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The UniCredit Chartbook - June 2013

The latest UniCredit Chartbook. We hope you will find this publication useful.

Monthly recap

■ EMU: Recent growth data have shown signs of improvement, marginally so for the soft indicators, but more clearly for hard data. The bright spot was the surprising resilience of industrial production, which may tilt to the upside the risks to our -0.1% qoq GDP forecast for 2Q13. The ECB remains cautious but positive overall, as reflected in its newly updated GDP projections, which envisage the beginning of a slow recovery in the summer. We still see the refi rate on hold for the foreseeable future and no cut in the deposit rate, while new bold unconventional measures are unlikely in the near term.

■ US: After the US economy expanded a solid 2.4% annualized in 1Q13, growth is on track to slow down to 1.8% in the current quarter. Most of this volatility reflects the (lagged) response to fiscal tightening and some renewed inventory adjustment. While business sentiment continued to deteriorate, the dynamic in the consumer sector already started to pick up again at the end of the quarter, in line with our view that the economy will regain momentum in the second half of the year. We continue to expect that the Federal Reserve will not begin to taper its asset-purchase program before September.

■ CEE: Within CEE, external financing pressures have increased in the face of expectations of Fed tapering and higher UST yields, although this is materializing at a time of welcome improvements in activity in industry, less downward pressure from fiscal policy on activity and record low policy interest rates in many countries. Looking ahead, the risks from a normalization in Fed policy are non-negligible for the region, though much smaller in some countries than others. Current-account-deficit countries such as Turkey, Ukraine and Serbia risk proving particularly vulnerable.

■ Japan: Overall, recent data continued to improve sharply, underpinning the strong acceleration of the economy following the regime shift of Japan's economic policy and fueled by the depreciation of the JPY. Leaving monetary policy setting unchanged more recently (thus disappointing some hopes of additional measures) reflects the BoJ's assessment that the Japanese economy is already expanding satisfactorily and that bond market volatility has decreased. We remain worried about a too timid approach to structural reforms to lift potential output, particularly in the context of strong demand stimulus.

■ China: Partly reflecting the significant yen depreciation (and thereby the Renminbi appreciation), Chinese data releases over recent weeks have been disappointing on balance, thus fuelling worries that the tepid economic recovery will not gain further momentum, but rather ends up in an L-shaped development. While posing further downside risks to our expectation of a moderate uptick, we will wait for next month's 2Q13 GDP figures before fine-tuning our macro projections.

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