20160616-穆迪服务-Credit_Metrics_Bode_Ill_22页_778kb

Moody's Weekly Market Outlook Summary

Core Content

Moody's Weekly Market Outlook provides a detailed analysis of credit market trends and economic indicators across the US, Europe, and Asia-Pacific. The report highlights the current state of the credit cycle, the relationship between corporate earnings, employment costs, and credit spreads, as well as upcoming economic data releases that may influence market conditions.

Main Views

• Credit Cycle Outlook: The current business cycle upturn is in its mature phase, and the credit cycle is expected to deteriorate unless corporate profits and cash flows improve significantly. A key indicator is the ratio of internal funds to corporate debt, which has fallen from 25.4% in Q2-2011 to 19.1% in Q1-2016, suggesting a potential turning point.

• Credit Spreads:

  • Investment-grade credit spreads are expected to remain around 147 bp at year-end 2016.
  • High-yield spreads are projected to rise to approximately 640 bp by year-end 2016.
  • A narrowing of high-yield spreads may be suspect unless profits show clear growth.

• Defaults: The US high-yield default rate is expected to rise to 6.4% in Q4-2016, up from 5.0% in May 2016.

• Corporate Bond Issuance:

  • In 2015, US-denominated investment-grade (IG) bond issuance increased by 17.5% to $1.326 trillion.
  • High-yield bond issuance decreased by 15.0% to $358 billion in 2015.
  • For 2016, IG issuance is projected to increase by 7.5% to a record $1.426 trillion, while high-yield issuance may drop by 13.4% to $307 billion.

• Economic Indicators:

  • The correlation between internal funds and profits is strong (0.78), indicating that profit growth is essential for maintaining credit quality.
  • The annual growth rate of corporate gross value added is closely linked to nominal GDP, and the Blue Chip consensus forecasts suggest a weak outlook for both.
  • A slowdown in profits from current production is expected in 2016 due to the imbalance between rising employment costs and sluggish revenue growth.

• Recession Risks:

  • The report warns that a recession is likely unless corporate profits and cash flows improve.
  • The current pace of employment costs makes it difficult to significantly slow down profit growth without a recession.
  • The ratio of internal funds to corporate debt is projected to fall to 18.2% by Q4-2016 and 17.8% by Q4-2017, both levels historically associated with recessions.

Key Information

US Outlook

• Housing Starts & Permits (May): Housing starts are expected to decline slightly, but the recent surge in sales may lead to a recovery in the second half of the year.
• Existing Home Sales (May): Existing home sales are projected to reach a new cycle high, supported by rising credit availability and income gains.
• New Home Sales (May): New home sales are expected to fall after a strong increase in April, but remain above historical averages.
• Leading Economic Indicators (May): The index is expected to rise slightly, but the timing of the Brexit vote may introduce international risks.
• Durable Goods Orders (May): Core durable goods orders are expected to increase, but the euro zone's weak exports and global slowdown could limit the overall rebound.
• Consumer Sentiment (June Final): A revised low reading on inflation expectations could impact the Fed's policy and fixed income markets.

Europe Outlook

• Spain: Lending is expected to remain subdued due to political uncertainty and tight credit standards, though ECB stimulus and bank competition may help stabilize credit levels.
• Euro Zone: The current account surplus is expected to narrow, but the weak euro and global demand should support exports.
• Italy: The trade surplus is expected to widen, but risks from a potential UK exit and a stronger euro may limit export growth.
• Germany: Economic sentiment is expected to improve, but the UK referendum introduces uncertainty.
• France: Job seekers are expected to decline, indicating a strengthening labor market, but household caution and a high savings rate remain concerns.

Asia-Pacific Outlook

• Japan: Trade balance is expected to remain positive, with auto exports strong in North America and low commodity prices helping the trade balance.
• Thailand: The central bank is expected to keep rates unchanged but may ease policy in the future due to internal and external pressures.
• Taiwan: Industrial production is expected to decline, with weak exports and global demand as key factors.
• Singapore: Industrial production is expected to slow, but improved European recovery and rising oil prices may support growth in the second half of the year.

Summary of Key Charts

• Figure 1: Highlights the declining ratio of internal funds to corporate debt, indicating a mature upturn and potential recession risk.
• Figure 2: Shows the historical pattern of corporate debt growth, suggesting that a slowdown in debt growth may precede a recession.
• Figure 3: Illustrates the correlation between employment costs and profit growth, emphasizing the difficulty of slowing costs without recession.
• Figure 4: Demonstrates the weak outlook for nominal GDP and corporate gross value added, which could lead to a deeper profit contraction in 2016.

Conclusion

Moody's report underscores the fragility of the current credit cycle and the need for improved corporate profits and cash flows to avoid a recession. It also highlights the importance of economic indicators such as credit spreads, defaults, and bond issuance in gauging market health. The report provides a comprehensive outlook for the coming weeks, with a focus on the US, Europe, and Asia-Pacific, and warns of potential risks from global events and domestic economic conditions.