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Aspen Publishers
Blue Chip ® Financial Forecasts Top Analysts’ Forecasts Of U.S. And Foreign Interest Rates, Currency Values And The Factors That Influence Them Vol. 28, No. 10, October 1, 2009
Wolters Kluwer Law & Business
BLUE CHIP FINANCIAL FORECASTS® EXECUTIVE EDITOR: RANDELL E. MOORE 3663 Madison Ave. Kansas City, MO 64111 Phone (816) 931-0131 Fax (816) 931-0430 E-mail: [email protected] Publisher: Paul Gibson Marketing Director: Dom Cervi Blue Chip Financial Forecasts® (ISSN: 07418345) is published monthly by Aspen Publishers, 76 Ninth Avenue, New York, NY 10011. Printed in the U.S.A. Subscriptions: $875 per year for print or e-mail delivery of 12 monthly issues. $1050 per year for both print and e-mail delivery of 12 monthly issues. For multiple-copy rates and site-license agreements call Terry Watkins toll free at 866873-9156, or contact her at: [email protected] Permission requests: For information on how to obtain permission to reproduce content, please to the Aspen Publishers website at: www.aspenpublishers.com/permissions. Purchasing reprints: For customized article reprints, please contact Wright’s Reprints at 1-877652-5295 or go to the Wright’s Reprints website at www.wrightsreprints.com. Customer Service: 1-800-234-1660 To Order: 1-800-638-8437 Customer Service Fax: 1-800-901-9075 Email: [email protected] Web Sites:www.aspenpublishers.com www.bluechippubs.com Blue Chip Financial Forecasts® is a general circulation news monthly. No statement in this issue is to be construed as a recommendation to buy or sell securities or to provide investment advice. The editor and Aspen Publishers, while considering the contents to be reliable, take no responsibility for the information contained herein. © 2009 Aspen Publishers. All Rights Reserved. This material may not be used, published, broadcast, rewritten, copied, redistributed or used to create any derivative works without prior written permission from the publisher.
TABLE OF CONTENTS Domestic Commentary
p. 1
Domestic Summary Table –Table of consensus forecasts of U.S. interest rates and key economic assumptions
p. 2
International Summary Table – Table of consensus forecasts of international interest rates and foreign exchange values
p. 3
International Commentary
p. 3
Individual Panel Member’s U.S. Forecasts – Of interest rates and key assumptions for the next six quarters
p. 4-9
Individual Panel Member’s International Forecasts – Of international interest rates and foreign exchange values
p. 10-11
Viewpoints – A sampling of views on the economy and government policy excerpted from recent reports issued by our panel members p. 12-13
Special Questions – Results of special questions posed to panel members about the economy, financial markets and government policy p. 14
Databank – Monthly historical data on many key indicators of economic activity
p. 15
Calendar – Release dates for important upcoming economic Data, FOMC meetings, etc.
p. 16
List Of Contributing Economists – To Domestic and International Survey
inside of back cover
.
Consensus Still Sees Trend-Like Real GDP Growth Over Coming Year Domestic Commentary Confidence remains high that the U.S. economy began growing again this summer, ending the longest, deepest recession in the post World War II era. Indeed, more than 90% of our panelists say the recession has ended. Moreover, consensus forecasts of near-term economic growth again moved higher over the past month, extending the streak of upgrades that began in April. Nonetheless, the consensus continues to only foresee trend-like real GDP growth of 2 ¾% or so over the coming year, well short of the rebounds that followed prior recessions in the past 60 years. Among the data released since our last survey that helped lift expectations of near-term GDP growth was a four-point jump in the Institute of Supply Management’s August index of manufacturing activity to 52.9, matching its highest reading since July 2006. Other August reports also exceeded expectations, including a 2.7% surge in retail sales, a 0.8% jump in industrial production and a 1.5% increase in housing starts that left them at their highest level in nine months. Moreover, the Conference Board’s index of leading economic indicators rose for a fifth consecutive month in August and is up 4.7% over the past five months, the strongest such gain since early 1983. The news, however, was not uniformly upbeat. The unemployment rate jumped 0.3 of a percentage point to 9.7% in August. The trade deficit widened by a much larger than expected $4.5 billion in July. Sales of new single-family homes rose a smaller-than-expected 0.7% in August while sales of existing homes actually fell 2.7%, accompanied by a second-consecutive drop in the median sales price. New orders for durable goods unexpectedly declined by 2.4% in August and nondefense capital goods shipments excluding aircraft dropped 1.9% to a fresh cycle low. Early indications suggest unit sales of cars and light trucks fell dramatically in September following the “cash for clunker” induced increases in July and August. Key factors expected to cap the strength of the economic recovery over the next six quarters include: an unusually slow improvement in labor market conditions; only modest gains in consumer spending, restrained by tepid growth in personal income, tight credit and a desire by households to pare debt; an atypically muted recovery in residential investment due to still rising home foreclosures and persistently high inventories of unsold existing homes; a sharp further pullback in commercial construction; and limited improvement in capital spending resulting from the excess capacity that exists in many sectors and still-tight credit for small and mid-size businesses. As for the specifics of our September 23rd-24th survey results, the consensus predicts real GDP expanded at an annual rate of 3.2% in Q3 and will grow at a 2.5% clip in the final quarter of this year and in Q1 2010. The Q3 forecast increased 0.9 of a percentage point over the past month, the Q4 2009 and Q1 2010 estimates rose 0.2 of a percentage point and 0.1 of a point, respectively. Consensus forecasts of real GDP growth in subsequent quarters were little changed this month. Real GDP is predicted to expand at a 2.7% rate in Q2 2010, 0.1 of a point less than predicted last month. Real GDP is forecast to grow at a 2.8% rate in both Q3 and Q4 of next year, the Q3 projection 0.1 of a point better than predicted last month. Our panelists’ first stab at predicting real GDP’s growth rate in Q1 2011 produced a consensus forecast of 2.9%. Given the subdued pace of recovery, inflationary pressures are expected to remain relatively muted over the next year, according to the consensus. Since December 2008 and March 2009, respectively, the Producer Price Index (PPI) and the Consumer Price Index (CPI) have contracted on a year-over-year basis, primarily the result of the steep run-up and subsequent pull-back in energy and food prices. In July, the 12-month decline in the PPI widened to -6.8% while the decline in the CPI reached -2.1%. In August, however, the y/y change in the PPI narrowed to -4.3% while the change in the CPI shrank to 1.5%.
By late this year or early next, the y/y change in both measures of inflation is widely expected to become positive again, but largely because of less favorable year ago comparisons. On the other hand, the y/y change in inflation excluding food and energy prices is widely expected to continue working its way lower for the time being. For example, the core CPI was up 1.9% y/y in April but has declined each and every month since to stand at 1.4% in August. While the overall CPI likely rose at a seasonally-adjusted annual rate of 2.7% in the current quarter, the consensus continues to foresee growth rates of 2.0% or less between Q4 2009 and Q4 2010. In light of uncertainty about the strength of the recovery and the expectation that inflation will remain subdued, the consensus continues to believe the Federal Reserve will move very cautiously in unwinding its monetary accommodation. The policy statement issued at the conclusion of the Federal Open Market Committee’s September 22nd-23rd meeting did nothing to dissuade panelists of that belief. Policymakers’ discussion of the economic outlook was a bit more optimistic, noting signs of a pick-up in economic activity and that long-term inflation expectations remain tame. The committee also reiterated its commitment to leave the target federal funds rate unchanged “for an extended period”. The most notable news from the meeting, word that the Fed would purchase a "total" of $1.25 trillion of agency-issued mortgage-backed securities (MBS). Earlier statements said the Fed would buy "up to" $1.25 trillion. However, the FOMC retained the "up to" phrasing for its planned purchases of $200 billion of agency debt. The FOMC also announced it would slow the rate of buying for both programs and extend the purchases through the first quarter of next year. The day following conclusion of the FOMC meeting the Fed announced it would reduce the size of upcoming Term Auction Facility (TAF) and Term Securities Lending Facility (TSLF) operations in light of improving market conditions. Neither represent a tightening of policy but rather administrative moves designed to align the size of lending facilities with underlying demand. Given the unanimous vote at the FOMC meeting, credit markets were taken aback by Fed Governor Kevin Warsh’s hawkish op-ed in the September 25th Wall Street Journal. In it, Warsh said “prudent risk management indicates that policy likely will need to begin normalization before it is obvious that it is necessary, possibly with greater force than is customary”. Warsh added that “If "whatever it takes" was appropriate to arrest the panic, the refrain might turn out to be equally necessary at a stage during the recovery to ensure the Federal Reserve's institutional credibility.” Short-term rates jumped and long-term yields swooned in reaction to the op-ed. However, in the Q&A after a speech later that day, Warsh said his hawkish tone in the op-ed did not imply an imminent change in Fed policy. Consensus Forecast The consensus still predicts the FOMC will leave its target federal funds rate at 0.0%-0.25% until late next spring. By the end of 2010, the consensus thinks the FOMC will have raised its target rate by about 100 basis points. In the interim, the Fed is expected to continue unwinding its various lending facilities and purchase programs. The Treasury yield curve is expected to flatten over the coming year as short-term market rates increase faster than long-term yields. The consensus assumes the dramatic narrowing in corporate spreads seen over the past several months may struggle to continue (see page 2 for U.S. consensus forecasts). Special Questions About 70% of the panelists think that by the end of this year Congress will extend, expand or both the $8,000 federal tax credit program for first-time homebuyers. However, just 42% believe Congress should do so. About 60% of the panelists say the trade deficit will widen in the second half of this year; almost threequarters think it will widen in 2010 (see page 14).
