New financial forecasts from Nordea – Uncertainty galore
Specialist from Nordea Markets have published a new financial forecast – and the outlook on the global market is that it is ‘uncertainty galore’.
The Greek situation still very much fluid. We are looking to lower our growth forecast for Europe but are already now introducing a ECB rate cut in June.
We are also lowering our yield forecasts to take into account the weaker growth profile but more so in Europe than in the US. We stick to our guns on EUR/USD but look to lower our commodities price forecasts
- More words from European leaders on Greece and the Euro-situation… but too little action says the market and stress is still high with risk-off in full swing. The situation can go either way but we believe there is a small wiggle room for compromise. This could lead to a fragile agreement and Greece staying in the Euro-zone (for now).
- Weak numbers out of Europe is making us think about our growth forecasts and we’re contemplating lowering them. With continued weakness and higher uncertainty on the political side we now call for a 25 bps refi rate cut from the ECB in June or July.
- The risk premium in Bunds is large these days but no-one dares to be short. Making 3M forecasts at this junction is exceedingly difficult but we still see room for even lower yields in the short-term but an albeit temporary solution to Greece could dent the demand for safe assets. We see little value at current levels for long-term real money investors.
- Longer-term, we are cutting our yield forecasts in both the US and the Euro-zone but more so in the Euro-zone. We now expect 10Y swap yields in the Euro-zone to hit 2.10% at year end and about 2.75% at the end of 2013.
- EUR/USD will be extremely volatile and short-term we could see an even further drop in EUR/USD but we stick to our guns expecting a correction over the 3M to 1.30 before the downtrend resumes.
- We also look to lower our commodities price forecasts later this week to reflect a lower global growth trajectory.
Steen Grøndahl, Johnny Bo Jakobsen, Anders Svendsen, Jan von Gerich, Aurelija Augulyte & Bjørnar Tonhaugen