20180109-穆迪服务-Profits_Growth_and_Benign_Default_Outlook_May_Offset_Higher_Interest_Rates_25页_737kb

Moody's Analytics Weekly Market Outlook Summary

Core Content

Moody's Analytics Weekly Market Outlook discusses the potential for corporate profits growth and a benign corporate default outlook to offset the impact of rising interest rates in 2018. It provides insights into credit market trends, economic forecasts, and key indicators for the U.S., Europe, and Asia-Pacific regions.

Main Views

• Interest Rates and Equity Market: While benchmark interest rates are expected to rise in 2018, the combination of corporate earnings growth and a favorable default outlook may prevent a deep and prolonged equity market decline.
• Historical Context: The 1987 and 1994 stock market crashes were driven by significant interest rate spikes, but the equity market typically rebounds quickly unless the rate increases severely impact corporate profits.
• Default Rate Trends: Moody's forecasts a decline in the U.S. high-yield default rate from 3.4% in November 2017 to 2.3% by November 2018, based on the EDF metric, which has been in a downward trend since early 2018.
• Credit Spreads: Investment-grade credit spreads are expected to exceed 103 basis points by year-end 2018, while high-yield spreads may approach 400 basis points.
• Economic Indicators: The report highlights key economic data points and their implications for the credit and equity markets, including GDP, industrial production, employment, and inflation.

Key Information

U.S. Market Outlook

• Corporate Bonds and Equities: Expected to perform well due to strong earnings and low default risk.
• Weather Impact: Unseasonably cold weather in late December and early 2018 may affect GDP growth in the first quarter but not the fourth.
• C&I Loans: Growth in C&I loans has slowed significantly, with a 0.9% increase in November 2017 compared to November 2016, suggesting limited upside for the federal funds rate.
• Key Indicators:
  • Moody's Analytics Business Confidence: 35.9 (as of November 2017)
  • Job Openings and Labor Turnover Survey: 5996 (November 2017)
  • Import Prices: 0.7% (December 2017)
  • Producer Price Index (PPI): 0.4% (December 2017)
  • Consumer Price Index (CPI): 0.4% (December 2017)
  • Retail Sales: 0.8% (November 2017)

Europe Market Outlook

• Economic Recovery: The Eurozone has experienced a broad-based recovery, with growth expected to moderate from 2.4% in 2017 to 1.9% in 2018.
• CEE Countries: Expected to see cooling growth due to less expansive fiscal policies, particularly in Poland and Hungary.
• UK Economy: Likely to grow at a slower pace, around 1.3% in 2018, due to ongoing Brexit uncertainty.
• Key Indicators:
  • Germany Industrial Production: 0.8% (November 2017)
  • Germany Foreign Trade: €21.0 billion (November 2017)
  • France Industrial Production: -1.1% (November 2017)
  • U.K. Industrial Production: 0.9% (November 2017)
  • Spain Industrial Production: 0.6% (November 2017)
  • Italy Retail Sales: -1.0% (November 2017)

Asia-Pacific Market Outlook

• China's Economy: Consumer price growth is expected to cool to 1.6% in December, while producer price growth is projected to rise to 6.0% y/y. The M2 money supply growth is likely to slow to 9.0% from 9.1%.
• India's Inflation: Expected to rise to 5.0% in December, driven by food and fuel inflation.
• Taiwan's Trade: Expected to maintain a high trade surplus of around US$5.8 billion in December.
• Malaysia's Trade: Surplus is expected to narrow to MYR8.3 billion in November.
• Philippines' Industrial Production: Likely to decline by 7% y/y in November.
• South Korea's Employment: Unemployment rate is expected to remain at 3.7% in December.

Outlook for 2018

• Interest Rates: The rise in interest rates is anticipated to be milder than in 1987 and 1994, and may not significantly impact equity markets unless it causes a severe contraction in corporate profits.
• Credit Market Dynamics: A benign default outlook and strong corporate earnings are likely to support credit markets despite rising rates.
• Industrial Commodity Prices: Continued growth in industrial commodity prices may push up Treasury bond yields, but the relationship is not necessarily direct.
• Equity Market Response: Historical data suggests that equity markets tend to recover quickly after a default rate decline, which is expected in 2018.

Summary of Key Metrics

• U.S. High-Yield Default Rate: Projected to decline from 3.4% (November 2017) to 2.3% (November 2018).
• 10-Year Treasury Yield: Expected to rise to 2.90% by year-end 2018, up from 2.45%.
• High-Yield Bond Spread: May approach 400 basis points by year-end 2018.
• Industrial Metals Price Index: Rose 23.5% in 2017, contributing to higher Treasury yields.
• C&I Loan Growth: Slow growth in commercial and industrial loans suggests limited potential for further rate hikes.
• Moody's Analytics Business Confidence Index: 35.9 (November 2017)

Future Outlook

• The report emphasizes the importance of monitoring key economic indicators and credit market metrics to gauge the potential impact of interest rate changes on equity and corporate bond markets.
• It highlights the resilience of equity markets in the face of moderate interest rate increases, provided corporate profits and default rates remain stable.