SCOTIABANK-A WEEKLY LOOK AHEAD AT CANADIAN AND US FINANCIAL MARKETS-100312

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      【出版时间及名称】：SCOTIABANK-A WEEKLY LOOK AHEAD AT CANADIAN AND US FINANCIAL MARKETS-100312
      【作者】：scotiabank
      【文件格式】：pdf
      【页数】：21
      【目录或简介】：
Capital Points
— A weekly look ahead at Canadian and U.S. financial markets
Global Economic Research
Capital Points is available on: Bloomberg at SCOE and Reuters at SM1C
Derek Holt (416) 863-7707
derek_holt@scotiacapital.com
Karen Cordes Woods (416) 862-3080
karen_woods@scotiacapital.com
Changing Treasury Market Dynamics?
An updated holistic two-part look at the overall saving and investment balance of
the U.S. economy (Part I below) and net economy-wide credit flows (Part II
below) helps to explain why Treasury yields have not exploded in response to
massive combined federal, state, and local government deficits. That said, the
argument weakened slightly in the fourth quarter of last year as evidenced in the
latest update of the U.S. Flow of Funds accounts, and this flags a risk to Treasury
markets as it may help explain why Treasury yields drifted higher late in the year.
In a very macroeconomic and longer lived sense, should the Treasury market be
in a bubble with material capital losses lying ahead, then a required development
is a combination of the resumption of material growth in private credit channels, a
sustained recovery in investment demand for capital, and all without being offset
by higher net foreign and domestic saving flows such that issuance competition
for capital with the U.S. Treasury intensifies. Thus far, the evidence does not
support such an outcome but it may come to do so over 2010-11.
Going forward, we are of the view that high cash balances on household and
business balance sheets continue to restrain near-term net private credit flows as
the opportunity cost remains favourable toward reallocating excess cash toward
funding needs versus borrowing to do so. The resumption of material credit
growth over the duration of 2010-11 is feasible, as is lessened global
liquidity through central bank exits and hence possibly less foreign saving
being supplied to the U.S. market, along with intensifying global sovereign
issuance through incremental needs and rollovers with open economy
implications for the U.S. market’s ability to attract as much capital. For
benchmark comparisons, U.S. 10 year yields were in the 5% range during
the period in which economy-wide net borrowing in the U.S. economy was
in the US$4-5 trillion range versus the current flatness in economy-wide
issuance. If global forces unfold as anticipated, a lower peak in economywide
U.S. debt issuance may be needed to hit a comparable Treasury yield.
I. Improving U.S. Saving and Investment Imbalances
Took a Step Backward in Q4
As the first and most important broad observation, the U.S. dissaving
position is actually on an improving trend despite rising fiscal deficits (chart
1), although it took a mild step backward in Q4. Even after factoring in
deficits, national dissaving (the excess of investment over saving) has gone
from a pace of about $850 billion (all figures we use in this article are
seasonally adjusted at annualized rates) during the boom years for consumer
spending and business investment to $473 billion now, for a net improvement
of $377 billion. That would suggest that fiscal deficits are not creating a
paucity of saving dollars. More importantly, the U.S. economy simply needs
less net foreign funding now. This is an important step in the rebalancing of
America’s domestic saving and investment imbalances of recent years. If this
trend remains intact or strengthens, then it presents a less bearish perspective
on the USD unless Q4 harkens the resumption of a deteriorating trend in the
imbalances.
Second, much of the improvement in the structural imbalance of the U.S.
economy is because private saving is rising as an offset to public sector
March 12, 2010
Commentary
Canadian Preview
U.S. Preview
International Preview
U.S. Macro Comment
U.S. Monetary Policy
Canadian Macro Comment
Fiscal Policy
International Markets
Emerging Markets
Foreign Exchange Markets
Fixed Income Markets
Indicator Preview Tables
1-3
4
4-5
5
6-7
8
9
10
11-12
12-15
16
17-18
19-20
Index
Chart 1:
Chart 2:

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