20150108-穆迪服务-Oil_Price_Plunge_Is_Not_Enough_to_Deflate_Credit_24页_447kb

Moody's Weekly Market Outlook Summary

Core Content

This Moody's Weekly Market Outlook focuses on the impact of oil price declines on credit markets, particularly in the context of deflation fears across Europe and the broader economic outlook for the US, Europe, and Asia-Pacific regions. It highlights the resilience of corporate credit in the face of falling prices and explores the relationship between base metals prices and credit spreads.

Main Views

• Oil Price Plunge Not Enough to Deflate Credit: Despite the sharp decline in oil prices, credit markets have not shown signs of panic. Central banks, especially the European Central Bank (ECB), are expected to take measures to prevent deflationary pressures.
• European Credit Market Resilience: European corporate credit remains stable, with investment grade spreads below their 2013 and 2012 averages. The market is not overly concerned with deflation, which has been tempered by central bank support.
• US Corporate Credit Outlook: The US corporate credit outlook is more optimistic, with bond spreads wider than European counterparts, suggesting potential undervaluation. The EDF/NAI model predicts a narrowing of high yield spreads.
• Base Metals vs. Oil: Base metals prices are more correlated with economic growth and credit quality than oil prices. A significant drop in base metals prices is more likely to worsen credit spreads and economic outlook than oil price declines.
• Deflationary Pressures and Inflation Expectations: Deflationary pressures are affecting the Eurozone and other regions, but central banks are expected to maintain inflation expectations through monetary stimulus.
• Economic Indicators and Outlook: Key economic indicators such as employment, retail sales, and industrial production are analyzed, with expectations for continued moderate growth in 2015.

Key Information

Credit Market Metrics

• Investment Grade Bond Spreads (Europe):

  • Financial companies: 108 bp
  • Industrials: 92 bp
  • Both under their 2013 and 2012 averages.

• High Yield Bond Spreads:

  • US: 537 bp
  • Europe: 34 bp widening in December

• Moody's EDF/NAI Model Predictions:

  • US high yield spread: 483 bp
  • Suggests potential improvement in US corporate credit.

Deflation and Inflation Expectations

• Eurozone CPI:

  • December: -0.2% y/y (preliminary)
  • Core CPI: 0.1% y/y
  • Weak economic growth and falling oil prices are dampening inflation.

• Germany CPI:

  • December: 0.2% y/y
  • Energy prices fell 6.6% y/y, food prices declined 1.2% y/y

• US CPI:

  • December: -0.3% y/y (overall), 0.1% y/y (core)
  • Indicates very weak inflation, possibly under 1% for the first time in over five years.

Corporate Default Rates

• US High Yield Default Rate:

  • November 2014: 1.9%
  • 1H/2015: 2.1% average

• European High Yield Default Rate:

  • Expected to rise only modestly over the next 12 months.

Bond Yields and Liquidity

• Medium Grade Bond Yields:

  • US: Sank by -18 bp to 4.52%
  • Speculative Grade Bond Yields: Jumped by 14 bp to 6.90%

• Systemic Liquidity:

  • Easing of medium grade bond yields supports continued liquidity in credit markets.
  • In 2008, rising bond yields coincided with worsening corporate credit and business activity.

Base Metals and Economic Correlation

• Industrial Metals Price Index:

  • Strong correlation (0.82) with global economic growth since 1998.
  • A decline in base metals prices is more likely to impact credit quality than oil price declines.

• Base Metals Price Index:

  • Fell by -7.2% from its 52-week average
  • If it falls by more than -15%, it would signal a significant economic slowdown.

Economic Outlook for Key Regions

United States

• Employment Report (Dec):

  • Forecast: 240,000 nonfarm payrolls, 5.7% unemployment rate
  • Strong job growth expected, keeping pace with GDP growth.

• Retail Sales (Dec):

  • Forecast: 0.1% overall, 0.1% ex auto
  • Weak inflation and low fuel prices may keep retail sales stable.

• Producer Price Index (Dec):

  • Forecast: -0.4% overall, 0.1% core
  • Core PPI remains stable, indicating well-anchored price trends.

Europe

• Eurozone CPI (Dec):

  • Forecast: -0.2% y/y
  • Indicates a potential negative CPI for the Eurozone.

• Germany PMI (Dec):

  • Reached highest level since May, but sentiment may be affected by political tensions in Greece.

• France CPI (Dec):

  • Forecast: -0.1% y/y
  • Weak economic performance and high unemployment continue to suppress inflation.

• Italy CPI (Dec):

  • Forecast: -0.1% y/y
  • Weak domestic demand and a strong euro continue to limit price growth.

Asia-Pacific

• Australia:

  • Housing finance likely rose slightly in November
  • Unemployment rate is expected to remain around 6.4% in December

• India:

  • Trade balance remains in deficit
  • Industrial production dipped in October due to holiday distortions but is expected to rebound

• OECD Composite Leading Indicators (Nov):

  • Forecast: 100.4
  • Indicates a stable outlook, with the US and Europe offsetting declines in China

Conclusion

The report suggests that while oil price declines are significant, they are not sufficient to cause a major credit crisis. Base metals prices, however, are a more critical indicator for economic health and credit quality. The European corporate bond market is showing resilience, with spreads below historical averages, and the US market is underperforming relative to European counterparts. Central banks, particularly the ECB, are expected to continue monetary stimulus to counter deflationary pressures. The outlook for 2015 is cautiously optimistic, with potential for improved credit conditions and moderate economic growth.