20170112-穆迪服务-Credit_Looks_for_US_to_Realize_Potential_25页_528kb

Moody's Weekly Market Outlook Summary

Core Content

Moody's Weekly Market Outlook provides a comprehensive analysis of the current state and future prospects of credit markets in the US, UK/Europe, and Asia-Pacific. The report is authored by a team of experts, including John Lonski, David W. Munves, Ben Garber, and others, and includes forecasts, economic indicators, and insights on credit spreads, defaults, and issuance trends.

Key Contributors

• David W. Munves, CFA: Contact: 1.212.553.2844 | david.munves@moodys.com
• John Lonski: Contact: 1.212.553.7144 | john.lonski@moodys.com
• Ben Garber: Contact: 1.212.553.4732 | benjamin.garber@moodys.com
• Njundu Sanneh: Contact: 1.212.553.4036 | njundu.sanneh@moodys.com
• Yukyung Choi: Contact: 1.212.553.0906 | yukyung.choi@moodys.com
• Irina Baron: Contact: 1.212.553.4307 | irina.baron@moodys.com
• Franklin Kim: Contact: 1.212.553.4419 | franklin.kim@moodys.com
• Xian (Peter) Li: Contact: 1.212.553.1404 | Xian.li@moodys.com
• Moody's Analytics/Europe: Tomas Holinka | +420(221)666-384 | Tomas.holinka@moodys.com
• Moody's Analytics/Asia-Pacific: Alaistair Chan | +61 (2) 9270-8148 | Alaistair.chan@moodys.com
• Emily Dabbs: +61 (2) 9270-8159 | Emily.dabbs@moodys.com
• Editor: Dana Gordon | 1.212.553.0398 | dana.gordon@moodys.com

Main Views and Key Insights

US Credit Market Outlook

• Economic Potential: The US economy is still underperforming, with industrial capacity utilization at 75.2% and payrolls at 57.0% of the working-age population, indicating room for growth.
• Credit Spreads: High-yield spreads are expected to rise from 405 bp to around 525 bp by year-end 2017. The current low spread suggests expectations of faster jobs growth.
• Issuance Trends: US$-denominated investment-grade (IG) bond issuance is expected to decline slightly in 2017, while high-yield issuance may rise by 2.7%.
• Labor Market: The unemployment rate may overstate labor market tightness due to a high U6 under-employment rate and a low labor force participation rate.
• Consumer Spending: Slower household spending growth may limit economic growth, as businesses rely on strong consumer demand to increase production.
• Inflation Expectations: Core PCE inflation is expected to rise gradually, but the US economy may not see a significant acceleration in price inflation due to dollar strength and weak labor productivity.

Europe Credit Market Outlook

• UK: The UK is expected to face inflationary pressures due to the depreciation of the pound following the Brexit vote. CPI inflation is forecast to rise to 1.5% in December and peak at 3.4% in July.
• Euro Zone: Inflation in the euro zone is expected to accelerate to a 3.5-year high of 1.1% in December, driven by energy and food prices. The ECB may consider reducing asset purchases but is likely to wait until inflation is more sustainable.
• Italy: Industrial production is expected to grow in November, but political uncertainty from the rejected constitutional referendum may hinder early 2017 growth. A hard Brexit could further impact Italian exports.

Asia-Pacific Credit Market Outlook

• China: China's economy is expected to grow at 6.7% in 2016, with investment supported by a booming housing market and rising commodity prices. However, FDI flows are expected to remain weak in 2017.
• Japan: Subdued domestic demand continues to drag on tertiary activity, despite a weaker yen boosting export-oriented businesses.
• South Korea: The Bank of Korea is expected to maintain its current monetary policy rate of 1.25% in January, as domestic demand remains weak and inflation pressures are low.
• India: The foreign trade deficit is expected to widen in December due to rising imports and slow export growth. This trend is likely to continue in 2017.

Key Economic Indicators

• Credit Spreads:
  • Investment Grade: Year-end 2017 spread may exceed 122 bp.
  • High Yield: Expected to rise to 525 bp by year-end 2017.
• Defaults: US HY default rate is forecast to near 3.9% by 2H 2017.
• Issuance:
  • US$-denominated IG bond issuance may dip to $1.394 trillion in 2017.
  • US$-priced high-yield issuance is expected to rise to $349 billion.
• Industrial Capacity Utilization: At 75.5% in December, indicating potential for growth.
• Consumer Price Index (CPI): Expected to rise to 1.5% in December and peak at 3.4% in July.
• Unemployment Rate: May overstate labor market tightness due to U6 under-employment and low labor force participation.
• Retail Sales: Expected to grow at 6.6% y/y in December, but monthly contraction is anticipated.

Conclusion

The report emphasizes that while the US economy has room for growth, it is not expected to see a significant acceleration in inflation. The labor market remains underutilized, and credit spreads reflect optimism for stronger economic activity. In Europe, inflation is expected to rise, particularly in the UK and Germany, with the ECB likely to maintain its accommodative stance. In Asia-Pacific, China's growth remains steady, while Japan and India face challenges in trade and domestic demand. The outlook is cautiously optimistic but highlights the importance of continued economic momentum and policy responses to sustain growth.