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New yield forecasts
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Growth concerns are back
Fri, Aug 15 2008, 09:15 GMT
by Danske Research Team
Recent market developments: Over the past month, focus in the bond markets has turned from inflationary fears to concerns about the growth outlook, as commodity prices have declined and Euroland data have been surprisingly weak. Even though risk appetite has improved of late, financial markets remain fragile, and the flow of reported credit losses and write downs has continued. Going forward, high uncertainty remains attached to the oil price and the health of the financial sector.
Macro outlook: The US economy remained afloat in the spring and early summer due to strong foreign demand and a significant boost from tax rebates. However, the outlook remains fundamentally weak given the ongoing housing market correction, credit tightening, lacklustre equity markets, high inflation and slowing foreign economies. Moreover, the impact from the tax rebates will soon fade and the labour market has weakened considerably. This implies that the economy will remain on the verge of a recession throughout the year. We do not expect the US to stabilise before H1 09.
In Euroland, the outlook for growth has deteriorated further and the risk of recession is now considerable. Consumption growth is being hit by the high level of inflation, while export and investment growth are declining on the back of lower global growth. Further, a number of housing markets in Euroland are experiencing increasing problems. We expect that growth will deteriorate further in the remainder of 2008 and into early 2009. A European recovery will not materialise before mid-2009. Inflation in Euroland remains far above the ECB target of 2%, but it will begin to gradually slow late in the autumn.
Published on Fri, Aug 15 2008, 09:17 GMT
Archive
- ECB to ease aggressively - yields will fall further
Published On Fri, Nov 21 2008, 15:21 GMT - EUR yields set to fall further
Published On Fri, Nov 14 2008, 09:26 GMT - Lower yields ahead
Published On Wed, Oct 15 2008, 09:35 GMT - Yields set to decline when ECB cuts rates
Published On Mon, Sep 15 2008, 09:00 GMT - Growth concerns are back
Published On Fri, Aug 15 2008, 09:15 GMT
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