20171208-大华银行-Markets_Overview_5页_253kb

Global Economics & Markets Research Summary (08 December 2017)

Core Content Overview

This document provides a comprehensive summary of global economic and market conditions as of 08 December 2017, covering key data releases, central bank outlooks, FX movements, equities performance, commodities, and bond yields.

Main Highlights

US Market Outlook

• Government Shutdown Concerns: The US House of Representatives passed a 2-week spending bill, easing concerns about a government shutdown. The Senate is now expected to approve it, requiring Democratic support.
• Jobs Data: The November US Nonfarm Payrolls (NFP) are expected to show 250k jobs added, with the unemployment rate likely to remain steady at 4.1%. The US wage growth is forecast to increase to +0.4% m/m and +2.8% y/y.
• Fed Rate Hike: The probability of a Fed rate hike in December is at 98.3%, indicating strong confidence in the US economy.
• Stock Market Performance: The US stock market ended higher, led by the industrial sector. The Dow Jones rose by 0.29%, the S&P 500 by 0.29%, and the Nasdaq by 0.54%.
• Bond Market: The US bond market saw yields rise at the longer end, with the 10-year yield increasing by 2.5bps to 2.36%. The 2-year yield fell by 0.4bps to 1.80%.
• FX Market: The US dollar strengthened as concerns over the shutdown eased and tax reform optimism grew. The EUR/USD pair hit a 4-day low at 1.1773, while GBP/USD reached a high of 1.3485. The USD/JPY pair rose to an intraday high of 113.16.
• Asian FX: The SGD NEER is expected to trade between 1.0% and 1.5% above the midpoint, implying a USD/SGD range of 1.3453–1.3520. The PBoC is expected to set a slightly stronger midpoint for the CNY/USD rate at 6.6194.

Japan Market Outlook

• GDP Growth: Japan's 3Q GDP was revised higher to 0.6% q/q and 2.5% y/y, marking the best growth streak in 16 years.
• Economic Indicators: Japan's Nov bank lending growth eased slightly to +2.7% y/y, while the trade surplus narrowed to JPY430bn. Real earnings increased to +0.2% y/y.
• Consumer Confidence: Japan's consumer confidence remained stable, and the Nikkei 225 saw a rebound of 1.45% after a prior decline.

Asian Markets

• Foreign Reserves: Thailand and Indonesia reported higher foreign reserves, with Thailand at US$279.59bn and Indonesia at US$3119.3bn. The Philippines saw a slight decrease.
• Equity Markets: Asian equity markets showed mixed performance, with some markets like the Nikkei 225 and SET Index rising, while others like the Shanghai Composite and TAIEX fell.

Commodities

• Oil Prices: Crude oil prices rose after news of potential Nigerian strikes and inventory drawdowns. WTI closed at $55.97 and Brent at $62.09.
• Gold: Gold prices declined due to a stronger US dollar and anticipation of the Fed rate hike, closing at $1,249.80.

Central Bank Outlook

• Swiss National Bank (SNB): All 28 economists surveyed expect the SNB to keep key interest rates on hold until after the ECB's rate hike.
• Bank of Japan (BOJ): The BOJ governor hinted at the need for an appropriate yield curve to support the banking system, indicating potential future policy changes.

Key Information

• Government Shutdown: The US government shutdown concern is easing, with a 2-week spending bill passed by the House and expected Senate approval.
• Economic Data: The US November labor market report is a key focus, with expectations of strong NFP numbers and potential Fed rate hike.
• FX Trends: The USD is strengthening against most currencies, including EUR, GBP, and JPY, while the SGD is expected to remain within a narrow range.
• Commodities: Oil prices rose, and gold prices fell, reflecting market sentiment towards the US economy and central bank actions.
• Central Bank Policies: The SNB is expected to keep rates unchanged, while the BOJ is considering changes to its yield curve strategy.

Economic Indicators Table

FX Rates (as at 07 Dec 2017)

Bond Yields (as of 07 Dec 2017)

Market Holidays/Events

Conclusion

The document highlights a generally positive economic outlook for the US, with strong labor market data and a high probability of a Fed rate hike. FX markets are showing a strengthening USD, while Asian markets are mixed. Central banks, including the SNB and BOJ, are expected to maintain or adjust their monetary policies based on economic conditions. Commodities like oil are rising, while gold is declining due to the stronger dollar and market expectations.