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Economics Chartbook / Macro & Markets Outlook

88833585496baa5d9e148f1a4f64d8a9c6fc1c1d28c961549c12778eebbd14d4;;[{"layout":"detailed","uid":28500,"publicationDate":"28 Sep 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_184012.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJKZXH2GAVJvL78LWAPe4_o0=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Economics Chartbook - Central banks\u00b4 inflation fight raises recession odds (4Q22)","titleDe":"","titleIt":"","product":"The Unicredit Economics Chartbook","synopsis":"<ul class=\"ucrBullets\"><li><strong> Global: <\/strong> The growth outlook is deteriorating. After likely subdued growth of 2.7% this year, we forecast global GDP rising by only 1.9% next year. The weakening reflects tighter financial conditions, surging energy bills in Europe and reduced economic momentum across the US, Europe, and China. The manufacturing sector is under pressure, the boost to services from the reopening of the economy is fading, and consumer confidence is low. Supply constraints have eased but remain elevated compared to before the pandemic. High excess savings and the tight labor market should mean any recession is mild. We expect global inflation to ease next year amid negative base effects, lower demand, a further easing of supply constraints and lower commodities prices. The risks to growth are to the downside as central banks prioritize fighting inflation.<\/li><li><strong> US: <\/strong> We forecast GDP growth of 1.5% this year and -0.1% next year (previously +0.1%), with the economy teetering on the edge of recession. The weakness is concentrated in interest-rate-sensitive sectors, notably housing and durable goods. Monthly headline inflation will likely ease sustainably to levels consistent with the 2% target from the spring, while core inflation is likely to take longer to do so. The midterm elections seem likely to result in political gridlock. We now see the Fed raising interest rates to a peak of 4.50-4.75% (previously 3.75-4.00%) by early next year, followed by a first rate cut in late 2023.<\/li><li><strong> Eurozone: <\/strong> GDP growth is likely to average 3.1% this year and come to a standstill in 2023 (0.2%). The latest survey indicators point to a recession at the turn of the year, in line with our baseline scenario. Inflation is likely to hover at around 10% for the remainder of the year, before entering a downward trajectory that would take it towards 2.5% by the end of 2023. We are raising our forecast for the peak level of the deposit rate by 25bp to 2.25%, to be reached in 1Q23. As policy rates rise towards, or above, the upper end of the neutrality range, the ECB is likely to start looking at quantitative tightening (QT) as its next policy step.<\/li><li><strong> CEE: <\/strong> We forecast GDP growth to slow from 4.3% in 2022 to 0.8% in 2023 in EU-CEE and from 5.5% in 2022 to 3.2% in 2023 in Turkey. In Russia, we expect the economy to shrink by around 5% this year and 4% in 2023. We believe that CEE can avoid an energy crisis, but not a technical recession in 4Q22-1Q23 due to high energy prices, circumspect consumers, negative credit and fiscal impulses, destocking, imports outpacing exports, low EU fund inflows and falling public investment. A gradual recovery is possible in 2H23. Inflation is likely to peak this winter in all CEE countries and to remain well above target in 2023. We expect tightening cycles to end at 13% in Hungary, 7% in Czechia and Poland, 6% in Romania and 5% in Serbia. The CBRT is likely to cut its policy rate to single digits and the CBR to 7%. FX interventions will likely continue in Czechia, Poland, Romania, Serbia and Turkey.<\/li><li><strong> UK: <\/strong> We are revising our GDP growth forecasts down slightly to 3.3% for this year (previously 3.5%), and to -0.3% for next year (previously -0.1%). The economy is likely already in recession. The energy price cap means inflation will probably peak at just under 11% in October. Large and poorly targeted fiscal easing at a time of constrained supply will likely force the BoE to hike the bank rate sharply to 4.50% (previously 2.50%).<\/li><li><strong> China: <\/strong> We are reducing our GDP growth forecast for 2022 to 2.0% from 2.4%, and for 2023 to 3.4% from 4.0%. The combination of power shortages, sporadic lockdowns and a real estate sector in disarray is weighing on economic activity. However, contained inflationary pressure, both on the producer and consumer front, is allowing the government to use its monetary and fiscal policy levers to support the economy ahead of the party congress that will likely elevate Xi Jinping to a third term as president of the country. After hitting new lows since 2008, the CNY is set to remain weak against the USD, beyond 7.20. <\/li><\/ul>","synopsisDe":"","synopsisIt":"","hash":"88833585496baa5d9e148f1a4f64d8a9c6fc1c1d28c961549c12778eebbd14d4","available":"0","settings":{"layout":"detailed","size":"small","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"300","synopsisexpand":"1","noproduct":"1","noflags":"0","shownav":"0","oldestedition":"","limit":"1"}}]