2 BLUE CHIP FINANCIAL FORECASTS OCTOBER 1, 2009
Consensus Forecasts Of U.S. Interest Rates And Key Assumptions1 -------------------------------------History-----------------------------------------
Consensus Forecasts-Quarterly Avg.
---------Average For Week End-------- ----Average For Month---- Latest Q*
4Q 2009 0.2 3.2 0.5 0.2 0.2 0.3 0.5 1.1 2.5 3.6 4.4 5.3 6.6 4.5 5.2
Interest Rates Sep. 25 Sep. 18 Sep. 11 Federal Funds Rate 0.15 0.16 0.15 Prime Rate 3.25 3.25 3.25 LIBOR, 3-mo. 0.29 0.30 0.31 Commercial Paper, 1-mo. 0.13 0.14 0.13 Treasury bill, 3-mo. 0.10 0.11 0.14 Treasury bill, 6-mo. 0.20 0.20 0.22 Treasury bill, 1 yr. 0.41 0.40 0.40 Treasury note, 2 yr. 1.00 0.98 0.92 Treasury note, 5 yr. 2.44 2.43 2.34 Treasury note, 10 yr. 3.46 3.46 3.41 Treasury note, 30 yr. 4.21 4.24 4.25 Corporate Aaa bond 5.16 5.15 5.18 Corporate Baa bond 6.31 6.36 6.39 State & Local bonds 4.04 4.20 4.33 Home mortgage rate 5.04 5.04 5.07
Sep. 4 0.15 3.25 0.34 0.15 0.14 0.23 0.42 0.93 2.33 3.37 4.18 5.12 6.37 4.37 5.08
Aug. 0.16 3.25 0.42 0.17 0.17 0.27 0.46 1.12 2.57 3.59 4.37 5.26 6.58 4.60 5.19
July 0.16 3.25 0.52 0.18 0.18 0.28 0.48 1.02 2.46 3.56 4.41 5.41 7.09 4.72 5.22
June 0.21 3.25 0.62 0.18 0.18 0.31 0.51 1.18 2.71 3.72 4.52 5.61 7.50 4.81 5.42
3Q 2009 0.16 3.25 0.41 0.16 0.16 0.25 0.45 1.04 2.48 3.53 4.34 5.28 6.67 4.50 5.15
----------------------------------------History-------------------------------------------
4Q 2007 73.3 2.1 2.3 5.8
Key Assumptions Major Currency Index Real GDP GDP Price Index Consumer Price Index
1Q 2008 72.0 -0.7 1.9 4.5
2Q 2008 70.9 1.5 1.8 4.5
3Q 2008 73.5 -2.7 4.0 6.2
4Q 2008 81.3 -5.4 0.1 -8.3
1Q 2009 82.7 -6.4 1.9 -2.4
2Q 2009 79.4 -1.0 0.0 1.3
1Q 2010 0.2 3.2 0.5 0.3 0.3 0.4 0.7 1.3 2.7 3.7 4.5 5.4 6.7 4.6 5.3
2Q 3Q 2010 2010 0.3 0.6 3.3 3.6 0.7 1.0 0.4 0.7 0.4 0.7 0.6 0.9 0.8 1.2 1.5 1.8 2.8 3.0 3.9 4.1 4.6 4.8 5.4 5.6 6.7 6.8 4.7 4.8 5.4 5.6
4Q 2010 1.0 4.1 1.4 1.2 1.1 1.3 1.6 2.1 3.2 4.2 4.9 5.7 6.9 4.9 5.8
1Q 2011 1.5 4.5 1.8 1.6 1.5 1.7 1.9 2.5 3.5 4.4 5.1 5.8 7.0 5.0 5.9
Consensus Forecasts-Quarterly
3Q* 2009 75.4 3.2 1.4 2.7
4Q 2009 75.2 2.5 1.2 1.8
1Q 2010 75.1 2.5 1.5 1.7
2Q 3Q 2010 2010 74.6 74.6 2.7 2.8 1.6 1.7 1.6 2.0
4Q 2010 74.9 2.8 1.7 2.0
1Q 2011 75.2 2.9 2.0 2.1
Forecasts for interest rates and the Federal Reserve’s Major Currency Index represent averages for the quarter. Forecasts for Real GDP, GDP Price Index and Consumer Price Index are seasonally-adjusted annual rates of change (saar). Individual panel members’ forecasts are on pages 4 through 9. Historical data for interest rates except LIBOR is from Federal Reserve Release (FRSR) H.15. LIBOR quotes available from The Wall Street Journal. Interest rate definitions are the same as those in FRSR H.15. Treasury yields are reported on a constant maturity basis. Historical data for the Fed’ Major Currency Index is from FRSR H.10 and G.5. Historical data for Real GDP and GDP Chained Price Index are from the Bureau of Economic Analysis (BEA). Consumer Price Index (CPI) history is from the Department of Labor’s Bureau of Labor Statistics (BLS).
U.S. Treasury Yield Curve
U.S. 3-Mo. T-Bills & 10-Yr. T-Note Yield
Week ended September 25, 2009 and Year Ago vs. 4Q 2009 and 1Q 2011 Consensus Forecasts
5.00
Year Ago Week ended 9/25 Consensus 1Q 2011 Consensus 4Q 2009
4.50 4.00
4.00
5.00 4.50
3.50
4.00
4.00
3.50
3.50
3.00
3.00
2.50
2.50
2.00
2.00
2.50
2.00
2.00
1.50
1.50
1.50
1.00
1.00
1.00
0.50
0.50
0.50
0.00
0.00
0.00
1yr
2yr
5yr
10yr
Percent
2.50
6mo
1Q 2001
30yr
Maturities
Corporate Bond Spreads
2006
2007
2008
2009
5.00 4.50
1.50
Consensus
1.00 0.50
3-Month T-Bill Yield
0.00 1Q 2002
1Q 2003
1Q 2004
1Q 2005
1Q 2006
1Q 2007
1Q 2008
1Q 2009
1Q 2010
400 350 300
Basis Points
Aaa Corporate Bond Yield minus 10-Year T-Bond Yield
10-Yr. T-Note Yield.
