Vladimír Urbánek (Kurzy.cz)
Finance  |  June 06, 2011 09:04:42

MS - commentary 06.06 - Weekly reboot

The main markets

O        Macro data: This week will be in terms of disclosures substantially peaceful. Data will be relatively few and none of them will have the potential to affect more fundamental sentiment in the market. That will primarily affect what is happening around the EMU debt crisis and the developments of the past of Greece. Much attention will also deny the Board at a meeting of the ECB.Expected to de facto announcement of further rate hike in July, according to us, however, market expectations are somewhat exaggerated. Basically the only reason for the growth rate is the current growth rate of headline inflation, economic considerations rather speaks against tightening monetary policy. The ECB itself admits that the annual increase in headline inflation will decline in the second half, a significant share of that will have a base effect (the price of oil rose from the end of last August). Also, the end of quantitative easing in the U.S. should alleviate inflationary pressures globally. An important argument against tightening monetary policy is still weak final demand in the EMU. See if you want to raise rates to persist for almost any price or more comes into play economic considerations. Fed Beige book, as always, provide an alternative view on the development of the U.S. economy.This time will be even more interesting than usual because it could shed more light on the causes of slowing U.S. economy (in particular whether the effect of failure of subcontracting in Japan or something rather more broadly-based). The data will be most interesting factory orders in Germany, which show also not weaken if the dynamics of German industry.

O        FX and FI:The dollar gave back to the weaker levels, the cause is currently higher market confidence in providing further assistance to Greece. In this respect we can expect additional information that may significantly affect the mood of the market and thus the direction of development of the course. As demonstrated by recent developments is not unusual when the exchange rate within a day shift for two cents, so the range of possibilities for the development of the course is very broad. Weak U.S. data contributed to a further decline in revenues, market sentiment suggests that a decline in the coming weeks to continue. His pace, it should be relatively slow. Commodities are still held, doing mainly gold, benefiting from the uncertainty about the debt crisis in the EMU. Other commodities are stagnating, I still think that, in connection with the end of quantitative easing and slower world economy there is noticeable decline in prices. 

CEE region

O        Macro dataThis week we have another meeting Central Bank which will be monitored very well because if the committee will continue the exchange rate last month and will indicate if something usable for the estimation of rates further development. For now, the bank said hiky for 3, which is what we expected for the entire year. Thanks to higher inflation, stronger domestic demand remains weak, and gold seems to us one more hike as justified and chances are it NBP delivers this week are not negligible. Then it would not be followed due to the stability of the expected slowdown in inflation in the 2H and the planned fiscal consolidation - after all, the bank has already received quite a few hiků it and it takes a while before it shows in the economy. In the CR next week, the most important data for inflation and GDP data for the final. Inflation is important from the perspective of the CNB.Here we expect to remain ever under the CNB should be lower than the market expects it may fall further short end of the curve - even though there was little market přestřeluje. Final GDP for 1Q/11 is important in terms of structure - we are most curious about how to develop a fixed investment, from which the declines in 2008.2009 and 2010 and under the influence of the improving situation in the real economy, we expect growth this year. Dominate growth should still export, domestic demand in 1Q/11 under the influence of fiscal restrictions about q / q fall, the question is how much - Retail 1Q/11 was weak, employment in 1Q/11 also improved, on the other hand, consumer confidence is 10 points below their summer 2010.

O        FI and FX: The crown will be dominated by external developments, the good news about the debt crisis (Germany's willingness to continue financing Greece) relieves pressure against CZK. The rates - as we have written - will be dominated by inflation in May. Surprise downward (ie below 0.3% mm) m short end of the RES to move a little lower.

Ľuboš Mokráš
Czech Savings Bank

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