Die EZB-Zinserhöhungen entfalten in der Wirtschaft ihre Wirkung. Die Kreditvergabe an Unternehmen stagnierte und die Geldmenge M3 sank im November deutlich.
Der Tiefpunkt für die Industrie ist offenbar überschritten – dennoch verzeichnen einige Branchen in Deutschland Einbußen. Für den Währungsraum sieht es ähnlich aus.
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The US ISM Manufacturing PMI is expected
at 47.1 vs. 46.7 prior. The last
report saw the index falling further into
contraction in November and the general commentary was pretty grim. The negative
data continued in December with the US S&P
Global Manufacturing PMI missing
expectations and reaffirming the drag on the economy from the Manufacturing
sector.
The US Job Openings are expected at 8.850M
vs. 8.733M prior. The last
report saw Job Openings falling much more
than expected with the weakest reading since March 2021. The labour market continues
to soften via less jobs availability rather than more layoffs, which
coupled with the falling inflation rate, supports the soft-landing narrative. Such
episodes occur right before a recession though, so time will tell if the
“most crowded trade on Wall Street” was indeed the right one all along.
Thursday
The US ADP is expected to show 113K jobs
added in December compared to 103K in November. The last
report missed expectations and, of course,
we got a beat across the board in the NFP report a couple of days later. Although
this release is pretty useless to forecast the NFP number, it can be
market-moving and maybe give some broad insight into the US labour market.
The US Jobless Claims continue to be one
of the most important releases every week as it’s a timelier indicator on the
state of the US labour market. Initial Claims keep on hovering around cycle
lows, which shows us that layoffs have not picked up notably yet, but
Continuing Claims have been rising at a fast pace and that’s indicative of
people finding it harder to get another job after being laid off. This week
the consensus sees Initial Claims at 215K vs. 218K prior,
while Continuing Claims are expected at 1882K vs. 1875K prior.
Friday
The Eurozone Headline CPI Y/Y is expected
at 3.0% vs. 2.4% prior,
while the Core Y/Y measure is seen at 3.5% vs. 3.6% prior. The market is
pricing in around 160 bps worth of rate cuts in 2024 with the first 25 bps cut
coming in April. The ECB members have been pushing back against the aggressive
market pricing and the consensus among the officials is that they want to
wait for Q1 data before deciding if a rate cut in Q2 will indeed be warranted.
Looking at the M/M inflation readings, the ECB can already call it “mission
accomplished” and we could see the Y/Y inflation rates falling below 2% already
in Q2 2024.
The Canadian Labour Market report is
expected to show 12K jobs added in December vs. 24.9K in November
and the Unemployment Rate to rise further to 5.9% vs. 5.8% prior. This
report is unlikely to influence the January BoC decision as the central
bank might want to see more data in Q1 before deciding on the next move,
especially after the last hotter than expected inflation
report. If you want to know more about the
2024 outlook for Canada, you can read Adam’s articles on the BoC
and the Canadian
Dollar.
The
US NFP is expected to show163K jobs added in December compared to 199K in November and the Unemployment Rate to tick higher to 3.8% vs.
3.7% prior. The Average Hourly Earnings are seen cooling further with the Y/Y
measure expected at 3.9% vs. 4.0% prior and the M/M reading at 0.3% vs. 0.4%
prior. The major central banks have ended their tightening cycles, so the
markets’ reaction function has changed from “strong data equals more rate
hikes” to “strong data equals less rate cuts”.
The US ISM Services PMI is expected at
52.6 vs. 52.7 prior. The November
report beat forecasts as the US Services sector continues to remain
resilient given its lower sensitivity to rate hikes. This tendency was
reaffirmed further with the release of the December
S&P Global Services PMI were the data
beat expectations closing the year with the fastest growth since last
July.
This article was written by Giuseppe Dellamotta at www.forexlive.com.
Eight weeks ago, we might be having a very different conversation about Canadian housing. Yields were rising and central banks were offering no hints about cutting rates. Pain was certainly in the pipeline and a hard housing landing in the spring was likely.
Skip ahead and the Government of Canada five year has fallen to 3.20% from almost 4.50%. That 130 basis points will feed directly into housing. Notably though It looked like it would be the year of a housing reckoning but now it looks like the year of rate relief.
Canada has about $1.75 trillion in mortgage debt outstanding with about $250 billion coming up for renewal in 2024, with another $352 billion in 2025. Every 100 basis points is taking $17.5 billion in annual spending out of the economy plus all the multipliers on that. Compare that to around $67 billion in monthly retail sales and it’s material.
