20171005-穆迪服务-Rate_Spike_Would_Tame_the_Bulls_30页_809kb

Moody's Weekly Market Outlook Summary

Core Content

Moody's Weekly Market Outlook provides an analysis of credit markets, economic forecasts, and geopolitical developments impacting financial conditions. The report highlights the potential for a rate spike to affect market dynamics and discusses trends in credit spreads, defaults, and bond issuance. It also outlines upcoming economic data releases and their implications for the U.S., Europe, and Asia-Pacific regions.

Main Points

Credit Market Trends

• Credit Spreads: The U.S. investment-grade bond spread is expected to exceed 109 bp by year-end 2017, while the high-yield spread may rise to 410 bp.
• Defaults: The U.S. high-yield default rate is forecast to average 2.8% during Q2-2018, down from 3.4% in August 2017.
• Bond Issuance: In 2017, U.S.-denominated investment-grade (IG) bond issuance is expected to rise by 7.0% to $1.511 trillion, while high-yield (HY) issuance is projected to increase by 26.8% to $432 billion, still below the 2014 peak of $435 billion.
• Profit Outlook: A positive outlook for corporate credit quality is tied to the continued expansion of pretax operating profits.
• Net Interest Expense: The ratio of net interest expense to corporate debt has been declining, suggesting a lower cost of debt and a benign outlook for defaults.

Market Behavior and Correlations

• High-Yield Bond Spreads: High-yield spreads react more strongly to downgrades than to upgrades, with a correlation of 0.80 between the net downgrade ratio and the high-yield bond spread.
• Default Risk: The net high-yield downgrade ratio has historically led the default rate by two to three quarters, indicating a stable outlook for defaults.

Geopolitical and Economic Outlook

• U.S. Economic Data: The report forecasts a weaker-than-average nonfarm payrolls increase in September, influenced by the impact of recent hurricanes.
• Hurricane Impact: Hurricanes Harvey and Irma have disrupted labor markets and economic activity, leading to temporary declines in employment and consumer spending.
• Consumer Confidence: Despite the hurricane effects, consumer and business confidence has remained resilient.
• ISM Surveys: The manufacturing and nonmanufacturing indices are expected to remain stable, with manufacturing showing strong fundamentals and nonmanufacturing facing some uncertainty in the mining sector.
• Trade Deficit: The U.S. trade deficit is expected to narrow in August, with goods exports increasing and imports decreasing.
• European Developments: The Spanish government is actively preventing the Catalonia independence vote, which could have significant economic and political consequences, including a potential impact on the euro and Spanish bonds.

Key Information

• Rating Revisions: In Q3-2017, there were 78 high-yield downgrades and 73 upgrades, with fundamentals being a key driver.
• VIX Index: The VIX index has remained low, indicating continued market liquidity.
• Political Risks: Geopolitical tensions, including the German elections and U.S.-North Korea relations, are on the radar.
• Data Releases: The upcoming week will feature key economic data, including the U.S. jobless claims, GDP, and employment reports, as well as European trade and manufacturing surveys.

Summary of Forecasts

Figures and Insights

• Figure 1: Highlights that each of the last three recessions was preceded by a rise in the net interest expense to corporate debt ratio.
• Figure 2: Shows the correlation between high-yield downgrades and bond spreads, indicating that downgrades have a stronger impact on spreads than upgrades.
• Figure 3: Demonstrates that the current trend of net high-yield downgrades supports a benign default outlook.

Conclusion

Moody's outlook suggests that while the credit markets remain stable, the potential for a rate spike could lead to a tightening of spreads and an increase in defaults. The report also emphasizes that the U.S. and European economies are navigating through the aftermath of recent hurricanes and political uncertainties, with mixed signals on economic performance. Overall, the market seems to be in a phase of relative stability, with a cautious outlook on future economic conditions.