Market movers today
Euro-area money supply and bank lending data are published. The subdued bank lending in the euro area is expected to show a continued recovery in November. This should occur as the asset quality review and stress test, which were released in October, revealed a very limited capital shortfall, with banks having raised capital in anticipation of the assessment. Based on that, we view supply-side constraints on credit growth as limited and lending should continue to improve as loan demand improves.
The US conference board consumer sentiment index surprisingly declined in November but we expect a significant rebound in December and look for an increase to 94.5 from 88. The University of Michigan consumer sentiment index published before Christmas showed the highest reading in this cycle, a level not seen since 2007. The US consumer is in good shape.
The Swedish trade balance in November is unlikely to deviate from the deteriorating trend seen throughout this year. Sweden's exports are struggling to keep market share as the main markets are in the doldrums. Some positive effects should come from the weaker SEK but it will hardly make up for the weak markets. Instead, some help may come from the plunging oil price, which should limit the import bill. Nonetheless, the recent trend suggests the trade balance is moving into a deficit for the first time in more than 20 years. Hence, net exports are likely to be a drag on GDP in 2015.
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