1Q 2011
As of week ended September 25, 2009 700 650 600 550 500 450 400 350 300 250 200 150 100 50 0
Baa Corporate Bond Yield minus 10-Year T-Bond Yield
5.50
Consensus
U.S. Treasury Yield Curve
As of week ended September 25, 2009 700 650 600 550 500 450 400 350 300 250 200 150 100 50 0
6.00
4.50
3.00
3mo
Forecast
5.50
3.00
Basis Points
Percent
3.50
(Quarterly Average) History
6.00 5.00
400 10-Year T-Bond minus 3-Month T-Bill (Constant Maturity Yields)
350 300
250
250
200
200
150
150
100
100
50
50
0
0
-50
-50
-100 2006
-100 2007
2008
2009
OCTOBER 1, 2009 BLUE CHIP FINANCIAL FORECASTS 3
-------------3-Month Interest Rates1--------------------------History----------
U.S. Japan U.K. Switzerland Canada Australia Eurozone
Latest: 0.78 0.51 0.83 0.45 0.68 3.80 0.78
Month Ago: 1.00 0.46 0.85 0.44 0.70 3.80 0.95
Year Ago: 4.47 1.02 6.31 2.80 4.00 7.74 5.06
Consensus Forecasts Months From Now: 3 6 12 0.40 0.51 1.01 0.44 0.46 0.53 0.71 0.86 1.35 0.30 0.37 0.60 0.57 0.72 1.30 3.40 3.55 3.83 0.83 0.93 1.23
-----------10-Yr. Government Bond Yields1----------------History----------
U.S. Germany Japan U.K. France Italy Switzerland Canada Australia Spain Eurozone
Latest: 3.41 3.34 1.34 3.72 3.59 4.06 2.11 3.43 5.44 3.85 3.89
Month Ago: 3.45 3.26 1.33 3.55 3.51 4.03 2.02 3.40 5.47 3.77 3.85
Year Ago: 3.84 4.25 1.48 4.67 4.50 4.92 2.84 3.70 5.78 4.71 4.67
Consensus Forecasts Months From Now: 3 6 12 3.66 3.96 4.33 3.41 3.49 3.70 1.44 1.49 1.63 3.80 3.96 4.29 3.68 3.75 3.94 4.19 4.28 4.45 2.07 2.32 2.52 3.67 3.97 4.42 5.50 5.60 5.85 3.98 4.04 4.20 3.50 3.58 3.85
----------------Foreign Exchange Rates1---------------------History----------
U.S. Japan U.K. Switzerland Canada Australia Euro
Latest: 73.785 89.74 1.5945 1.0274 1.0892 0.8656 1.4686
Month Ago: 74.882 94.60 1.6503 1.0613 1.0799 0.8349 1.4305
Year Ago: 73.854 105.80 1.8558 1.0813 1.0355 0.8385 1.4737
Consensus Forecasts Months From Now: 3 6 12 79.1 80.3 82.1 92.5 93.5 96.8 1.71 1.72 1.72 1.07 1.08 1.09 1.04 1.06 1.11 0.88 0.88 0.89 1.49 1.50 1.48
Consensus 3-Month Rates vs. U.S. Rate Japan U.K. Switzerland Canada Australia Eurozone
Now
In 12 Mo.
-0.27 0.05 -0.33 -0.12 3.02 0.00
-0.48 0.34 -0.41 0.29 2.81 0.21
Consensus 10-Year Gov’t Yields vs. U.S. Yield Germany Japan U.K. France Italy Switzerland Canada Australia Spain Eurozone
Now
In 12 Mo.
-0.07 -2.07 0.31 0.18 0.65 -1.30 0.02 2.03 0.44 0.48
-0.63 -2.70 -0.04 -0.39 0.12 -1.81 0.09 1.53 -0.12 -0.48
Forecasts of individual panel members are on pages 10 and 11. Definitions of variables are as follows: 1Three month currency interest rates. Short term rates are call for the US Dollar and Yen, others: two day’s notice. Government bonds are yields to maturity. Foreign exchange rate forecasts for U.K., Australia and the Euro are currencies per U.S. dollar. For the U.S dollar, forecasts are of the U.S. Federal Reserve Board’s Major Currency Index.
International Commentary The past month delivered a mix bag of news for global financial markets to chew on. Data continued to indicate the global economy will emerge from recession during the second half of this year. The rebound has been especially striking in nonJapan Asia, but improving activity, if sometimes more uneven, continued to be see in North American and European economies. As a result, forecasts of economic growth over the forecast horizon are still rising. Nonetheless, most analysts still predict the recovery in Western economies will be more subdued than is usual given the considerable headwinds (tighter credit, persistently high levels of unemployment, etc.) that are likely to prevail well into next year. That would be especially true, many argue, if policymakers prematurely begin an unwinding of the massive fiscal and monetary stimulus put in place over the past year, dampening prospects for a self-sustaining upturn in economic activity. As for the markets, global equity indices generally moved higher over the past month though there were some signs of back-tracking as September wound down. Sovereign bond markets were directionless, with yields up a little in some nations and down elsewhere. However, spread product generally continued to perform well, especially were governments were acting as financiers. Perhaps the most notable development was in the foreign exchange markets where the U.S. dollar continued to slide, dropping to it lowest level in more than a year against many currencies. The European Central Bank (ECB) left its refi rate unchanged at 1.0% at the September meeting and also announced that its next 12-month tender would again be allocated at 1.0%, signaling to markets its intention to keep rates lows for the foreseeable future. While ECB officials have warned against overdone optimism about the growth outlook, recent data still point to recover. PMI data for both the manufacturing and service sectors continues to improve with the latter in September indicating out-right growth. Factory orders are up and business sentiment is still increasing. However, retail sales fell in July, and possibly August, after being unchanged in June, demand dampened by still rising unemployment and damp income growth. The ECB is not expected to raise interest rates until next spring. At its September meeting, the Bank of England (BoE) held its asset purchase target steady at 175 billion pounds and the repo rate was left unchanged. Minutes from the meeting indicated there was no discussion of lowering the interest rate paid on reserves held at the Bank of England. However, speculation on a BoE deposit rate cut continued when City economists were invited to a special meeting at the bank. Governor King had previously acknowledged the BoE was looking into the possibility of following the Riksbank and cutting its deposit rate to offer negative rates on bank reserves to encourage banks to lend rather than to hoard the cash. Real GDP is expected to expand this quarter, snapping a five-quarter string of declines. However, growth of just 1.0% or so still is expected in 2010. The Bank of Canada (BoC) left its policy rate at 0.25% in September and maintained its conditional commitment to leave rates unchanged until June of next year. While the bank has voiced more optimism about GDP growth going forward the persistent strength of the loonie recently prompted BoC president Carney to threaten the use quantitative easing to combat its upward trajectory. The Bank of Japan (BoJ) maintained its call rate at 0.1% on September 17th where it’s been stuck since last December. While the BoJ noted "economic conditions are showing signs of recovery" and that financial conditions "increasingly (are) showing signs of improvement," the "risks to the economy are still on the downside.” Real GDP grew at a downwardly revised rate of just 2.3% in Q2 versus the 3.7% originally estimated. Prices continue to fall at an alarming clip with the national core CPI down a record -2.2% y/y in July and headed lower (see 10 and 11 for individual panel members’ forecasts).
4 BLUE CHIP FINANCIAL FORECASTS OCTOBER 1, 2009
Fourth Quarter 2009 Interest Rate Forecasts
Key Assumptions
----------------------------------------------------------------------Percent Per Annum -- Average For Quarter---------------------------------------------------------------
Blue Chip Financial Forecasts Panel Members
-------------------------------------Short-Term-----------------------------------1 Federal
2 Prime
3 LIBOR
4 Com.
5 Treas.
Funds
Bank
Rate
Paper
Bills
Rate
Rate
3-Mo.
1-Mo.
3-Mo.
6 Treas.
------------Intermediate-Term-----------
7 Treas.
8 Treas.
9 Treas.
Bills
Bills
Notes
Notes
6-Mo.
1-Yr.
2-Yr.
5-Yr.
10 Treas.
-----------------Long-Term------------------
11 Treas.
12 Aaa
13 Baa
Notes
Bond
Corp.
Corp.
10-Yr.
30-Yr.
Bond
Bond
14 State &
Avg. For
------(Q-Q % Change)------
---Qtr.---
------------(SAAR)-----------
15 Home
A. Fed's Major
B.
C. GDP
D. Cons.
Local
Mtg.
