: Bank Research Consensus Weekly 06.11.12

American economy and interest rate strategy: The Inside Scoop on the Action of the Fed
Vincent Reinhart, Chief Economist we, Morgan Stanley
Slower employment growth, deepening of the strains in European markets and a more sombre assessment of the ability of American politicians to lead the imminent financial Cliff make likely mark that the Fed cuts its forecast already warm. This would allow all of justification, that the Fed should launch political action more unconventional by changes in its balance sheet. In view of the Morgan Stanley economic forecasts, we consider a possibility of four to five this trigger is reached by June 19-20 FOMC meeting.
History
FX: Stretched positioning risks to counter declining
Morten Helt, principal analyst, Danske Bank
This was to be the week that major central banks, announced its intention to monetary easing more but for the moment, only China has delivered. Thus, where that leaves the FX market? Visibility of growth remains weak and is likely to maintain the volatility in the market as investors try to guess what scenario of growth at a discount. This is in turn likely to keep the beta currencies high bounce, as investors will probably confirmation more monetary easing still adding long positions in those currencies.
History
Bernanke reaffirms Outlook
John e. Silvia, Chief Economist, Wells Fargo
"Economic growth has continued to moderate pace so far this year," said Ben Bernanke, President in testimony to the Joint Economic Commission this week. We agree with this perspective while recognizing that many in the market had planned economy to pick up steam as the year progressed. We also agree with assessment of the President reflecting the slowdown of the growth of employment, in part, the influence of the seasonal correction factors and earlier this week in hot weather. Inflation, our second fundamental that defines the framework for interest rates, suggests that the measures of inflation, as PCE index and index of consumer prices, are expected to show slower gains for the rest of this year led to mainly by the low prices of energy and weakened demand in the economies.
History
United States - financial partners
Chris Jones, Economist, TD Financial Group Bank
Major central banks around the world have been on the offensive this week, even if only in words. In testimony Thursday before the Joint Economic Committee, Bernanke, President supplié lawmakers to do more to support the economic recovery in the United States, saying: "I would be much more comfortable if Congress would take some of that burden us.". Across the Atlantic, after the announcement of the interest rate remain outstanding at 1%, head of the ECB Mario Draghi chastised makers not to be quite aggressive in the resolution of the crisis in Europe. But all the Governors of the central banks step spoke simply speak. In a surprise move, the Bank of China (popular PCB) cut its reference rate by 0.25 pp for the first time since 2008. The movement comes ahead of a sweep of all the economic data to be published by the Statistical Office of the State of this weekend, including inflation.
History

: Bank research Consensus weekly 06.04.12

ECB Preview: We Expect ECB To Cut In June
Anders Møller Lumholtz and Lars Tranberg Rasmussen, Danske Bank
Recent leading indicators have been very weak and even the core countries are in recession. We expect the ECB to respond with a rate cut on Wednesday. A cut is partly priced in the market although unchanged rates remain the consensus among analysts.
Full Story
Fear Triumphs-in the Short-Run
John e. Silvia, Chief Economist, Wells Fargo
Fears of the downside in the European economic and financial future have altered the outlook for U.S. and global interest rates in ways outside the domestic fundamentals in each country.
Weaker European growth implies weaker U.S. exports and, by implication, weakness in employment and capital spending since less labor and less capital will be required to produce the lower expected pace of U.S. growth. Weaker growth expectations have also lowered inflation expectations and thereby the pricing power of firms selling to consumers and other businesses. Therefore, inflation measures have also show some weakness in recent months.
Full Story
U.S. - Never Say Never
James Marple, Senior Economist, TD Bank Financial Group
It seems that every week that the European crisis goes on, a new record is broken. This week, government bond yields in the United States and Germany broke through their previous historic lows to even more historic levels. In Germany, the 2-year government bond yield fell negative actually. In the U.S. the 10-year bond yield has breached the 1.5% mark, a level never seen in the 200 years that data has been recorded. Government bonds of safe-haven countries have turned into the equivalent of Brink's trucks - investors are willing to pay a premium just to get their money back in a few years time. In Germany's case, it's "most," not "all" of their money. We are truly in uncharted territory.

