Bank Research Consensus Weekly 08.02.11
Heading for the Worst Growth Since the Credit Crisis
Chetan Ahya, Economist, Morgan Stanley
Heading for India's inflation story is largely known and well understood - but we believe that downside risks to growth are not fully appreciated as yet. Indeed, we have been highlighting downside risks to our below-consensus growth estimates since April 2011. Growth had remained relatively strong until the quarter ending March 2011 - but clear signs of slowdown have emerged over the last 3-4 months. We believe that a combination of factors - including persistently high inflation, a higher cost of capital, a cut in fiscal spending to GDP, the weak global capital markets environment and a slow pace of investment - will cause a further slowdown in growth.
Euro Area: Italian and Spanish Yields in New Highs
Anders Møller Lumholtz, Analyst, Danske Bank
Despite no significant news on either Italy or Spain, sovereign yields are trading at new highs. The Italian 10-year yield has surpassed the 6% barrier it reached exactly three weeks ago. This morning Italy’s 10-year yields have been trading as high as 6.20%, around 20bp higher than yesterday’s close. Also two-year yields are up 20bp, trading around 4.70%.
With Greece “Stabilized,” Will the Fire Spread?
John E. Silvia, Chief Economist, Wells Fargo
The second bailout of Greece is a major stride toward stabilization in that country; however, substantial risks remain. With Greece off the ropes, for now, our focus turns toward other vulnerable Eurozone countries; namely, Belgium, Ireland, Italy, Portugal and Spain. For each country, we took four growth rate and four interest rate assumptions and determined what primary surpluses would stabilize their debt-to-GDP ratios.
Canada – A Far From Ordinary Week
Sonya Gulati, Economist,TD Bank Financial Group
If this past week were a typical one, today’s release of Canadian GDP numbers would have grabbed all the business news headlines; we would have then spent the rest of this commentary analyzing the numbers. However, the last few days have been far from ordinary; so we instead summarize the GDP release in just a few sentences. Real economic growth contracted M/M by 0.3%, the largest decline posted in two years. Of note, oil production output came in lower in May due to several factors: (1) maintenance shutdowns at some oil fields; (2) wildfires in northern Alberta; and (3) lingering global supply chain disruptions stemming from the March Japanese earthquake and tsunami.
Other Pre-screened Independent Contributors
J-Chart is an innovative charting and bias-neutral market analysis tool. Based on its proprietary theoretical concept and display of market price action, J-Chart provides a much clearer and unique insight into the market than conventional charting methods. This innovative charting and market analysis tool is designed to visualize market price action that constructs unique price patterns called "Equilibriums". Based on its "non-fixed time frame" concept and "Kinetic Equilibrium" application, J-Chart users are able to forecast markets' future movements with high accuracy.
Compiled by David Song, Currency Analyst
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.