Currency
Real
Price
Price
Bonds
Rate
$ Index
GDP
Index
Index
Stone Harbor Investment Partners
0.3 H
3.3 H
0.6
0.4
0.2
0.3
0.5
1.1
2.7
3.7
4.4
6.3 H
9.2 H
na
5.2
74.0
1.5
1.2
2.5
Bank of Toyko-Mitsubishi UFJ
0.3 H
3.3 H
0.3
0.3
0.2
0.3
0.4 L
1.4
3.1
4.1 H
4.8
5.1
6.3
4.5
5.7 H
72.0 L
3.8
2.7
2.0
Swiss Re
0.3 H
3.3 H
0.3
0.6 H
0.1 L
0.3
0.5
1.0
2.5
3.6
4.4
5.2
6.6
na
5.4
na
1.9
2.1
0.4 L
Scotiabank
0.3 H
3.3 H
na
na
0.3 L
na
na
1.1
2.6
3.8
4.5
5.2
6.5
4.5
5.3
na
2.0
1.0
1.2
MacroFin Analytics
0.2
3.3 H
0.5
0.3
0.2
0.4 H
0.6
1.1
2.6
3.6
4.4
5.3
6.9
4.4
5.1
76.0
1.5
0.9
1.2
PNC Financial Services Corp.
0.2
3.3 H
0.4
0.3
0.2
0.3
0.5
1.0
2.5
3.5
4.3
5.3
6.5
4.7
5.3
76.0
1.8
1.8
2.2
RDQ Economics
0.2
3.3 H
0.4
0.2
0.3 H
0.4 H
0.6
1.1
2.5
3.8
4.5
5.3
6.3
4.6
5.2
74.0
2.1
2.8 H
2.5
Woodley Park Research
0.2
3.3 H
0.4
0.3
0.2
0.3
0.5
1.1
2.4
3.5
5.1 H
5.1
6.4
4.3
5.1
76.2
3.2
0.2
1.2
The Northern Trust Company
0.2
3.3 H
0.4
na
0.2
na
0.5
1.0
2.4
3.6
4.4
na
na
na
5.2
na
1.9
2.3
2.5
Societe Generale
0.2
3.3 H
0.3
na
0.2
0.3
na
1.1
1.1 L
3.7
4.4
5.4
6.9
na
5.4
73.0
4.0
1.2
2.4
Russell Investments
0.2
3.3 H
0.2 L
0.2
0.2
0.4 H
0.7 H
1.2
2.6
3.5
4.5
5.2
6.2
4.2 L
5.1
74.0
2.2
1.4
1.3
Conning & Company
0.2
3.3 H
na
0.2
0.2
0.3
0.5
1.0
2.5
3.5
4.2
5.2
6.5
4.5
5.3
74.0
2.5
0.5
1.4
Fannie Mae
0.2
3.3 H
na
na
0.2
na
0.7 H
na
na
3.5
4.1
5.3
na
na
na
na
2.4
0.4
1.7
Wayne Hummer Investments
0.2
3.2
0.6
0.2
0.2
0.3
0.4 L
1.4
2.7
3.7
4.3
5.3
6.4
4.3
5.1
79.5
2.4
1.4
1.6
Thredgold Economic Assoc.
0.2
3.2
0.6
0.3
0.2
0.3
0.5
1.1
2.5
3.5
4.4
5.4
6.9
4.7
5.2
75.0
2.8
1.5
1.8
Kellner Economic Advisers
0.2
3.2
0.6
0.3
0.2
0.3
0.5
1.2
2.6
3.6
4.4
5.4
7.0
5.0
5.5
76.0
2.5
1.5
2.2
Mesirow Financial
0.2
3.2
0.5
0.3
0.2
0.4 H
0.7 H
1.3
2.3
3.6
4.3
5.4
6.8
4.7
5.3
76.6
2.4
0.1
1.4
Woodworth Holdings
0.2
3.2
0.5
0.2
0.2
0.3
0.4 L
1.0
2.4
3.4
4.2
5.2
6.4
4.2 L
5.1
72.5
3.4
0.7
1.7
Cycledata Corp.
0.2
3.2
0.4
0.2
0.1 L
0.2 L
0.5
0.9 L
2.4
3.5
4.2
5.3
6.5
4.3
5.1
75.0
4.0
1.6
2.5
Action Economics
0.2
3.3 H
0.5
0.3
0.3 H
0.4 H
0.6
1.2
2.5
3.7
4.3
5.2
6.4
4.4
5.1
73.8
2.0
1.6
2.2
RBS Securities
0.2
3.3 H
0.4
0.2
0.3 H
0.4 H
0.7 H
1.2
2.6
3.7
4.5
5.4
6.6
4.4
5.2
74.5
2.1
2.0
2.2
SunTrust Banks
0.2
3.2
0.3
0.2
0.1 L
0.3
0.4 L
1.0
2.5
3.4
4.2
5.2
6.3
5.5 H
4.5 L
74.5
4.5 H
0.5
2.4
ClearView Economics
0.2
3.3 H
0.3
0.2
0.1 L
0.2 L
0.4 L
1.0
2.5
3.5
4.3
5.2
6.3
4.3
5.1
73.8
4.0
2.0
2.4
Nomura Securities, Inc.
0.2
3.3 H
0.4
0.2
0.2
0.3
0.4 L
1.2
3.2 H
3.5
4.3
5.1
6.2
na
5.1
75.0
2.1
0.7
1.1
Chmura Economics & Analytics
0.2
3.3 H
0.6
0.2
0.2
0.2 L
0.5
1.1
2.4
3.6
4.3
5.4
na
na
5.1
76.8
0.5
Goldman Sachs & Co.
0.2
3.3 H
0.4
na
0.2
na
na
1.0
2.4
3.3
4.0
5.5
na
na
5.3
na
3.0
Daiwa Securities America
0.2
3.3 H
0.4
0.3
0.2
0.3
0.5
1.3
2.5
3.5
4.3
5.2
6.4
4.2 L
5.1
74.0
3.0
2.0
1.8
Loomis, Sayles & Company
0.2
3.3 H
0.4
0.2
0.2
0.3
0.6
1.1
2.5
3.6
4.4
5.3
6.6
4.5
5.2
73.3
2.6
0.2
2.2
1.3 -0.2 L
0.9 1.5
Wells Fargo
0.2
3.3 H
0.3
0.2
0.2
0.3
0.4 L
1.1
2.6
3.6
4.4
5.5
6.8
4.7
5.2
77.0
2.5
0.8
0.7
Wells Capital Management
0.2
3.3 H
0.2 L
0.1 L
0.1 L
0.3
0.7 H
1.2
2.6
3.9
4.4
5.1
6.1 L
4.3
5.5
74.1
3.0
2.0
2.3
DePrince & Assoc.
0.2
3.2
1.3 H
0.2
0.2
0.3
0.5
1.1
2.4
3.5
4.3
5.3
6.4
4.4
5.2
76.1
0.4
1.5
1.0
JPMorgan Privare Wealth Mgt.