But it may be the wealth effect that’s more impactful. Going back to the start of 2023, the question then was, if housing prices fell 20% (which was merely back to 2021 levels) would consumers recoil. The answer was that they largely didn’t.
I wouldn’t take for granted that the same thing happens if prices continue down to 2019 levels or lower. At some point there is a drag and it should be noted that in mid-1990 when the Bank of Canada began to cut rates from 13% down to 5%, house prices continued to fall for two years.
Summing up, the housing market remains in a precarious state as there is something of a buyers‘ strike while sellers continue to hold out hope for high prices. If a flood of supply hits the spring market, it could easily crack the dam, even with 50-75 bps in BOC cuts in H1. Alternately, a hint at cuts could unleash the housing animal spirits again with buyers taking variable rates on the well-grounded belief that they will come down.
How that unfolds is key to the outlook for the economy but note that there is some reflexivity in play. If buyers balance out the market, the BOC is less likely to cut in 2024 and 2025 and vice versa. That has important knock-ons for the currency.
2) China
A key upside risk for Canada and the Canadian dollar is China. Sentiment surrounding China right now is ghastly, with many fund managers determining its univestible due to President Xi wanting to squeeze out housing excess and control tech companies. There’s also a strong belief that a conflict in Taiwan is more a question of ‚when‘ than ‚if‘.
At this point, I’d argue those worries are fully priced in. Chinese consumers have also been struggling coming out of covid and officials haven’t taken strong steps to reverse that. The upside risk is that they will, and they have many levers to pull given zeroed out inflation in China. If so, it would flow through to Canada via commodity demand, boosting a sector that had a tough year in 2023.
For now, I’ll file this under: I’ll believe it when I see it, but it’s a spot to watch.
3) OPEC
Angola quitting OPEC in December fanned the flames of the idea that OPEC is in an unsustainable position. They keep cutting output and US shale continues to hike to fill it. A tense December OPEC meeting eventually agreed to H1 cuts that should balance the market but all the risks are to the downside now, with further cuts unpalatable.
Eyes will be on market balances early in the year but it’s seasonally the slowest time of year so inventory builds are possible. As the year progresses, OPEC needs to see deficits emerge, which they can fill by gradually increasing output. In time, rising demand should allow them to wind down spare capacity but if shale another 1 mbpd in the first half of the year, then they may have no choice but to start an ugly war for market share; crippling Canada’s largest export just as TMX ramps up.
4) Inflation
The latest CPI was worrisome at 3.1% versus 2.9% expected and it came at the same time as inflation data undershot in most other advanced economies.
That miss should help to keep the Bank of Canada cautious at the January meeting but beyond that there is reason for optimism as easier y/y comps hit.
Two major sources of Canadian inflation right now are mortgage interest (which the BOC obviously controls) and rent (which is one of the toughest things for the BOC to affect). Scarcity of rental supply is something the BOC can’t control but the central bank has a mandate for low and stable inflation and they won’t tolerate high inflation, even if it’s driven by rent. I’d certainly argue though that lower rates would be helpful in bringing on long-term housing supply but that won’t be possible until they’ve restored credibility on low-and-stable inflation.
5) Consumer spending
This is a great chart from CIBC. It highlights how Canadian consumption has already slowed materially while in the US, demand for consumer goods has continued to rise.
US consumption will continue to benefit from low 30-year fixed mortgages while Canadian consumers will be hit with higher fixed-rate resets through 2026, even if the BOC cuts materially from here.
Ultimately, these are two consumer-driven economies and the winning currency will be largely driven by the winning consumer. The latest leg of Canadian dollar strength was all about pricing-out risks of a hard landing in the housing market — you can see that in the banking equities and REITs. That trend may extend into early 2024 and take USD/CAD down to 1.30 (or CAD/USD 0.77) but to fuel further moves we will need to see positive outcomes from housing, the consumer, China or energy. Alternatively, a path lower for USD/CAD would be broader USD weakness on a softening American consumer and economy, though some of that is undoubtedly priced in already.
This article was written by Adam Button at www.forexlive.com.
Wenn die Zinsen 2024 sinken, dürften an der Börse Unternehmen mit soliden Dividenden attraktiver werden. Eine einfache Strategie kann bei der Aktien-Auswahl helfen.
Der Organisationschef der Privatkundensparte verlässt das Institut. Er gilt als einer der Verantwortlichen für die massiven Service-Probleme bei der Postbank.