20180222-穆迪服务-Borrowing_Restraint_Elsewhere_Makes_Room_for_Federal_Debt_Surge_26页_797kb

Summary of Moody's Weekly Market Outlook

Core Content

Moody's Weekly Market Outlook highlights the dynamics of U.S., European, and Asia-Pacific credit markets, with a focus on the implications of federal debt growth, demographic changes, and economic indicators for the coming weeks and year.

Main Points

U.S. Federal Debt Growth

• Federal debt share: The U.S. federal government's share of total nonfinancial-sector debt has risen significantly from 18% in 2007 to 34% in 2017, the highest since 1960.
• Historical context: The peak of federal debt share was 72% in 1945 due to post-WWII spending, but it declined afterward.
• Future outlook: Tax cuts and an aging population are expected to drive continued growth in federal debt, which will likely outpace other debt categories.
• Debt growth rates:
  • Nonfinancial corporate debt: May grow at 4.3% in 2018, slower than 5.5% in 2017.
  • State and local government debt: Is expected to remain under $3.18 trillion, with a potential stabilization in 2018.
  • Household debt: May grow at 3.5% in 2018, down from 3.6% in 2017.

U.S. Economic Outlook

• Housing market:
  • Existing-home sales fell 3.2% in January to 5.38 million annualized units.
  • Mortgage rates are expected to rise, potentially affecting residential investment.
  • The 10-year Treasury yield is projected to increase, but may not surpass the Blue Chip consensus of 2.85% for 2018.
• Consumer credit: Growth is expected to slow due to higher mortgage yields and less favorable tax treatment.
• Key indicators:
  • Second estimate of Q4 GDP will be released on Wednesday.
  • Durable goods orders and vehicle sales will also be closely watched.
  • Construction spending and ISM manufacturing survey will provide insights into economic activity.

U.S. Credit Market Metrics

• Investment-grade bond spreads: Expected to rise to over 102 bp by year-end 2018.
• High-yield bond spreads: May approach 425 bp by year-end 2018.
• Default rates: The U.S. high-yield default rate is forecasted to drop from 3.2% in January 2018 to 2.0% by January 2019.

Key Insights

• Federal debt surge: The increase in federal debt is partly due to borrowing restraint in the private and state sectors.
• Demographic impact: An aging population will slow household and business spending, potentially leading to lower real interest rates.
• Serial correlation: The 10-year Treasury yield is more closely correlated with core PCE inflation and private-sector debt growth than with federal debt growth.
• Market sensitivity: The U.S. housing market is becoming more sensitive to mortgage rate changes, which could impact GDP growth.

Asia-Pacific Outlook

• Japan:
  • Industrial production rose 1.0% in January, while retail sales increased 1.1% year-on-year.
  • Core inflation is expected to rise to 1% in January, driven by higher fuel costs.
  • The labor market is tightening, with the unemployment rate likely to remain at 2.8%.
• South Korea:
  • Consumer sentiment is expected to decline slightly to 109.7 in February.
  • Exports surged in January, but trade tensions with the U.S. pose risks.
• India:
  • GDP growth is expected to hit 6.8% in the fourth quarter, down from 7.9% in 2016.
  • Domestic conditions improved in the second half of 2017, with consumption likely to remain strong.
• China:
  • Manufacturing PMI for February is expected to rise to 51.1, showing continued optimism.
• Hong Kong:
  • GDP growth rebounded in the fourth quarter, with asset markets and housing activity performing well.

Europe Outlook

• France, Spain, Italy:
  • Economic expansions are expected to be confirmed in the second estimates of Q4 GDP.
  • Manufacturing investment is projected to be a key growth driver.
  • Consumer spending is expected to slow in some countries, but labor market tightening and wage growth could support a rebound in the first quarter.
• Euro Zone:
  • Preliminary inflation figures for February are expected to remain stable at 1.3% for the headline and 1% for the core rate.
  • Unemployment is expected to remain relatively stable, with France, Germany, and Italy showing resilience.

Key Data Releases

Conclusion

The U.S. federal debt is set to grow significantly in 2018, outpacing other debt categories. This is attributed to demographic shifts, tax policy, and aging populations. While the housing market faces challenges due to rising mortgage rates, the overall impact on Treasury yields may be limited. In Europe, economic expansions are expected to be confirmed, with manufacturing investment and core inflation as key drivers. In Asia-Pacific, Japan and South Korea show mixed signals, with Japan's core inflation rising and South Korea facing trade risks. Overall, the report suggests a cautious outlook with potential for slower growth in non-federal sectors and a focus on inflation and interest rate trends.