Macro Brief: there was good news and bad news Macro Brief: there was good news and bad news Macro Brief: there was good news and bad news

Macro Brief: there was good news and bad news

Macro 4 minutes to read
CD
Christopher Dembik

Head of Macro Analysis

Summary:  Amid heightened focus on growth in both the Eurozone and in China, one of the most pressing issues is how will the ECB elaborate on its TLTRO plans.


Concerns about growth in the Eurozone increased yesterday as the Sentix expectations survey reached its lowest level since Q3 2012, at minus 15.6. This indicator tends to lead the real economy by 6 months, which is another confirmation that growth is doomed to decelerate further in the euro area adding pressure on the European Central Bank to stimulate the economy more and more.

On the other side of the world, China has added further stimulus. The government plans to cut the VAT rate that covers the manufacturing sector by three percentage points. This is only one measure among many others to offset the current negative economic trend. As economic data remains bad, we expect that China will announce more such measures in the coming weeks.

However, as we all know, the current focus is more on the central banks from developed countries, especially the European Central Bank. Markets should be rather quiet in coming days, waiting for insights regarding a new round of targeted longer-term refinancing operations  in the euro area. In our view, the ECB's governing council should refrain from giving a lot of detail concerning the calendar as there are still some technical issues to resolve. Focus should be on forward guidance – “lower for longer” – to reassure investors.

In the short term, we will have plenty of economic data to monitor. There is no much to expect from ISM non-manufacturing, which is still broadly well-oriented in the US, contrary to ISM manufacturing.

Elsewhere, Eric Rosengren and Neel Kashkari, board members of the Federal Open Market Committee, are due to speak this afternoon about the macroeconomic outlook and monetary policy. We will pay attention to the remarks from Kashkari who is, in our point of view, one of the best US economists. He has been saying for several months that the Fed would face great difficulties in raising interest rates. His speech will certainly provide some food for thought. 

Today's Calendar (All times GMT)

03:30 Australia, RBA Overnight Rate
07:30 Switzerland, CPI
08:50 France, Services PMI
08:55 Germany, Services PMI
09:00 Eurozone, PMI indices
15:00 US, ISM non-manufacturing index
Disclaimer

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-hk/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo Capital Markets HK Limited holds a Type 1 Regulated Activity (Dealing in securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged foreign exchange trading); Type 4 Regulated Activity (Advising on securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong

By clicking on certain links on this site, you are aware and agree to leave the website of Saxo Capital Markets, proceed on to the linked site managed by Saxo Group and where you will be subject to the terms of that linked site.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

Please note that the information on this site and any product and services we offer are not targeted at investors residing in the United States and Japan, and are not intended for distribution to, or use by any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Please click here to view our full disclaimer.