" Bank research Consensus weekly 05.28.12

May 28, 2012 14 analyst h 10 GMT  
China economy: difficult to reach 9.0% this year, but we remain optimistic
Global economic team, Morgan Stanley
Always optimistic on the prospects of the macro: policy measures more streaming, we believe that the growth of GDP in China now has troughed and accelerate significantly in the third and fourth quarter of this year.
History
FX: Euro under pressure
Morten Helt, principal analyst, Danske Bank
Since the Greek elections on May 2, the euro has been under a severe pressure against the US dollar and EUR/USD in may fell from above 1.32 currently 1.25. The main reasons are of course the risk of a Greek default, or that the country decides to leave the euro. We think that things could get much worse before they improve and we see more risk in the short term EUR/USD and EUR/GBP, EUR/JPY.
History
Growth reduced yields more
John e. Silvia, Chief Economist, Wells Fargo
The wall of worry related to the European financial crisis, combined with reports of slower economic growth in China, from expectations of lower interest and reduced interest rates going forward. The 10-year Treasury yield ends the month just below 1.75%, and the Treasury of two years is less than 0.3%. The federal funds rate has effectively transferred a little stronger in recent weeks, possibly reflecting the effect of slightly stronger growth of the loan. Despite a few higher basis points, the expectations for the moment a strengthening of monetary policy remain unchanged, with the majority of the members of the Committee on the open market and the market players expect the first tightening move sooner than 2014.
History
United States - imbalances in Europe
Chris Jones, Economist, TD Financial Group Bank
Fears for the future of Europe reached a new field this week after it emerged that senior officials have been drawing of contingency plans for a potential that Greek out of monetary union. We also published a report describing how a Greek start might be and how it may affect the U.S. economy. No doubt a chaotic divorce consequences. But what is often underestimated is the fact that this crisis is not only Governments that cannot pay their bills. It's a balance of payments crisis that extends well beyond the borders of the Greece.
History

> Bank research Consensus weekly 05.07.12

Review and Preview
Ted Wieseman, U.S. Fixed Income Economist, Morgan Stanley
Soft overall economic data in the wake of the weak employment report two weeks back and a further deterioration in European sovereign markets supported further small Treasury market gains over the past week, a fifth straight weekly rally that left yields near their lowest levels since early March at the longer end and February at the shorter end. These gains were accompanied and underpinned by a further dovish repricing of the Fed rate path in coming years ahead of Wednesday's FOMC statement and forecast release and press conference. The pricing of the fed funds rate path in coming years is going into this FOMC meeting at the most dovish levels since shortly after the January 25 FOMC statement initially extended the zero rate guidance from mid-2013 to late 2014, extending a dramatic reversal of the initial misguided move in the aftermath of the March 13 FOMC meeting to price in a much earlier start to tightening. Treasury market gains since the March 20 recent market lows have closely tracked this major shift in the medium-term fed funds rate outlook, underlining that QE is only one of two key policy tools the Fed is currently employing unconventional. Market expectations at this point for an extension of Fed asset purchases after June seem to remain low, and we see less than a 50-50, though still highly data-dependent, chance of an extension of Operation Twist. But short rate policy guidance, when consistently and credibly reinforced by Fed leaders - as Fed Chairman Bernanke, New York Fed President Dudley and Fed Vice Chairman Yellen have done over the past month - has been proving to be the more powerful unconventional Fed policy tool. And the steady and cumulatively significant further fed funds future repricing through the past week indicates that investors expected this message to be further reinforced by Wednesday's FOMC meeting results.
Full Story
FX: Higher Risk of Lower EUR/USD
Morten Helt, Senior Analyst, Danske Bank
This week's IMS/PMI data painted an even more divergent picture between the eurozone and the US While US ISM surprised on the upside rising to 54.8 in April from 53.4, eurozone PMI fell from 47.7 to 45.9 after the final revision yesterday (Wednesday).
Diverging economic development increases the possibility of further narrowing of the EUR - USD rate spread. This could be the game change that could move EUR/USD out of the current very tight trading range, as further worsening of European data could trigger rising speculations about a new round of ECB stimuli, while falling US unemployment might increase expectations of an early Fed hike.
Full Story
Further ECB Ahead?
John e. Silvia, Chief Economist, Wells Fargo
As widely expected, the European Central Bank (ECB) kept its main policy rate unchanged at 1.00 percent at its monthly policy meeting this week. However, the ECB's description of the present state of the Eurozone economy was anything but rosy. The ECB said the economy has stabilized, albeit at a low level, but also stated that the outlook was subject to downside risks, most notably from the ongoing sovereign debt crisis. Although we believe the ECB will refrain from cutting its policy rate further, we acknowledge that further easing could perspire if economic activity remains depressed for longer than we anticipate. In that regard, the weaker-than-expected PMIs for the manufacturing and service sectors for April suggest that growth remains anemic, if not negative, thus far in the second quarter. Significant pressure on Spanish and/or Italian debt markets would probably induce the ECB to engage in another round of massive liquidity support to the banking system.
Full Story
U.S. - Two Labor Markets Divided By A Common Ocean
Chris Jones, Economist, TD Bank Financial Group
Payrolls day gives economists a lot to talk about. Unfortunately, the conversation won't be an ebullient one. Data released Friday showed the U.S. created a mere 115 K jobs in April, after falling short of expectations in March. Across the Atlantic, eurozone unemployment hit 10.9% in March, the highest since the euro was launched over a decade ago. Worse still, Germany posted a surprise rise in unemployment, raising concerns that der motor of the European economy is starting to falter.