0.2
3.2
0.6
0.2
0.1 L
0.2 L
0.4 L
1.0
2.5
3.5
4.2
5.2
6.4
4.6
5.2
74.2
2.7
1.3
1.7 3.2 H
Comerica Bank
0.1 L
3.3 H
0.5
0.2
0.2
0.3
0.5
1.1
2.6
3.7
4.4
5.6
7.4
4.6
5.2
78.3
3.0
2.1
BMO Capital Markets
0.1 L
3.3 H
0.3
0.2
0.2
0.2 L
0.5
1.2
2.5
3.6
4.4
5.2
6.4
4.2 L
5.1
74.0
3.1
0.7
1.6
Moody's Capital Markets
0.1 L
3.3 H
0.3
0.2
0.2
0.3
0.6
1.0
2.5
3.6
4.4
5.3
6.5
4.4
5.1
74.5
2.3
1.5
2.0
Economist Intelligence Unit
0.1 L
3.2
0.9
0.2
0.2
0.3
0.4 L
1.1
2.5
3.5
4.3
na
na
na
5.1
na
1.6
na
0.8
Moody's Economy.com
0.1 L
3.2
0.8
0.3
0.3 H
0.4 H
0.6
1.2
2.7
4.0
4.8
6.2
8.3
na
5.5
na
2.1
1.5
1.1
J.W. Coons Advisors LLC
0.1 L
3.1
0.6
0.5
0.3 H
0.4 H
0.5
1.0
2.3
3.3
4.1
5.0 L
6.2
na
5.0
73.8
3.4
1.0
1.2
Argus Research
0.1 L
3.1
0.5
0.2
0.2
0.3
0.4 L
0.9 L
2.4
3.5
4.3
5.3
6.5
4.5
5.1
75.3
-0.1
2.2
2.9
GLC Financial Economics
0.1 L
3.1
0.4
0.2
0.1 L
0.2 L
0.4 L
1.0
2.4
3.4
4.3
5.2
6.5
4.5
5.0
74.2
2.6
1.4
2.2
J.P. Morgan Chase
0.1 L
na
0.5
na
0.2
na
na
0.9 L
2.0
3.0 L
3.7 L
na
na
na
na
na
3.0
0.9
2.2
UBS
0.1 L
na
0.5
na
0.2
na
na
1.6 H
2.9
3.8
4.4
na
na
na
na
na
3.0
1.2
1.1
Banc of America-Merrill Lynch
0.1 L
na
0.4
na
0.2
na
na
1.0
2.5
4.0
4.6
na
na
na
na
na
3.5
1.3
2.9
1.3
-0.1
1.3
Standard & Poor's Corp.
0.1 L
3.2
0.6
0.3
0.2
0.3
0.5
1.1
2.6
3.6
na
5.4
6.7
4.7
5.2
87.6 H
Georgia State University
0.1 L
3.3 H
na
na
0.2
0.2 L
0.4 L
1.0
2.5
3.6
4.3
5.3
6.5
na
5.2
na
Naroff Economic Advisors
0.1 L
3.3 H
0.8
0.3
0.2
0.4 H
0.5
1.1
2.6
3.7
4.4
5.3
6.6
4.5
5.2
Barclays Capital
0.1 L
3.3 H
0.3
0.3
0.2
0.4 H
0.6
1.3
2.8
3.7
4.6
5.5
7.0
5.0
Nat'l Assn. of Realtors
0.1 L
3.1 L
0.6
0.2
0.2
0.4 H
0.7 H
1.2
2.6
3.5
4.2
5.4
6.8
4.9
-0.2 L
0.2
1.2
73.8
2.8
1.1
3.0
5.5
na
4.0
1.1
2.6
5.5
na
1.8
1.3
1.8
October Consensus
0.2
3.2
0.5
0.2
0.2
0.3
0.5
1.1
2.5
3.6
4.4
5.3
6.6
4.5
5.2
75.2
2.5
1.2
1.8
Top 10 Avg.
0.2
3.3
0.7
0.4
0.2
0.4
0.7
1.3
2.8
3.8
4.6
5.6
7.3
4.8
5.5
78.0
3.8
2.2
2.7
Bottom 10 Avg.
0.1
3.2
0.3
0.2
0.1
0.2
0.4
1.0
2.2
3.4
3.7
5.1
6.3
4.3
5.0
73.4
1.0
0.3
0.9
September Consensus
0.2
3.2
0.6
0.3
0.2
0.4
0.6
1.2
2.6
3.7
4.5
5.5
7.0
4.8
5.3
76.1
2.3
1.4
1.8
16
Number of Forecasts Changed From A Month Ago: Down
9
4
35
25
36
32
31
33
34
38
34
36
32
26
28
25
14
18
Same
37
39
6
11
12
8
9
10
9
8
9
5
4
4
9
5
7
19
12
Up
2
2
3
3
0
1
2
4
4
2
4
2
4
3
7
5
27
10
20
64 %
41 %
54 %
Diffusion Index
43 %
48 %
14 %
22 %
13 %
12 %
15 %
19 %
18 %
13 %
18 %
10 %
15 %
15 %
26 %
21 %
OCTOBER 1, 2009 BLUE CHIP FINANCIAL FORECASTS 5
First Quarter 2010 Interest Rate Forecasts
Key Assumptions
--------------------------------------------------------------------Percent Per Annum -- Average For Quarter--------------------------------------------------------------
Blue Chip Financial Forecasts Panel Members
-------------------------------------Short-Term-----------------------------------1 Federal
2 Prime
3 LIBOR
4 Com.
5 Treas.
Funds
Bank
Rate
Paper
Bills
Rate
Rate
3-Mo.
1-Mo.
3-Mo.
6 Treas.
------------Intermediate-Term-----------
7 Treas.
8 Treas.
9 Treas.
Bills
Bills
Notes
Notes
6-Mo.
1-Yr.
2-Yr.
5-Yr.
10 Treas.
-----------------Long-Term------------------
11 Treas.
12 Aaa
13 Baa
Notes
Bond
Corp.
Corp.
10-Yr.
30-Yr.
Bond
Bond
14 State &
Avg. For
------(Q-Q % Change)------
---Qtr.---
------------(SAAR)-----------
15 Home
A. Fed's Major
B.
C. GDP
D. Cons.
Local
Mtg.
Currency
Real
Price
Price
Bonds
Rate
$ Index
GDP
Index
Index 1.7
Woodworth Holdings
0.5 H
3.5 H
0.7
0.5
0.5
0.6
0.7
1.3
2.7
3.6
4.4
5.3
6.5
4.3
5.2
71.0
3.3
1.0
Action Economics
0.3
3.3
0.7
0.3
0.4
0.6
1.1
1.7
2.8
4.0
4.6
5.3
6.5
4.7
5.2
73.3
2.3
2.3
1.6
RBS Securities
0.3
3.3
0.7
0.3
0.6 H
0.9 H
1.3 H
1.8
3.1
4.1
5.0
5.6
6.9
4.7
5.6
76.0
3.7
2.8
2.0 1.4
Russell Investments
0.3
3.3
0.5
0.3
0.2
0.5
0.8
1.4
2.7
3.5
4.4
5.2
6.2
4.1 L
5.1
73.7
2.2
1.4
Stone Harbor Investment Partners
0.3
3.3
0.5
0.5
0.2
0.3
0.7
1.4
2.9
3.9
4.8
5.5
7.9
na
5.4
72.0
1.3
2.3
2.3
The Northern Trust Company
0.3
3.3
0.5
na
0.2
na
0.6
1.1
2.4
3.7
4.5
na
na
na
5.2
na
1.9
2.3
2.5
Bank of Toyko-Mitsubishi UFJ
0.3
3.3
0.4
0.3
0.2
0.3
0.4 L
1.5
3.2
4.2
4.9
5.2
6.4
4.5
5.7
70.0 L
2.9
2.8
2.3
Swiss Re
0.3
3.3
0.3
0.6 H
0.1 L
0.3
0.5
1.0 L
2.5
3.6
4.4
5.2
6.4
na
5.4
na
2.1
3.5 H
1.4
Scotiabank
0.3
3.3
na
na
0.4
na
na
1.5
3.0
4.3 H
4.8
5.3
6.6
4.6
5.3
na
5.0
1.5
1.9
ClearView Economics
0.2
3.3
0.5
0.2
0.2
0.4
0.8
1.4
2.8
3.7
4.4
5.3
6.4
4.4
5.2
72.5
4.2
2.0
2.4
DePrince & Assoc.
0.2
3.2
1.2 H
0.3
0.3
0.4
0.6
1.3
2.5
3.6
4.3
5.4
6.4
4.4
5.3
77.3
1.4
1.9
1.7
MacroFin Analytics
0.2
3.3
0.6
0.5
0.4
0.5
0.8
1.3
2.7
3.9
4.5
5.2
7.1
4.5
5.1
76.5
1.8
1.0
0.8
PNC Financial Services Corp.