CEE Quarterly

e2b67f80bbfba19f7126e612f02b8e74334ea0dc829748900eb4cd73ce1c876f;;[{"layout":"detailed","uid":28499,"publicationDate":"28 Sep 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/emergingmarkets_docs_2022_184011.ashx?EXT=pdf&KEY=l6KjPzSYBBGzROuioxedUNdVqq1wFeRoYLcQZAba8MpzoBozIhtkyg==&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"CEE Quarterly - Testing resilience ahead of the winter (4Q22)","titleDe":"","titleIt":"","product":"CEE Quarterly","synopsis":"<ul class=\"ucrBullets\"><li> Europe is heading into a difficult winter, but we believe that CEE can avoid an energy crisis, even if Russia halts all exports of natural gas to Europe. <\/li><li> We expect a technical recession in 4Q21-1Q23 caused by high energy prices, circumspect consumers, negative credit and fiscal impulses, destocking, imports outpacing exports, low EU fund inflows and falling public investment. A gradual recovery is possible in 2H23. <\/li><li> We forecast economic growth to slow from 4.3% in 2022 to 0.8% in 2023 in EU-CEE, with the Western Balkans lagging this year and outperforming in 2023. We see Turkey\u00b4s economy growing by 5.5% in 2022 and 3.2% in 2023. In Russia, we expect the economy to shrink by around 5% this year and 4% in 2023, with the overall contraction similar to our previous forecast.<\/li><li> Inflation is likely to peak this winter in all CEE countries, as inflation momentum is strengthening only in Hungary. We expect inflation to remain well above target in 2023 due to higher retail energy prices, resilient domestic demand and tight labor markets. <\/li><li> We believe that the CNB has ended its tightening cycle at 7% and the NBH at 13%. We expect the NBP to stop hiking at 7%, the NBR at 6% and the NBS at 5%. The CBRT is likely to cut its policy rate to single digits, hiking sharply in 2023 if the opposition wins the parliamentary election. We expect the CBR to end cuts at 7%. <\/li><li> We expect FX interventions to continue in Czechia, Poland, Romania, Serbia and Turkey. Only the CNB is considering phasing out its FX sales. <\/li><li> Besides a protracted conflict between Russia and Ukraine and its potential spillover to Europe, we highlight the following risks: 1. Russia\u00b4s inability to substitute imports from the West, 2. potential economic sanctions if Turkey continues to cooperate with Russia, 3. low EU transfers as the European Commission focuses on the rule of law, 4. pre-election populism affecting economic policies and ratings, 5. Hungary\u00b4s geopolitical isolation with possible repercussions on FDI, 6. Bulgaria\u00b4s protracted election cycle and the potential postponement of euro adoption and 7. Serbia\u00b4s political reshuffling to avoid choosing between Europe and Russia.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","hash":"e2b67f80bbfba19f7126e612f02b8e74334ea0dc829748900eb4cd73ce1c876f","available":"0","settings":{"layout":"detailed","size":"small","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"300","synopsisexpand":"1","noproduct":"1","noflags":"0","shownav":"0","oldestedition":"","limit":"1"}}]


Rates Perspectives

de6e192ee2b0adfb860cffe94b2fd52b2075b3e6e57223cb520052066d16e4fe;;[{"layout":"detailed","uid":27695,"publicationDate":"13 Apr 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2022_183024.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVIRKs7N21TUl4ouDWG55vMJ3BVRmOvrLfQ==&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Rates Perspectives - BTPis are cheap vs. BTPeis, even amid inflation\/liquidity differences","titleDe":"","titleIt":"","product":"Rates Perspectives","synopsis":"<ul class=\"ucrBullets\"><li> BTPis have recently underperformed BTPeis, with their 5Y real yield spread widening to 90bp. In the following, we investigate the key drivers of this spread and assess whether its current level offers a good entry point to go long BTPis vs. BTPeis.<\/li><li> Based on our model, the current pickup is appealing, even considering liquidity or inflation differences between BTPis and BTPeis.<\/li><li> Moreover, going long BTPis vs. BTPeis has worked as a defensive trade in past episodes of BTP-Bund spread widening. BTPis also represent a cheaper alternative to other European inflation-linked bonds for investors concerned that inflationary pressure will increase further.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","hash":"de6e192ee2b0adfb860cffe94b2fd52b2075b3e6e57223cb520052066d16e4fe","available":"0","settings":{"layout":"detailed","size":"small","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"300","synopsisexpand":"1","noproduct":"1","noflags":"0","shownav":"0","oldestedition":"","limit":"1"}}]


