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All China Publications

Fast Comment China — Economic growth accelerated in Q1

  1. We still expect growth to slow ahead…
  2. …despite strong momentum in March

Bjarke Roed-Frederiksen, Economist | bjro03@handelsbanken.dk

Commodity Bulletin — At the peak of a mini-cycle

Optimism is growing
Global optimism, coupled with strong economic data, has spilt over into an expectation of a self-fulfilling global recovery. We see three driving forces behind the pick-up in global economic activity since last au-tumn. The first two relate to stimuli from central banks' monetary policy and the expansive policy in China. The third is the recovery on the commodity markets - particularly for the price of oil. The optimism since the US election in November last year has generally been regarded as a "Trump trade". We believe, however, that the stronger economic sta-tistics are largely an effect of the three factors men-tioned above, rather than of President Trump. Togeth-er, these three driving forces have been strong enough to lift the economy and growth expectations, but the effect will subside later in 2017, and it will probably be difficult for President Trump to compen-sate for this.

OPEC to extend the agreement?
The half-yearly OPEC meeting in Vienna was a show of strength from the slumbering cartel. No sooner have the fuel pumps been cut off than the focus is on the group extending the agreement at the next meeting on May 25. The market expects an extension, but we argue that a surprise departure from the agreement is actually not that unlikely. We believe that the oil price will approach USD 40, regardless of the outcome of the OPEC meeting.

Base metals to follow China's mini-cycle
It looks as if China's 2016 recovery will be further maintained. The latest data harvest points to at least another six months of strong activity.

Martin Jansson, Strategist | nija03@handelsbanken.se

Macro Comment China — Revised USD/CNY forecast; effective CNY stable

China's authorities seem more committed than earlier to their pledge of keeping the effective exchange rate "basically stable". Our new forecast of a generally stronger USD in the short run but weaker in 2018-19 should translate into a weakening of the CNY versus the USD in the short term, but a stronger CNY in the longer run.

Bjarke Roed-Frederiksen, Economist | bjro03@handelsbanken.dk

Global macro forecast — US toward recession

• Europe pressured by structural problems
• The economic and political toolbox is empty
• Low growth in the Nordics

Ann Öberg, Chief Economist | anob04@handelsbanken.se

Swedish Rate Wrap — Oil price fall challenging the inflation trend

The global economic climate continues to be strong. We see evidence of this in the US where most macro data is exceeding market expectations. The recent harvest of data from China confirms a strong start to the year. The trend in global inflation is also positive. Previous monetary policy stimulus measures are feeding into the economy and contributing to the improvement that we are now seeing. This forms the basis of increasing long yields.
Inflation is partly driven by earlier energy price rises. The price of oil falling to USD 40/barrel by year-end represents a risk to our view of inflation and long yields. Despite this, we still believe that interest rates will continue to rise. We address this on page 3.

Pierre Carlsson, Strategist | pica01@handelsbanken.se

Fast Comment China — China’s economy started 2017 on a strong note

  1. Construction investments keeps the economy running
  2. Lunar New Year holiday distorts data, as usually
  3. Less policy support needed

Bjarke Roed-Frederiksen, Economist | bjro03@handelsbanken.dk