0.2
3.3
0.4
0.3
0.2
0.3
0.5
1.0 L
2.5
3.5
4.3
5.3
6.5
4.7
5.3
74.0
2.5
1.8
2.2
RDQ Economics
0.2
3.3
0.3
0.3
0.4
0.5
0.7
1.2
2.7
4.2
5.0
5.5
6.7
5.0
5.7
73.0
2.2
2.7
2.7
Woodley Park Research
0.2
3.3
0.6
0.4
0.3
0.4
0.6
1.2
2.4
3.4
5.0
5.0
6.2
4.3
5.0
76.9
3.4
1.4
0.2
Wells Fargo
0.2
3.3
0.3
0.3
0.3
0.4
0.5
1.2
2.7
3.7
4.5
5.6
6.8
4.8
5.3
78.5
2.0
0.9
1.1
Societe Generale
0.2
3.3
0.3
na
0.2
0.3
na
1.2
1.4 L
3.9
4.3
5.4
6.7
na
5.4
72.0
2.6
1.0
0.9
Fannie Mae
0.2
3.3
na
na
0.2
na
1.0
na
na
3.6
4.2
5.3
na
na
5.8 H
na
2.6
1.0
1.1
Conning & Company
0.2
3.3
na
0.2
0.2
0.3
0.5
1.0 L
2.6
3.7
4.4
5.4
6.7
4.5
5.5
74.0
1.5
1.0
1.6
Wayne Hummer Investments
0.2
3.2
0.6
0.2
0.3
0.4
0.6
1.6
2.8
3.8
4.5
5.4
6.5
4.4
5.2
79.0
2.7
1.6
1.7
Thredgold Economic Assoc.
0.2
3.2
0.6
0.3
0.2
0.3
0.5
1.1
2.5
3.6
4.5
5.5
7.0
4.7
5.2
75.0
2.8
1.5
1.8
Mesirow Financial
0.2
3.2
0.5
0.3
0.2
0.4
0.8
1.4
2.4
3.7
4.4
5.5
6.9
4.8
5.4
76.9
2.6
1.0
0.1 L
Kellner Economic Advisers
0.2
3.2
0.5
0.3
0.3
0.4
0.6
1.3
2.8
3.8
4.6
5.6
7.2
5.0
5.7
75.0
1.6
2.0
Cycledata Corp.
0.2
3.2
0.4
0.2
0.2
0.3
0.5
1.0 L
2.5
3.6
4.3
5.4
6.5
4.4
5.2
75.0
-1.5 L 3.5
2.0
2.9
J.W. Coons Advisors LLC
0.2
3.2
0.6
0.5
0.4
0.5
0.7
1.1
2.4
3.4
4.3
5.1
6.3
na
5.1
72.3
3.3
1.3
2.4
SunTrust Banks
0.2
3.2
0.3
0.2
0.1 L
0.3
0.4 L
1.0 L
2.5
3.4
4.2
5.2
6.3
5.5 H
4.5 L
74.1
5.4 H
0.8
2.5
Nomura Securities, Inc.
0.2
3.3
0.4
0.2
0.2
0.3
0.5
1.5
3.4 H
3.7
4.4
5.2
5.9 L
na
5.2
77.0
2.3
1.0
1.1 2.5
Naroff Economic Advisors
0.2
3.3
0.9
0.4
0.4
0.5
0.8
1.3
3.2
4.1
4.8
5.8
7.4
4.9
5.5
72.5
1.6
1.4
Daiwa Securities America
0.2
3.3
0.5
0.3
0.3
0.4
0.6
1.5
2.7
3.8
4.5
5.4
6.5
4.2
5.4
72.0
2.8
1.8
1.8
Loomis, Sayles & Company
0.2
3.3
0.4
0.2
0.2
0.3
0.7
1.5
2.6
3.8
4.5
5.4
6.6
4.6
5.4
73.3
2.9
1.0
0.8
Goldman Sachs & Co.
0.2
3.3
0.4
na
0.2
na
na
1.0 L
2.2
3.1 L
3.8 L
4.8 L
na
na
5.1
na
2.0
0.0
1.1
Wells Capital Management
0.2
3.3
0.2 L
0.1 L
0.1 L
0.3
0.7
1.2
2.7
3.9
4.4
5.1
6.0
4.2
5.5
74.2
3.5
1.9
1.8 1.5
JPMorgan Privare Wealth Mgt.
0.2
3.2
0.6
0.2
0.1 L
0.2 L
0.4 L
1.0 L
2.5
3.5
4.2
5.2
6.4
4.6
5.2
74.0
2.8
1.2
Comerica Bank
0.1 L
3.3
0.7
0.3
0.3
0.6
1.0
1.4
3.0
4.0
4.7
5.7
7.1
4.6
5.6
82.0
4.5
2.0
1.2
Chmura Economics & Analytics
0.1 L
3.3
0.4
0.2
0.2
0.4
0.6
1.2
2.8
3.8
4.5
5.6
7.3
4.4
5.3
81.0
2.5
1.0
1.4
BMO Capital Markets
0.1 L
3.3
0.3
0.2
0.2
0.2 L
0.7
1.6
2.8
3.8
4.6
5.4
6.5
4.3
5.3
73.5
2.3
1.0
1.5
Moody's Capital Markets
0.1 L
3.3
0.3
0.2
0.2
0.4
0.7
1.1
2.8
3.7
4.5
5.4
6.6
4.4
5.3
74.8
2.3
1.9
2.3
na
0.8
Economist Intelligence Unit
0.1 L
3.2
1.0
0.3
0.3
0.4
0.5
1.2
2.5
3.7
4.4
na
na
na
5.2
na
1.0
Moody's Economy.com
0.1 L
3.2
0.8
0.6 H
0.3
0.7
0.9
1.8
2.5
4.2
5.1 H
6.3 H
8.1 H
na
5.8 H
na
1.0
Argus Research
0.1 L
3.1 L
0.6
0.2
0.3
0.4
0.6
1.0 L
2.4
3.7
4.5
5.5
6.3
4.7
5.3
76.0
1.8
2.5
4.8 H
GLC Financial Economics
0.1 L
3.1 L
0.4
0.2
0.1 L
0.3
0.4 L
1.0 L
2.3
3.4
4.2
5.3
6.7
4.5
5.1
73.8
1.5
2.1
2.2
UBS
0.1 L
na
0.5
na
0.3
na
na
2.0 H
3.1
3.8
4.4
na
na
na
na
na
2.5
1.6
1.7
J.P. Morgan Chase
0.1 L
na
0.5
na
0.2
na
na
1.0 L
2.2
3.3
3.9
na
na
na
na
na
3.0
0.8
1.1
Banc of America-Merrill Lynch
0.1 L
na
0.4
na
0.2
na
na
1.2
2.6
4.1
4.7
na
na
na
na
na
3.5
1.5
2.3 0.1
-0.4 L
1.6
Georgia State University
0.1 L
3.3
na
na
0.2
0.3
0.5
1.0 L
2.6
3.6
4.5
5.3
6.7
na
5.2
na
1.0
1.2
Barclays Capital
0.1 L
3.3
0.4
0.3
0.2
0.6
0.8
1.7
3.2
4.0
4.9
5.7
7.1
5.1
5.8 H
na
5.0
1.2
2.2
Nat'l Assn. of Realtors
0.1 L
3.1 L
0.8
0.3
0.3
0.6
0.9
1.3
2.8
3.7
4.4
5.5
6.9
5.1
5.6
na
2.3
1.4
1.9
Standard & Poor's Corp.
0.1 L
3.2
0.7
0.4
0.3
0.4
0.5
1.1
2.6
3.8
na
5.5
6.8
4.8
5.3
85.1 H
1.7
1.7
1.1
October Consensus
0.2
3.2
0.5
0.3
0.3
0.4
0.7
1.3
2.7
3.7
4.5
5.4
6.7
4.6
5.3
75.1
2.5
1.5
1.7
Top 10 Avg.
0.3
3.3
0.8
0.5
0.4
0.6
0.9
1.7
3.1
4.1
4.9
5.7
7.3
5.0
5.7
79.0
4.2
2.5
2.7
Bottom 10 Avg.