Chart of the Week

db4d162b30b2479dbd64126bc5f47882e11f76e378a7a66fe404b7053bdbc992;;[{"layout":"detailed","uid":28481,"publicationDate":"23 Sep 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_183987.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJI3owJG455DyBOr9iK-WXoA=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - Household squeeze intensifies","titleDe":"","titleIt":"","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> The squeeze on real disposable income caused by surging inflation has taken a heavy toll on consumer sentiment globally, and the eurozone is no exception. The preliminary estimate for consumer confidence for September, published yesterday, recorded a drop to a new all-time low. <\/li><li> Our Chart of the Week shows the unprecedentedly large gap that has opened up between sentiment among households and retailers, with the latter displaying very good resilience so far. The main reason is probably the high pricing power of retailers as the economy rebounded from the slump caused by the pandemic. This has allowed them to pass on to consumers a meaningful share of their higher input costs, thus safeguarding profit margins. <\/li><li> We suspect that this trend will not prove sustainable as the economic outlook darkens and households become progressively less keen on spending the large savings accumulated during the pandemic. Despite a resilient labor market, in the eurozone this is likely to translate into a consumer-driven recession at the turn of the year and reduced profitability for retailers.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","hash":"db4d162b30b2479dbd64126bc5f47882e11f76e378a7a66fe404b7053bdbc992","available":"0","settings":{"layout":"detailed","size":"small","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"300","synopsisexpand":"1","noproduct":"1","noflags":"0","shownav":"0","oldestedition":"","limit":"1"}}]


Sunday Wrap

36cd808ffd4ac0fb215fd2fbfb85d96051762188e0c84c134173be698275653c;;[{"layout":"detailed","uid":28512,"publicationDate":"02 Oct 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_184029.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJKZXH2GAVJvLhr7t4nTli7c=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Sunday Wrap","titleDe":"","titleIt":"","product":"Sunday Wrap","synopsis":"<ul class=\"ucrBullets\"><li><strong> The UK: <\/strong> Lost in confusion. Period.<\/li><li><strong> Germany: <\/strong> Exercising its fiscal muscles ' unilaterally ' throwing national and EU fiscal rules out the window in the process.<\/li><li><strong> Italy: <\/strong> Impressive political discipline so far; the power of the EU' <\/li><li> The key lessons learned.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","hash":"36cd808ffd4ac0fb215fd2fbfb85d96051762188e0c84c134173be698275653c","available":"0","settings":{"layout":"detailed","size":"small","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"300","synopsisexpand":"1","noproduct":"1","noflags":"1","shownav":"0","oldestedition":"","limit":"1"}}]


Euro Credit Pilot Strategy

82a7d378e8cd59658cec7814045cd01b7a44f79ccdfecaf7a6e4a659cf71bd55;;[{"layout":"detailed","uid":26901,"publicationDate":"17 Dec 21","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2021_182023.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVCsY1pNwWYpS6IVUmwpko-O-UFiiTLh3Xg==&T=1&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2022_182057.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVIRKs7N21TUlnOaJCkTYBWrajTGlzzaJhQ==&T=1&T=1","protectedFileLinkIt":""},"title":"Euro Credit Pilot: MNMB version (December 2021)","titleDe":"","titleIt":"","product":"Euro Credit Pilot - Strategy","synopsis":"<p class=\"ucrIndent\"><p>This is a shortened version of the Euro Credit Pilot, which we deem to be an acceptable minor non-monetary benefit under MiFID II.As credit enters the next leg of its prolonged late-cycle phase, the environment is becoming more challenging. Rising inflation, higher yields, supply-chain friction and a fourth wave of COVID-19 cases represent key sources of volatility. However, the impact on performance is expected to be contained by technical factors.<\/p><\/p><p><ul class=\"ucrBullets\"><li><strong> Macro Outlook: <\/strong> At 3.9%, growth in the eurozone economy is likely to be weaker than previously expected in 2022, as supply constraints and higher inflation will probably slow the recovery of activity towards its pre-crisis trend.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Credit Quality Trend: <\/strong> Ongoing loose fiscal and monetary policy should continue support a gradual decline in the European default rate to 2.5% during 2022.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Market Technicals: <\/strong> We expect less new bond supply from IG NFIs and Financials in 2022 than in 2021, while supply from high yield non-financials should be comparable to this year.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Valuation &amp; Timing: <\/strong> We expect the credit-market environment to be volatile in 2022, though spread-tightening momentum will resume later in the year. The iBoxx NFI Senior NFI Index is expected to end the year at 40bp, and the Financials Senior Index at 45bp. The iBoxx NFI Subordinated Index is expected to tighten to 150bp and high yield NFI credit risk premiums to 280bp by the end of next year.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Sector Allocation &amp; Recommendation Overview: <\/strong> Within non-financials investment grade credit, we prefer hybrids over seniors, as they have a lower duration and provide a better buffer against higher interest rates. In terms of sectors, we have overweight recommendations on Automobiles &amp; Parts, Basic Resources, Oil &amp; Gas and Health Care and underweight recommendations on Travel &amp; Leisure, Retail, Utilities and Chemicals. In Financials, we prefer Bank AT1s. We also expect ESG investments become more important, leading to a moderate increase in 'greenium'.<\/p><\/li><\/ul>","synopsisDe":"","synopsisIt":"","hash":"82a7d378e8cd59658cec7814045cd01b7a44f79ccdfecaf7a6e4a659cf71bd55","available":"0","settings":{"layout":"detailed","size":"small","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"300","synopsisexpand":"1","noproduct":"1","noflags":"0","shownav":"0","oldestedition":"","limit":"1"}}]