August 27, 2016 (Commerzbank AG) – Merkel: “Yes, we can!” – one year on
A year ago, on 31 August 2015, German Chancellor Merkel made her now famous remark regarding the refugee crisis, which in English compares to President Obama’s “Yes, we can”. On the anniversary of her proclamation, we are analysing the economic impact of the large numbers of refugees. How many have actually reached Germany, and how many family members can be expected to follow? How is integration on the labour market progressing, and what does it mean for Germany’s long-term growth prospects?
US: Investment spending to pick up? US private investments have been falling for three consecutive quarters. However, companies will soon have to start replenishing their inventories, while the dramatic slump in oil investments appears to have bottomed out. Moreover, the residential construction outlook remains favourable.
Outlook for the week of 29 August to 2 September 2016
Economic data: Following two extraordinarily sound US labour market reports, we are looking for slightly weaker – but still solid – data in August.
Bond market: The downtrend in peripheral spreads may pause near-term with next week’s confidence votes in Spain possibly paving the way for more long-end supply, budget and rating jitters on the rise in Portugal and the important referendum in Italy looming in October.
FX market: Both Fed Chair Janet Yellen and BoJ Governor Haruhiko Kuroda are likely to disappoint the markets and thus increase the downward pressure on USD-JPY.
Equity market: In the short-term, the quite optimistic DAX sentiment is a point in favour of stagnating rather than rising share prices.
Commodity market: In our view, only in the gold market is there a good chance of rising prices next week.