0.1
3.2
0.3
0.2
0.1
0.3
0.5
1.0
2.2
3.4
4.2
5.1
6.2
4.3
5.0
72.1
1.0
0.7
0.7
September Consensus
0.2
3.3
0.6
0.3
0.3
0.5
0.8
1.4
2.8
3.9
4.6
5.6
7.0
4.8
5.4
76.2
2.4
1.4
1.7
12
Number of Forecasts Changed From A Month Ago: Down
10
6
34
20
28
28
27
28
27
34
30
33
31
23
27
25
17
13
Same
37
38
7
16
17
12
12
14
13
10
12
7
5
7
10
5
9
16
18
Up
1
1
3
3
3
1
3
5
7
4
5
3
4
3
8
5
22
18
18
41 %
44 %
15 %
28 %
24 %
17 %
21 %
26 %
29 %
19 %
23 %
15 %
16 %
20 %
29 %
21 %
55 %
55 %
56 %
Diffusion Index
6 BLUE CHIP FINANCIAL FORECASTS OCTOBER 1, 2009
Second Quarter 2010 Interest Rate Forecasts
Key Assumptions
----------------------------------------------------------------------Percent Per Annum -- Average For Quarter---------------------------------------------------------------
Blue Chip Financial Forecasts Panel Members
-------------------------------------Short-Term------------------------------------
------------Intermediate-Term-----------
1 Federal
2 Prime
7 Treas.
8 Treas.
9 Treas.
Funds
Bank
Rate
Paper
Bills
Bills
Bills
Notes
Notes
Rate
Rate
3-Mo.
1-Mo.
3-Mo.
6-Mo.
1-Yr.
2-Yr.
5-Yr.
3 LIBOR
4 Com.
5 Treas.
6 Treas.
10 Treas.
-----------------Long-Term------------------
11 Treas.
12 Aaa
13 Baa
Notes
Bond
Corp.
Corp.
10-Yr.
30-Yr.
Bond
Bond
14 State &
Avg. For
------(Q-Q % Change)------
---Qtr.---
------------(SAAR)-----------
15 Home
A. Fed's Major
B.
C. GDP
D. Cons.
Local
Mtg.
Currency
Real
Price
Price
Bonds
Rate
$ Index
GDP
Index
Index 1.3
Action Economics
0.8 H
3.8 H
1.3 H
0.8
0.9 H
1.1
1.5
2.0
3.1
4.2
4.8
5.4
6.5
4.8
5.2
73.3
2.6
1.7
Woodworth Holdings
0.8 H
3.8 H
0.9
0.8
0.7
0.8
1.0
1.6
3.0
3.8
4.6
5.3
6.5
4.3
5.2
71.5
4.3
1.2
1.8
Bank of Toyko-Mitsubishi UFJ
0.8 H
3.8 H
0.9
0.8
0.7
0.8
0.9
2.0
3.4
4.4
5.1
5.3
6.5
4.6
5.9
68.0 L
2.6
2.9
2.0 2.7
J.W. Coons Advisors LLC
0.7
3.7
1.1
1.0 H
0.8
1.0
1.2
1.6
2.8
3.7
4.5
5.4
6.6
na
5.4
68.6
3.2
0.8
ClearView Economics
0.7
3.7
1.0
0.7
0.7
1.0
1.3
2.0
3.2
4.1
4.7
5.6
6.6
4.5
5.6
71.0
4.0
2.0
2.4
Wells Capital Management
0.5
3.6
0.5
0.5
0.5
0.6
1.1
1.6
3.0
4.2
4.7
5.3
6.1
4.4
5.8
74.4
3.2
2.0
2.1
MacroFin Analytics
0.5
3.8 H
0.9
0.7
0.7
0.9
1.1
1.5
2.9
4.0
4.0
5.1
7.2
4.6
5.2
77.5
2.2
1.3
1.0
Daiwa Securities America
0.5
3.5
0.8
0.6
0.6
0.7
0.9
1.8
3.0
4.0
4.8
5.6
6.7
4.0 L
5.7
72.0
2.5
1.6
1.6
Scotiabank
0.5
3.5
na
na
0.8
na
na
2.0
3.5
4.5 H
5.2
5.4
6.7
4.7
5.4
na
3.0
1.5
1.9
DePrince & Associates
0.4
3.4
1.2
0.5
0.5
0.6
0.8
1.5
2.7
3.8
4.4
5.5
6.5
4.5
5.5
78.1
1.8
2.2
UBS
0.3
na
0.8
na
0.6
na
na
2.5 H
3.2
3.8
4.4
na
na
na
na
na
2.8
1.6
Nat'l Assn. of Realtors
0.3
3.3
1.0
0.6
0.8
1.0
1.2
1.7
3.1
3.8
4.5
5.6
7.0
5.2
5.7
na
2.5
1.7
2.0
Wayne Hummer Investments
0.3
3.3
0.7
0.4
0.5
0.6
0.8
1.8
2.9
3.9
4.6
5.5
6.5
4.5
5.3
78.7
3.0
1.6
1.8
2.3 -0.6 L
Kellner Economic Advisers
0.3
3.3
0.4
0.4
0.4
0.5
0.7
1.4
3.0
4.0
4.8
5.8
7.4
5.2
5.9
74.0
0.0 L
1.5
1.8
RBS Securities
0.3
3.3
1.1
0.5
0.8
1.2 H
1.7 H
2.5 H
3.7 H
4.5 H
5.4 H
5.7
7.2
5.0
6.1 H
78.0
4.2
2.0
2.4
The Northern Trust Company
0.3
3.3
0.5
na
0.3
na
0.8
1.2
2.6
3.9
4.6
na
na
na
5.4
na
2.3
2.3
2.5
Naroff Economic Advisors
0.3
3.5
1.0
0.7
0.6
0.9
1.2
1.6
3.5
4.3
5.1
6.2
7.8 H
5.2
5.8
71.0
2.3
1.7
2.3 1.5
Russell Investments
0.3
3.3
0.6
0.3
0.2
0.5
0.8
1.4
2.7
3.6
4.5
5.2
6.2
4.1
5.2
73.4
3.1
1.3
Stone Harbor Investment Partners
0.3
3.3
0.5
0.5
0.3
0.5
0.9
1.8
3.0
4.0
4.8
5.3
7.5
na
5.5
70.0
3.2
2.4
2.4
Societe Generale
0.3
3.3
0.4
na
0.2
0.4
na
1.3
1.5 L
4.1
4.3
5.4
6.7
na
5.5
77.0
3.0
0.9
-0.5
Swiss Re
0.3
3.3
0.3 L
0.6
0.1 L
0.3 L
0.5 L
1.0 L
2.6
3.7
4.4
5.2
6.3
na
5.4
na
2.2
3.1
1.0
GLC Financial Economics
0.2
3.2
0.5
0.3
0.2
0.4
0.6
1.0 L
2.3
3.4
4.3
5.4
6.9
4.5
5.2
73.6
1.6
2.0
2.1
PNC Financial Services Corp.
0.2
3.3
0.4
0.3
0.2
0.3
0.5
1.0 L
2.5
3.6
4.4
5.3
6.5
4.8
5.4
72.0
3.0
1.8
2.2
RDQ Economics
0.2
3.3
0.4
0.3
0.5
0.7
0.8
1.3
2.9
4.5 H
5.3
5.8
7.0
5.1
6.0
72.0
2.3
2.6
2.8
Woodley Park Research
0.2
3.3
0.7
0.5
0.4
0.5
0.7
1.3
2.4
3.4
4.9
4.9
6.1
4.3
4.9
76.4
3.2
1.4
Barclays Capital
0.2
3.3
0.5
0.3
0.3
0.8
1.1
2.3
3.6
4.4
5.0
5.9
7.2
5.1
6.0
na
3.0
1.0
1.1 -0.6 L
Wells Fargo
0.2
3.3
0.5
0.3
0.4
0.5
0.6
1.3
2.8
3.8
4.6
5.6
6.8
4.8
5.4
80.3
1.8
1.0
Fannie Mae
0.2
3.3
na
na
0.2
na
1.4
na
na
3.7
4.3
5.2
na
na
5.9
na
3.2
0.6
1.3 1.0
Conning & Company
0.2
3.3
na
0.2 L
0.2
0.3 L
0.5 L
1.1
2.8
3.8
4.5
5.4
6.7
4.5
5.6
73.0
2.0
1.0
1.8
Thredgold Economic Assoc.