€ Swale Euro training In Focus, Sterling, support research

Discussion points
Euro: ECB to knock your dove in the Middle risk for prolonged recession pound sterling: current Correction, the prospects remain optimistic on the Dollar of BoE: Index of 9 900, Lacker Fed on tap Euro tests: ECB to knock your Dove the medium risk for prolonged recession
The Euro slipped to a weekly minimum fee of 1.3120 as the weakening of the market of work associated with the decline in manufacturing of increased the risk of a prolonged recession, and the EURUSD can continue to rebound from the previous month, as the sovereign debt crisis continues to drag on the real economy. Indeed, the Portugal auction EUR 1 b 12 months good performance 3.908 percent, which compares the % 3.652 offered in March, and there could be a little more moderate the European Central Bank, this time as fundamental for the region perspectives more dark.
Although the ECB should largely to maintain its current position of the policy in may, Central Bank Chairman Mario Draghi may seek to target the reference interest rate as the non-standard measures have limited impact with regard to the risks to the region, and we could attend the Board of Governors to carry its relaxation cycle in the second half of the year : the Governments under the single currency become more and more dependent on monetary support. The EURUSD resumed a series of senior lower in April, we will paste by our forecasts down for the pair, and that we are still a strong bond of the exchange rate as price action continues to approach the apex of the triangle down. In return, we need a significant break and a fence below 1.3000 to see bearish formation pan, and we should see the entering fall to Fibonacci 23.6% of the top 2009-2010 allows low around 1. 2630-50 as European policy makers trying to reduce the risks surrounding the area.
Pound sterling: Correction underway, Outlook remains optimistic on the BoE
The pound extended the decline of the previous day as participants in the market reduced their appetite for risk, and the correction in the short term in the GBPUSD may gather pace for the rest of the week, then that index of upcoming continuing relative strength in the territory of surachat. However, as the economic recovery in the United Kingdom brings together progressively the pace, we should see the Bank of England continue to move away from its relaxation cycle, and we are looking for charges annual highs in the GBPUSD as the pair maintains the trend since the beginning of this year. As Governor of the BoE Mervyn King is expected to speak later today, bellicose comments of the head of the Central Bank should support the sterling, but the GBPUSD may continue to fall back to the old resistance around 1.6000 he is seeking for support.
US dollar: Index 9 900, Lacker Fed on tap test
The greenback has continued to return on the decline of the previous month, with the Dow Jones - FXCM U.S. Dollar Index (Ticker: USDOLLAR) advancing to a maximum of 9 902 and the reserve currency may appreciate more during trade in North America, as the flight to safety is the pace. As the economic record is still light enough for the rest of the day, we should see trends risk dictate the action price through the major currencies, but the fresh batch of comments from the Fed Chairman of Richmond Jeffery Lacker can trigger a bullish reaction in the greenback as the FOMC Member adopted a bellicose tone of monetary policy. As the US Federal Reserve increased its Outlook for growth and inflation, we should see the Central Bank to discuss a preliminary exit strategy, and the Committee can see scope start to normalize monetary policy toward the end of the year, as the recovery gathers pace.

