Bank Research Consensus Weekly 08.13.12
Europe Economics: Stuck in a No-Growth Trap
Elga Bartsch, Chief European Economist, Morgan Stanley
Our call for a recovery in the remainder of this year looks increasingly stretched. A renewed contraction in EMU GDP now seems more probable. Hence, we are cutting our euro area GDP growth forecast to -0.5% for this year and to no growth on average for next year.
FX: Scandies Forging Ahead
Arne Lohmann Rasmussen, Chief Analyst, Danske Bank
Recent months have seen sharp currency strengthening, not least of SEK versus EUR, but NOK has also appreciated. EUR/NOK is rapidly approaching 7.22, which provided the historical floor for the pair in 2003.Investors are attracted by the strong economic balances in Scandinavia and many investors see Scandinavia as a serious safe haven, offering shelter from the euro crisis.
Fundamentals Dictate Steady Ahead
John E. Silvia, Chief Economist, Wells Fargo
Our monthly outlook reaffirms our call for sub-2.0 percent economic growth and inflation below the Fed’s 2.0 percent target. Given this backdrop, the consensus expects some form of additional policy stimulus at the September FOMC meeting. While we agree with this assessment, we do not expect QE3.
U.S. – Catching a Break
Martin Schwerdtfeger, Senior Economist,TD Bank Financial Group
This has been a relatively calm week for financial markets. The leading stock market indexes were poised to secure weekly gains that would drive them up to levels not seen since May, even as Chinese trade data released today brought to the fore concerns about the strength of economic activity in the Asian country. Actually, the latter reinforced the belief that both fiscal and monetary policies will turn more stimulative in China. That belief had been fostered by softer-than-expected Chinese industrial production data and a decline in annual inflation released yesterday. This narrative adds to the markets’ hope for more quantitative easing from the Fed and the expectation that the European Central Bank would buy European sovereign bonds to stabilize yields at lower, more sustainable levels.
Compiled by David Song, Currency Analyst
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