Credit Thrives Amid Inflation's Inconsistencies (Capital Markets Research) - Moody's Capital Markets Research

Credit Thrives Amid Inflation's Inconsistencies (Capital Markets Research)

Credit Thrives Amid Inflation's Inconsistencies (Capital Markets Research) - Moody's Capital Markets Research
Credit Thrives Amid Inflation's Inconsistencies (Capital Markets Research)
Published Dec 08, 2016
29 pages — Published Dec 08, 2016
Price US$ 750.00  |  Buy this Report Now

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WEEKLY MARKET OUTLOOKDECEMBER 8, 2016CAPITAL MARKETS RESEARCHMoodys Analytics markets and distributes all Moodys Capital Markets Research, Inc. materials. Moodys Capital Markets Research, Inc is a subsidiary of Moodys Corporation. Moodys Analytics does not provide investment advisory services or products. For further detail, please see the last page.Credit Thrives Amid Inflations InconsistenciesCredit Markets Review and Outlook by John Lonski Credit Thrives Amid Inflations Inconsistencies. ¯ FULL STORY PAGE 2Topic of the Week by Ben Garber Chinas Evolving State Support Heightens Value of Standalone Credit Strength. ¯ FULL STORY PAGE 5The Week Ahead We preview economic reports and forecasts from the US, UK/Europe, and Asia/Pacific regions. ¯ FULL STORY PAGE 9The Long View Check our chart here for forecast summaries of key credit market metrics. Full updated stories, Moodys median high-yield bond spread narrowed to 365 bp for the end of November 2016 the thinnest such band since March 2014s 364 bp begin on page 17.¯ FULL STORY PAGE 17Ratings Round-Up by Njundu Sanneh Upgrades Predominant in US, Not in Europe.¯ FULL STORY PAGE 21Market Data Credit spreads, CDS movers, issuance.¯ FULL STORY PAGE 23Moodys Capital Markets Research recent publications Links to commentaries on: OPEC, guidance, sovereigns, inflation, Italy, jolt, Trumponomics, Lebanon, inflation, defaults, Italy, shareholders, DB, Saudi, M&A, subpar, Thailand, BP plc, UK. ¯ FULL STORY PAGE 27Credit SpreadsInvestment Grade: Year-end 2016 spread to be close to its recent 129 bp. High Yield: After recent spread of 453 bp, it may approximate 475 bp by year-end 2016. Defaults US HY default rate: after October 2016s 5.6%, MoodysCredit Policy Group forecasts it near 4.1% by the summer of 2017. Issuance For 2016, US$-denominated IG bond issuance may increase by 7.5% to a record $1.426 trillion, while US$-priced high-yield bond issuance may sink by -5.7% to $334 billion.Click here for Moodys Credit Outlook, our sister publication containing Moodys rating agency analysis of recent news events, summaries of recent rating changes, and summaries of recent research.Moodys Capital Markets Research, Inc.Weekly Market Outlook Contributors: David W. Munves, CFA 1.212.553.2844 John Lonski 1.212.553.7144 Ben Garber 1.212.553.4732 Njundu Sanneh 1.212.553.4036 Yukyung Choi 1.212.553.0906 Irina Baron 1.212.553.4307 Franklin Kim 1.212.553.4419 Xian (Peter) Li1.212.553.1404's Analytics/Europe: Tomas Holinka +420 ( 221) 666-384 Tomas.holinka@moodys.comMoody's Analytics/Asia-Pacific: Faraz Syed +61 (2) 9270-8146 Faraz.syed@moodys.comEditor Dana Gordon 1.2...

