20140814-穆迪服务-Weekly_Market_Outlook_27页_609kb

Moody's Weekly Market Outlook Summary

Core Content

Moody's Weekly Market Outlook provides a detailed analysis of credit market trends, focusing on high yield bonds, default rates, corporate bond issuance, and macroeconomic indicators. The report highlights that while there were significant market corrections in July, the outlook for high yield bonds remains relatively benign.

Main Points

• High Yield Rebounds: The high yield bond market experienced a correction in July, with spreads narrowing and yields stabilizing. This suggests that the downturn was not the start of a bear market but rather a short-term adjustment.

• Upgrades Outpace Downgrades: The third-quarter-to-date shows a higher number of high yield upgrades than downgrades, which is a positive sign for the market. This trend supports a low default outlook and suggests a potential rebound in the sector.

• Credit Market Outlook: The report indicates that the high yield default rate is expected to rise slightly from 1.8% in July to an average of 2.7% for the first half of 2015, but remains well below historical averages. The high yield spread is also expected to stay under 550 bp, despite the projected increase in default rates.

• Global and Domestic Factors: Global economic slack and a slowdown in US consumer spending are putting downward pressure on Treasury bond yields. The report suggests that the 10-year Treasury yield may remain under 2.4% as home sales continue to struggle.

• Housing Market Weakness: The decline in homebuyer mortgage applications signals weak housing demand. This is linked to a potential slowdown in home price growth and may affect the broader economy.

• Corporate Profit Growth: While the first-quarter corporate profits declined, second-quarter results have been strong, driven by rising domestic demand and improved margins. This suggests a potential recovery in corporate earnings.

• Capacity Utilization: The manufacturing sector's capacity utilization rate has not yet reached a clear peak, indicating room for further growth without significant cost increases.

• Fed Policy Impact: Despite concerns about Federal Reserve rate hikes, historical data shows that high yield debt can perform well during tightening cycles, especially if corporate fundamentals remain strong.

• European Economic Concerns: Europe's economic challenges, particularly in Germany and the broader eurozone, pose a significant risk to the global high yield market. The region's economic performance is closely tied to global speculative grade debt.

Key Data Highlights

• Credit Spreads:

  • Investment Grade: Expected to widen from 109 bp to 120 bp by year-end 2014.
  • High Yield: Recent spread of 396 bp is well under its historical averages, but could rise slightly.

• Default Rates:

  • US HY default rate: 1.8% in July, expected to rise to 2.7% for 1H/2015.
  • Global HY default rate: 2.2% in July, expected to rise to 2.6% in the next year.

• Bond Issuance:

  • US Investment Grade: $1.119 trillion in 2013, expected to rise to $1.175 trillion in 2014.
  • US High Yield: $431 billion in 2013, expected to drop to $425 billion in 2014.

• Retail Sales:

  • Total Retail Sales: 3.7% YoY increase for January-July 2014.
  • Autodealerships: 7.6% YoY growth.
  • Non-stores (e-commerce): 6.7% YoY growth.
  • General Merchandise Stores: 1.2% YoY growth, showing weakness.

• Mortgage Applications:

  • MBA's index of mortgage applications fell by -4.7% from the previous four-week period.
  • The drop in mortgage applications may indicate a slowdown in home sales.

• Economic Indicators:

  • US GDP contraction in Q1 2014: 2.9%.
  • European economic slowdown: Germany's GDP contraction and overall eurozone stagnation.

The Week Ahead

• FRIDAY, AUGUST 15:

  • Producer Price Index (July): Expected to rise slightly, but remain under 2% YoY.
  • Industrial Production & Capacity Utilization (July): Forecasted to increase by 0.3% and capacity utilization to reach 79.2%.
  • Consumer Price Index (July): Expected to rise modestly, with a focus on core inflation.

• MONDAY, AUGUST 18:

  • NAHB Housing Market Index (August): Forecasted to remain at a high of 53, with projected sales optimism.

• TUESDAY, AUGUST 19:

  • Consumer Price Index (July): Expected to rise by 0.1% overall and 0.2% core.
  • Leading Indicators Index (July): Forecasted to rise by 0.6%, reflecting strong job market and consumer confidence.

• WEDNESDAY, AUGUST 20:

  • FOMC Meeting Minutes: Expected to show reduced concerns about inflation, with potential discussions on rate targets.

• THURSDAY, AUGUST 21:

  • Existing Home Sales (July): Forecasted to reach 5.0 million, potentially influenced by mortgage application trends.
  • Housing Starts & Building Permits (July): Expected to rise to 970,000 starts and 1.0 million permits, indicating a rebound in housing activity.

• EUROPE:

  • Inflation Trends: Slowed due to low food and energy prices, with potential for further easing.
  • Russia's Sanctions: May affect EU agricultural exports and inflation, but not immediately.
  • UK Inflation: Accelerated to nearly 2% in June, with potential for further increases.

Conclusion

Moody's Weekly Market Outlook underscores a cautiously optimistic view for the high yield market, despite recent volatility. The report suggests that the market's performance is influenced by both global and domestic economic conditions, with a focus on corporate fundamentals, default rates, and monetary policy. The upcoming economic data will be crucial in determining the trajectory of credit markets and the broader economy.