of rapid thematic change. Jon Bell looks at the prospects for the coming year.[...] dlvr.it/RndRsw pic.twitter.com/TxVk8aXkMq

  • 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 Does UK growth mean we’re out of the woods?
  • Next story Is pooling business rates working?

© 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