IMF Estimates Still too Rosy as Global Growth Slows

19 April, 2016

IMF Estimates Still too Rosy as Global Growth Slows

FX News Today

European Outlook: Global stock markets recovered yesterday in tandem with oil prices and Asian markets followed suit with Japan in particular staging an impressive rebound. The Nikkei is up nearly 3.5% and the Topix gained nearly 3% after yesterday’s steep decline. The front end WTI (USOil) future is slightly off earlier highs, but still just shy of the EUR 40 per barrel mark and the weaker Yen helped stock markets to recover in Japan. Mixed U.S and UK stock futures are painting a more cautious picture although the DAX is higher ahead of the official opening. The local calendar has German ZEW investor confidence, seeing improving slightly amid the general recovery in risk appetite, as well as Eurozone current data and the latest ECB bank lending survey. The UK remains focused on the Brexit debate.

 IMF Estimates Still too Rosy as Global Growth Slows: The IMF’s recent world growth downgrades left 2016 estimates that are still too optimistic given the ugly Q1 performance for both the developed and emerging economies. The market’s early-year panic alongside the winter oil price plunge proved partly justified, though most of the year’s bad news is hopefully behind us. We expect a modest 2016 undershoot of IMF growth estimates across all the major countries and regions except Canada and the U.K., Brexit risk aside, before an improved trend into 2017.

Fedspeak: The Fed’s Kashkari said Chair Yellen is open-minded in her policy approach. The comments are from an interview posted on the Minneapolis Fed’s website. He noted the various challenges facing policymakers, including a slowing in China which has caused shocks around the world, and Brexit. And he added the Fed of course has a “de facto, huge global influence,” and is aware of its impact on world economic developments (it’s part of the Fed’s calculus). He thinks the existing structure of the Fed is working well. There wasn’t anything new or especially market moving in his remarks, especially since the FOMC is universally expected to be on hold at next week’s meeting.

ECB’s Knot: Realistic to think rates won’t rise for a while. The Dutch central bank head said at a conference in The Hague that “for the short term its realistic to think the interest rate won’t rise”, although he warned home buyers to take possible increases in the future into account. It’s hardly a surprise that the ECB is not thinking about rate hikes at the moment, but Knot is right of course to remind consumers that in the long run rates will go up again. The last thing the ECB needs is a real property bubble and excessive risk taking in the mortgage market.

Main Macro Events Today 

US Housing Starts: March housing starts data is later today and should reveal a slight headline increase to 1,185k (median 1,170k) from 1,1798k in February. Permits should be 1,200k from 1,177k in February and completions are seen at 1,040k in March from 1,016k in February. There is some upside risk to the data as construction employment remained firm in March and the NAHB remained stable.

German ZEW:  German ZEW investor confidence is expected to have recovered somewhat, in line with the stabilisation on markets and we are looking for a rise in the expectations reading to 7.0 (med 8.0) from 4.3 in the previous month. Confidence data nevertheless is pointing to a gradual loss of momentum in core Eurozone countries including Germany, with the second quarter likely to look weak in comparison to the first quarter.


Source link  
The dollar remained on the ebb

The narrow trade-weighted USD index is showing a modest 0.2% loss as the London interbank opens, at 93.23, having extended the decline from...

Trump bump seemed to get renewed

That added to an already optimistic tone after signs of solid consumption growth and fixed investment in the U.S. Q2 GDP and with the strength...

Fed VC Fischer steered clear of policy

Asian stock markets moved modestly higher on the last day of the third quarter. Hopes that the U.S. tax reform will boost growth underpinned...


FTSE 100 futures are slightly higher

Asian stock markets are narrowly mixed and fluctuating at high levels, as trading volumes are low and investors await the Fed decision...

Markets have come quite a way up

Both central banks are widely expected to keep policy on hold, but the BoE’s statement in particular will be watched carefully...

Dollar traded softer vs many currencies

European Outlook: Asian stock markets mostly moved higher in quiet trade, after Wall Street managed to close with slight gains...


Oil prices are holding above USD 49

Yesterday there was a relatively dovish view from the nonvoting president, Fed Bullard, who continues to twist between a hawkish...

Dollar majors playing narrow ranges

EUR-USD held in the upper 1.18s, below the 31-month high logged midweek at 1.1910, and Cable settled in the mid 1.31s, consolidating the sharp losses...

UK100 is at 0.62% gain for the day

UK preliminary Q2 GDP came on the nose at 0.3% q/q and 1.7% y/y, up from Q1’s 0.2% in the case of the q/q figure and down from Q1’s 2.0% y/y...

  


Share: