MNI Light At The End of The Tunnel? Euro Area Economy And the ECB. Johanna Treeck, Senior ECB Correspondent, September 2015

Transcription

1 MNI Light At The End of The Tunnel? Euro Area Economy And the ECB Johanna Treeck, Senior ECB Correspondent, September 2015

2 MNI Deutsche Börse Group 1 Market Data + Services We advance markets Service lines Information Provides investors, brokers, trading desks, algo traders and investment advisors with real-time and historical market data (price and order book information) and other market-moving signals to support their trading activities Provides middle and back offices of securities trading houses with accurate instrument reference data for risk management, compliance activities and services related to reporting obligations Index Serves issuers, who use indices as underlyings or benchmarks for financial products (e.g. futures, options, structured products), responsible for the renowned STOXX and DAX indices and benchmarks Tools Provides IT services to financial market participants in order to support or facilitate business processes (e.g. connectivity, software as a service solutions etc.) Market Solutions Aims its services at market operators, who are looking to enhance their business operations with state-ofthe-art, reliable infrastructure and associated services (e.g. trading surveillance) Shareholdings Market News International Inc. (100%): financial news agency STOXX Ltd. (100%): global index provider Infobolsa S.A. (50%): financial information systems

3 MNI Deutsche Börse Group 2 MNI Company Overview Market News International (MNI) is the leading provider of financial news and intelligence specifically for the Global Fixed Income and Foreign Exchange markets. For over 30 years MNI has been at the forefront of delivering exclusive news, expert analysis and strategic intelligence to financial professionals. Our clients rely on us to not only deliver breaking news and analysis but to link their effect on the market. breaking news and macroeconomic intelligence that moves markets 60 correspondents located in 12 news bureaus across Europe, America and Asia 1 of 4 real-time English language financial news agencies with press credentials recognized by governments and central banks of all major economies, delivering exclusive news directly from economic data lock ups

4 ECB Still Fighting

5 MNI Deutsche Börse Group 4 Euro Area Disappointment Euro area United Kingdom United States 2007 [YR2007] 2008 [YR2008] 2009 [YR2009] 2010 [YR2010] 2011 [YR2011] 2012 [YR2012] 2013 [YR2013] 2014 [YR2014]

6 MNI Deutsche Börse Group 5 Euro Area GDP Eurozone GDP ECB Staff Forecast Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1

7 MNI Deutsche Börse Group 6 Euro Area Inflation Inflation ECB Staff Forecast Jun 2008Jan 2008Aug 2009Mar 2009Oct 2010May 2010Dec 2011Jul 2012Feb 2012Sep 2013Apr 2013Nov 2014Jun 2015Jan 2015Aug 2016Mar 2016Oct 2017May 2017Dec

8 MNI Deutsche Börse Group 7 Economic Environment Disappointing - The Euro area has emerged much more slowly from the great recession than other advanced economies - The ECB has described economic prospects for the currency are as disappointing from both a longer-term and an international perspective. Growth - ECB staff cut GDP forecast To 1.4% (1.5%) in 2015, 1.7% (1.9%) in 2016, 1.8% (2.0%) in 2017 Inflation -ECB staff cut HICP forecast to 0.1% (0.3%) in 2015, 1.1% (1.5%) in 2016, 1.7% (1.8%) in While the revision for 2017 is minimal it is key as debatable whether in line with price stability objective Downside Risks - The ECB sees downside risks to its September forecasts as cut-off date was August 12 - ECB staff forecasts tended to overshoot in recent years, especially on inflation

9 MNI Deutsche Börse Group 8 5-year/5-year Forward Inflation Swaps year/5-year

10 MNI Deutsche Börse Group 9 Eurosystem Balance Sheet Asset purchases Lending to banks Other assets W W W W W W W W W W W W W W W W W W26

11 MNI Deutsche Börse Group 10 ECB Response Inflation Expectations - ECB favored measure of inflation expectation below pre-qe levels ECB Signal - ECB emphasizes willingness and ability to act, if warranted, by using all the instruments available within its mandate Real Economy -Data from real economy no source of additional concerns -Data largely predate China devaluation Markets - US Federal Reserve did not raise rates - Euro higher vs. US Dollar - Commodity prices still depressed - China remains a source of concern Timing -ECB More Likely to move in December than October -Even small downward revision of 2017 inflation will prompt move

12 MNI Deutsche Börse Group 11 Euro Area Core Inflation Euroo Area Core Inflation Headline Inflation Core Inflation 2007Feb 2007Aug 2008Feb 2008Aug 2009Feb 2009Aug 2010Feb 2010Aug 2011Feb 2011Aug 2012Feb 2012Aug 2013Feb 2013Aug 2014Feb 2014Aug 2015Feb 2015Aug

13 Confidential MNI Deutsche Börse Group 12 Euro Area Recovery Fading HICP (Y/Y Percentage Change) Q Q Q Q Q Q Q Q Q Q GDP (Q/Q Percentage Change)

14 MNI Deutsche Börse Group 13 Drifting Apart Greece Cyprus Germany Spain Italy Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3 2013Q1 2013Q3 2014Q1 2014Q3 2015Q1

15 MNI Deutsche Börse Group 14 Warning "In a monetary union you can't afford to have large and increasing structural divergences between countries. They tend to become explosive." ECB President Mario Draghi, May

16 MNI Deutsche Börse Group 15 Outlook Not Bright -Signs of growth slowing after 1Q 2017, unless other policy areas act ECB Impact - Economic divergence undermines effective monetary policy EMU Viability -Acute phase of crisis over, but question of viability remains unanswered Conclusion -EMU is out of the tunnel already, but it s not a sunny day

17 Presentation Manual Deutsche Börse Group 16 Conclusion

18 Thank you Johanna Treeck For more information about MNI, please visit or contact