Currency	GMT	EDT	Release	Expected	Prior
USD	14:00	10:00	Factory Orders	-1.70%	1.30%
USD	14:30	10:30	DOE U.S. Crude Oil Inventories		3978K
USD	14:30	10:30	DOE Cushing OK Crude Inventory		574K
USD	14:30	10:30	DOE U.S. Distillate Inventory		-3052K
USD	14:30	10:30	DOE U.S. Gasoline Inventories		-2235K
USD	16:30	12:30	Fed's Lacker Speaks on Economy in Norfolk
EUR	17:00	13:00	Italian Budget Balance (euros) (YTD)		-28.2B
EUR	17:00	13:00	Italian Budget Balance (euros)		-17.5B
NZD	22:45	18:45	Unemployment Rate	6.20%	6.30%
NZD	22:45	18:45	Employment Change (QoQ)	0.50%	0.10%
NZD	22:45	18:45	Employment Change (YoY)	0.90%	1.60%
NZD	22:45	18:45	Participation Rate (QoQ)	68.30%	68.20%

Currency	GMT	Release	Expected	Actual	Comments
NZD	01:00	ANZ Commodity Price (APR)	--	-4.5%	Falls for second month.
JPY	01:30	Labor Cash Earnings (YoY) (MAR)	0.2%	1.3%	Largest advance since July 2010.
CNY	02:30	HSBC Manufacturing PMI (APR)	--	49.3	Contracts for the sixth month.
CHF	07:30	SVME-Purchasing Managers Index (APR)	51.0	46.9	Lowest print since November.
EUR	07:45	Italian Purchasing Manager Index Manufacturing (APR)	47.1	43.8	Contracts for the second month.
EUR	07:50	French Purchasing Manager Index Manufacturing (APR F)	47.3	46.9
EUR	07:55	German Purchasing Manager Index Manufacturing	46.3	46.2
EUR	07:55	German Unemployment Change (APR)	-10K	19K	Rises for the second time this year.
EUR	07:55	German Unemployment Rate s.a. (APR)	6.7%	6.8%
EUR	08:00	Italy Unemployment Rate (SA) (MAR P)	9.4%	9.8%	Highest since 2000.
EUR	08:00	Euro-Zone Purchasing Manager Index Manufacturing (APR)	46.0	45.9	Lowest since June 2009.
GBP	08:30	Purchasing Manager Index Construction (APR)	54.0	55.8	Slows for the first time since January.
GBP	08:30	Mortgage Approvals (MAR)	48.0K	49.9K	Holds below 50K for the second month.
GBP	08:30	Net Consumer Credit (MAR)	0.3B	0.4B
GBP	08:30	Net Lending Sec. on Dwellings (MAR)	1.0B	1.0B
GBP	08:30	M4 Money Supply (MoM) (MAR)	--	-0.8%	Contracts for the second straight month.
GBP	08:30	M4 Money Supply (YoY) (MAR)	--	-5.0%
GBP	08:30	M4 Ex IOFCs 3M Annualised (MAR)	--	6.4%
EUR	09:00	Euro-Zone Unemployment Rate (MAR)	10.9%	10.9%	Rises to a 15-year high.
EUR	09:00	Italy Producer Price Index (MoM) (MAR)	0.6%	0.3%	Slowest pace of growth since March 2010.
EUR	09:00	Italy Producer Price Index (YoY) (MAR)	3.0%	2.7%
USD	11:00	MBA Mortgage Applications (APR 27)	--	0.1%	Rises for the second time in April.
USD	12:15	ADP Employment Change (APR)	170K	119K	Smallest advance since September.