20160915-穆迪服务-Rate_Hikes_Will_Be_the_Least_of_Market_Worries_25页_989kb

Moody's Weekly Market Outlook Summary

Core Content

This Moody's Weekly Market Outlook discusses the current state and future outlook of credit markets, focusing on the implications of rate hikes, corporate issuance trends, and economic indicators across the US, Europe, and Asia-Pacific regions. The report highlights that while the Federal Reserve is expected to maintain low interest rates, the broader economic concerns and corporate leverage issues may overshadow rate hike expectations. It also covers global corporate bond issuance, particularly post-Brexit, and provides a forecast for upcoming economic data releases.

Main Points

1. Rate Hikes: The Least of Market Worries

• Fed Policy Context: The Federal Reserve is unlikely to raise interest rates in 2016 due to weak economic data, including declining core retail sales and subdued business activity.
• Fed Governor Brainard's View: She argues for maintaining low rates to avoid premature hikes that could harm the economy more than delayed inflation.
• Market Expectations: Fed funds futures indicate only a 12% chance of a rate hike at the September 21 meeting, rising to 47% for the December 14 meeting.
• Equity Market Reaction: Despite weak sales data, US equities rallied, and the VIX index suggested a narrowing of high-yield spreads.

2. Corporate Issuance Booms Post-Brexit

• Global Issuance Surge: Corporate bond issuance reached record levels in August, with the US dollar issuance on track to set an all-time high for the year.
• Corporate Leverage Increase: The surge in issuance reflects a rise in corporate leverage, driven by low interest rates and the need for capital.
• Yankee and Reverse Yankee Bonds: US companies issued significant amounts of euro-denominated debt, while non-US corporations increased dollar-denominated issuance.

3. Credit Market Indicators

• Credit Spreads: High-yield bond spreads are expected to widen to 610 bp by year-end 2016, while investment-grade spreads may remain near 142 bp.
• Defaults: The US HY default rate is forecasted to drop to 4.5% by the summer of 2017.
• Corporate Leverage: US investment-grade corporations have a debt-to-earnings ratio of 2.4, the highest on record.

4. Economic Outlook for the Week Ahead

The US

• Consumer Price Index (CPI): Expected to show a 0.1% overall and 0.2% core increase in August.
• Consumer Sentiment: Preliminary September reading is forecasted at 90.7, showing improvement from August's low.
• Housing Market: NAHB Housing Market Index is expected to remain at 60, with housing starts and permits showing slight declines but long-term growth.
• FOMC Policy Decision: Expected to keep the fed funds rate in the range of 0.25% to 0.5%.
• Existing Home Sales: Forecasted to rise to 5.47 million in August.
• Leading Indicators Index: Expected to remain flat at 0.0% for August.

Europe

• France's GDP: Likely to show a stall in growth in the second quarter, with government consumption and household spending increasing.
• Eurozone PMIs: Flash Markit PMIs for September are expected to show weak growth, especially in France.
• Germany's PPI: Producer prices are expected to contract by 1.6% in August, with input prices rising and selling prices falling slightly.
• ZEW Economic Sentiment: Remains at 0.5, below expectations and long-term averages.
• Spain's Trade Deficit: Expected to narrow from €1.4 billion in June to a lower figure due to slowing exports and household spending.

Asia-Pacific

• Japan's Trade Surplus: Expected to be a small surplus of ¥290 billion in August, despite weak export growth.
• Japan's Monetary Policy: The Bank of Japan is likely to continue its stimulus measures, though the 2% inflation target remains out of reach.
• Singapore's Exports: Non-oil domestic exports are forecasted to contract by 5% y/y in August.
• Thailand's Monetary Policy: The Bank of Thailand is expected to cut its policy rate to a record low of 1.25% at its September meeting.

Key Information

• Rate Hike Uncertainty: The Fed is unlikely to hike rates in 2016 due to weak economic data and political factors.
• Corporate Issuance Surge: Global corporate bond issuance hit record levels in August, driven by low interest rates and increased borrowing.
• Credit Spread Trends: High-yield spreads are expected to widen, while investment-grade spreads remain stable.
• Economic Indicators: The report highlights key economic data releases, including CPI, consumer sentiment, housing market indices, and PMIs, which will influence market sentiment.
• Monetary Policy Outlook: Central banks in Japan, Russia, and Thailand are expected to continue accommodative policies, though the effectiveness is questioned due to weak economic conditions.

Conclusion

The report underscores that while rate hikes are a concern, they are not the primary worry for credit markets. Instead, the focus is on corporate leverage, economic growth, and the potential for wider credit spreads. The upcoming economic data releases will be critical in shaping market expectations and policy decisions.