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TitleStarting PageNumber of Pages
The Week Ahead11
The Long View11
Ratings Round-Up by Njundu Sanneh11
Upgrades Predominant in US, Not in Europe.11
Market Data11
Moody s Capital Markets Research recent publications11
Weekly Market Outlook Contributors:11
Credit Markets Review and Outlook23
  Stronger dollar may deepen consumer goods price deflation31
  Emerging markets are vulnerable to a costlier dollar31
  Base metals price inflation supports thinner spreads32
Topic of the Week By Ben Garber, Economist, Moody s Capital Markets Research, Inc.54
  Market signals diverge significantly from agency ratings51
  Top private firms show fundamental strength61
  Default risk continues to climb61
  Local currency markets dominate corporate lending72
The Week Ahead US, Europe, Asia-Pacific98
  THE US91
    Friday, December 991
  University of Michigan Consumer Sentiment December Preliminary91
    Time: 10:00 am91
    Forecast: 94.591
    Consumer sentiment may rise to the highest level in seven-months in December, perhaps reflecting some of the same post-election optimism seen in the stock market. Prior to recent OPEC moves to tighten supply, consumers benefitted from gasoline prices...91
    Tuesday, December 1391
  Import Price Index November91
    Time: 8:30 am91
    Forecast: -0.4%91
    The Import Price Index is projected to fall in November after two straight monthly advances. Even after expanding in seven out of eight months through October, the Import Index only managed a piddling 0.5% annual advance. Uplift in oil prices can bo...91
    Wednesday, December 1491
  Retail Sales November91
    Time: 8:30 am91
    Forecast: 0.4% overall, 0.5% ex auto91
    Retail sales look to grow strongly for the third consecutive month in November, bolstered by steady job and income gains. Disposable personal income grew 4.1% year-over-year in October, the fastest such pace since January. That acceleration in incom...91
  Producer Price Index November91
    Time: 8:30 am91
    Forecast: 0.1% overall, 0.2% core91
    The Producer Price Index is forecast to edge higher in November after holding flat in the previous month. Although the 0.8% yearly increase in the PPI to October is the quickest in almost two years, that pace points to very modest pressure on busines...91
  Industrial Production &Capacity Utilization November91
    Time: 9:15 am91
    Forecast: -0.2% industrial production, 75.1% capacity utilization91
    Industrial production is expected to decline for the third time in four months in October, with warm weather greatly limiting utility sector output. Manufacturing sector production has been lackluster over the long-term, falling 0.2% yearly to Octobe...91
  Business Inventories October101
    Time: 10:00 am101
    Forecast: -0.1%101
    Business inventories can fall slightly in October after expanding in the two previous months. After long being a drag on overall output, businesses have a better handle on their stockpiling needs. Inventories added 0.5% to third quarter GDP growth, ...101
  FOMC Rate Decision101
    Time: 2:00 pm101
    Forecast: 0.5%-0.75% fed funds target range101
    The first and only fed funds hike of 2016 is all but certain to occur at the December 2016 FOMC meeting. The more interesting question revolves around policymaker projections for the fed funds rate in 2017. Consistent uplift in inflation and wage gr...101
    Thursday, December 15101
  Consumer Price Index November101
    Time: 8:30 am101
    Forecast: 0.2% overall, 0.2% core101
    The Consumer Price Index is in line to increase steadily in November, keeping the annual core price trend north of 2%. Housing costs are keeping the core price growth elevated, with the cost of shelter rising 3.5% year-over-year in October. Continue...101
  NAHB Housing Market Index December101
    Time: 10:00 am101
    Forecast: 63101
    Homebuilder confidence will potentially remain unchanged in December, still pointing firmly to expanding construction activity. The index measuring expected sales growth was particularly stout at 69 in November, well above the historical average of 5...101
    Friday, December 16101
  Housing Starts &Building Permits November101
    Time: 8:30 am101
    Forecast: 1.23 million starts, 1.23 million permits101
    After jumping to the nine-year high in October, housing starts are likely to step backwards in November. Yet an improving permits trend will continue to guide starts higher over the long-term. Permits rose 4% year-over-year in the three months endin...101
    Thursday, December 8111
  Euro Zone: Monetary Policy (December; 12:45 p.m. GMT)111
    Friday, December 9121
  Germany: Foreign Trade (October; 8:00 a.m. GMT)121
    Friday, December 9121
  Philippines Industrial Production October121
  Australia Housing Finance October121
  China Consumer Price Index November131
  China Producer Price Index November131
  Malaysia Industrial Production October131
    Monday, December 12131
  Japan Machinery Orders October131
  Japan Industry Activity Indexes October131
  India Consumer Price Index November131
  India Industrial Production October131
    Tuesday, December 13141
  China Fixed Asset Investment November141
  China Industrial Production November141
  China Retail Sales November141
    Wednesday, December 14141
  Japan Tankan Survey 2016Q4141
  India Wholesale Price Index November141
  China Foreign Direct Investment November141
  China Monetary Aggregates November151
    Thursday, December 15151
  India Foreign Trade November151
  New Zealand GDP 2016Q3151
  Australia Employment Situation November151
  South Korea Monetary Policy December151
  Indonesia Foreign Trade November151
    Friday, December 16161
  Singapore Foreign Trade November161
  Thailand Monetary Policy December161
The Long View174
  Credit spreads171
  The recent high-yield bond spread of 453 bp is less than what is predicted by the spread s macroeconomic drivers and the high-yield EDF metric, but it is wider than what might be inferred from a now below-trend VIX index. The implications for liquidit...171
  Through the first 49 weeks of 2016, US$-denominated corporate bond issuance showed year-over-year percent changes of a 4.8% increase for investment-grade and an -8.2% drop for high-yield. US economic outlook181
  Asia Pacific192
Ratings Round-Up211
Ratings Round-Up211
Ratings Round-Up221
Market Data234
Moody s Capital Markets Research recent publications273

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Moody's Capital Markets Research. "Credit Thrives Amid Inflation's Inconsistencies (Capital Markets Research)" Dec 08, 2016. Alacra Store. Sep 23, 2020. <>
Moody's Capital Markets Research. (2016). Credit Thrives Amid Inflation's Inconsistencies (Capital Markets Research) Dec 08, 2016. New York, NY: Alacra Store. Retrieved Sep 23, 2020 from <>
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