L’attentisme prédomine. Les actions ont cédé un peu de terrain. Les spreads obligataires se sont légèrement écartés et les rendements obligataires ont légèrement reculé. Le marché se prépare à un mois de septembre chargé en termes de flux de nouvelles, en particulier sur les fronts macro et politique (réunion BCE le 6/9, débats sur l’union bancaire, décision institutionnelle en Allemagne sur l’ESM, Eurogroupe, demande d’aide possible de l’Espagne…).
Le résumé hebdomadaire de la vie sur les marchés financiers de la part de Jan Loeys, chez JPMorgan.
« Two weeks ago, we upgraded our global growth outlook from a negative risk bias to a more balanced one. There has not been a lot of news since then, but the releases we did receive appear to be confirming that a bottoming process has taken place in world growth. We currently have the world economy expanding at a 2% pace in Q3, slightly up from Q2. We have seen no reason to change our 2012 and 2013 global projections for the past month now. Across regions, better consumer spending is creating some upside for Q3, but only modestly so given the recent rise in gas prices. European data are largely tracking our forecast for continued contraction of the economy. In Asia, weaker data are creating downside risks to both Japan and China.
Economic data not getting worse is no source of comfort, as the current growth pace is some 1% below potential and risks driving the world into global deflation, if not depression. Hence, our eyes remains on what policy makers can do to prevent this. The US Federal Reserve is probably closest to having exhausted its armory, but is also seen as the policy maker most willing to do whatever it takes to reverse conditions. Hence, the preference of many investors to hold US equities relative to the rest of the world. Mr Bernanke today confirmed his commitments again at Jackson Hole, but is making us wait to the next FOMC meeting for details. He will then likely extend rate guidance for another year, with close to even odds of another bout of balance sheet extension.
Overall, we do not count on any of his actions to directly lift growth, and see it more as a boost to asset prices. Hence, our overall positive stance in US asset prices.
EM policy makers clearly have more ammunition than DM ones, both on fiscal and monetary policy, and their current growth paces are underperforming potential as much as those in DM. We have seen some 60bp in EM rate cuts over the past year, but the average EM policy rate remains above 5.5% (GDW, p. 6), as the EM output gap remains small and inflation is close to their targets. Only modest rate cuts, little fiscal easing and disappointing data have combined to make EM stocks underperform DM and prevented EM currencies from benefiting much from the global search for yields so prevalent in fixed income. We retain an OW of EM sovereigns (vs USTs), but not in EM equities, given still weak data and unconvincing policy action. Our long EM FX funded in euros has given back some of its gains most recently from the combination of weak EM data and hopes of ECB policy action. We thus cover this position now.
The real policy focus over the next fortnight will likely be on the Euro area (see this week and last GDW and GFIMS). Most important will be Thursday’s ECB meeting when the world expects Mr Draghi to provide more information on his new SMP program to bring funding costs of EMU members in trouble to more economically sensible levels. There is ample scope for surprises on both sides, but the market is expecting some details and then some action. This analyst’s views, at least, are biased to the upside for the near term given increased acceptance within Germany that some action must be taken and Mr Draghi’s track record when he upgraded the ECB’s liquidity provision to the shock and awe of LTRO last December.
Specifically, we expect the ECB to confirm it will intervene in (buy) the shorter end of euro sovereign bond markets of countries in an EFSF program and compliant with EFSF conditionality, in an effort to bring down EMU exit (convertibility) risk premia (see below under Fixed Income). It should similarly confirm it will respect contract law (ie, no seniority), although the market will likely want to test this in practice over time. Our best guess is that the ECB will show off its new SMP program by buying 2-3 year debt of Portugal, given that is both in an EFSF program, is compliant, and its 2-year funding costs appear to include some 3% in EMU exit risk premium. »