0.2
3.2
0.6
0.3
0.2
0.3 L
0.6
1.3
2.7
3.8
4.6
5.5
7.0
4.7
5.4
75.0
2.8
1.5
1.8
Mesirow Financial
0.2
3.2
0.5
0.3
0.2
0.5
1.0
1.5
2.4
3.8
4.5
5.6
7.0
4.8
5.5
76.4
3.0
0.6
1.0
Cycledata Corp.
0.2
3.2
0.5
0.2 L
0.2
0.4
0.6
1.1
2.6
3.6
4.3
5.5
6.6
4.5
5.2
74.0
2.2
2.0
2.5 2.5
SunTrust Banks
0.2
3.2
0.3 L
0.3
0.2
0.3 L
0.5 L
1.1
2.6
3.5
4.3
5.2
6.3
5.6 H
4.3 L
72.2
4.0
1.2
Nomura Securities, Inc.
0.2
3.3
0.4
0.2 L
0.2
0.3 L
0.5 L
1.6
3.4
3.7
4.4
5.1
5.8 L
na
5.3
79.0
2.9
0.9
1.1
Loomis, Sayles & Company
0.2
3.3
0.4
0.2 L
0.2
0.3 L
0.9
2.0
2.8
3.9
4.6
5.4
6.6
4.5
5.5
73.3
2.9
0.6
1.0
Goldman Sachs & Co.
0.2
3.3
0.4
na
0.2
na
na
1.0 L
2.2
3.0 L
3.7 L
4.5 L
na
na
5.0
na
2.0
0.4
0.6
Chmura Economics & Analytics
0.2
3.3
0.4
0.2 L
0.2
0.3 L
0.5 L
1.1
2.3
3.4
4.2
5.4
na
na
5.0
72.2
1.7
2.2
1.9
JPMorgan Privare Wealth Mgt.
0.2
3.2
0.6
0.3
0.2
0.3 L
0.5 L
1.1
2.5
3.6
4.3
5.3
6.4
4.7
5.3
73.8
2.7
1.3
1.6
Comerica Bank
0.1 L
3.3
0.7
0.3
0.3
0.6
1.0
1.4
3.0
4.0
4.7
5.7
7.1
4.6
5.6
82.0
4.5 H
2.0
1.2 2.3
Moody's Capital Markets
0.1 L
3.3
0.4
0.2 L
0.4
0.6
0.9
1.2
3.0
3.9
4.6
5.5
6.6
4.4
5.5
75.0
3.4
2.2
BMO Capital Markets
0.1 L
3.3
0.3 L
0.2 L
0.2
0.3 L
0.9
2.0
3.1
4.0
4.7
5.5
6.6
4.3
5.4
73.0
2.5
1.4
2.6
Moody's Economy.com
0.1 L
3.2
0.9
0.7
0.4
0.7
1.0
2.1
2.8
4.4
5.2
6.4 H
7.8 H
na
6.1 H
na
2.0
0.9
1.2
Economist Intelligence Unit
0.1 L
3.2
1.1
0.3
0.4
0.5
0.5 L
1.3
2.6
3.8
4.5
na
na
na
5.3
na
0.9
na
0.8
Argus Research
0.1 L
3.1 L
1.1
0.5
0.6
0.7
0.8
1.2
2.5
3.9
4.8
5.5
6.3
4.7
5.5
78.0
1.7
4.0 H
3.9 H 1.0
J.P. Morgan Chase
0.1 L
na
0.5
na
0.2
na
na
1.1
2.4
3.5
4.1
na
na
na
na
na
4.0
0.6
Banc of America-Merrill Lynch
0.1 L
na
0.4
na
0.2
na
na
1.5
2.8
4.2
4.8
na
na
na
na
na
3.3
0.0 L
0.2
Georgia State University
0.1 L
3.3
na
na
0.3
0.4
0.6
1.1
2.7
3.7
4.6
5.3
6.6
na
5.3
na
1.3
1.2
1.0
Standard & Poor's Corp.
0.1 L
3.2
0.8
0.4
0.3
0.4
0.5 L
1.1
2.7
3.8
na
5.5
6.8
4.9
5.4
83.4 H
1.6
1.5
1.5
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
October Consensus
0.3
3.3
0.7
0.4
0.4
0.6
0.8
1.5
2.8
3.9
4.6
5.4
6.7
4.7
5.4
74.6
2.7
1.6
1.6
Top 10 Avg.
0.6
3.7
1.1
0.7
0.7
0.9
1.3
2.1
3.4
4.3
5.1
5.8
7.3
5.1
5.9
79.2
3.8
2.6
2.7
Bottom 10 Avg.
0.1
3.2
0.4
0.2
0.2
0.3
0.5
1.1
2.3
3.5
4.2
5.1
6.3
4.3
5.0
70.8
1.4
0.6
0.4
September Consensus
0.4
3.4
0.8
0.5
0.5
0.7
1.0
1.6
2.9
4.0
4.7
5.6
7.0
4.8
5.6
76.4
2.8
1.5
1.6
Number of Forecasts Changed From A Month Ago: Down
17
13
33
20
28
25
27
29
27
32
29
32
29
19
26
25
21
14
14
Same
29
29
8
13
17
12
12
13
12
12
13
8
5
9
12
4
14
18
21
3
13
15
13
42 %
51 %
49 %
Up Diffusion Index
2 34 %
2 38 %
3 16 %
5 30 %
3 24 %
3 23 %
2 20 %
5 24 %
8 30 %
4 21 %
5 24 %
2 14 %
4 17 %
3 24 %
6 27 %
16 %
OCTOBER 1, 2009 BLUE CHIP FINANCIAL FORECASTS 7
Third Quarter 2010 Interest Rate Forecasts
Key Assumptions
----------------------------------------------------------------------Percent Per Annum -- Average For Quarter---------------------------------------------------------------
Blue Chip Financial Forecasts Panel Members
-------------------------------------Short-Term-----------------------------------1 Federal
2 Prime
3 LIBOR
4 Com.
5 Treas.
Funds
Bank
Rate
Paper
Bills
Rate
Rate
3-Mo.
1-Mo.
3-Mo.
6 Treas.
------------Intermediate-Term-----------
7 Treas.
8 Treas.
9 Treas.
Bills
Bills
Notes
Notes
6-Mo.
1-Yr.
2-Yr.
5-Yr.
10 Treas.
-----------------Long-Term------------------
11 Treas.
12 Aaa
13 Baa
Notes
Bond
Corp.
Corp.
10-Yr.
30-Yr.
Bond
Bond
14 State &
Avg. For
------(Q-Q % Change)------
---Qtr.---
------------(SAAR)-----------
15 Home
A. Fed's Major
B.
C. GDP
D. Cons.
Local
Mtg.
Currency
Real
Price
Price
Bonds
Rate
$ Index
GDP
Index
Index
Nat'l Assn. of Realtors
1.5 H
4.5 H
1.7
1.6
1.6
1.7
1.9
2.2
3.3
3.9
4.6
5.8
7.1
5.3
5.8
na
2.6
1.9
2.1
RBS Securities
1.3
4.3
2.4 H
1.7 H
1.7 H
2.3 H
2.7 H
3.2 H
4.1 H
4.8 H
5.6
5.9
7.4
5.2
6.5 H
82.0
4.5
2.2
2.8
Naroff Economic Advisors Action Economics
1.3 1.3
4.3 4.3
1.9 1.6
1.7 H 1.3
1.7 H 1.2
1.9 1.5
2.2 1.8
2.6 2.3
3.9 3.3
4.6 4.3
5.4 4.8
6.5 5.4
8.1 H 6.5
5.4 4.9
6.1 5.2
70.4 72.8
1.8 3.0
2.0 1.5
2.6 1.3
Bank of Toyko-Mitsubishi UFJ
1.3
4.3
1.5
1.4
1.2
1.3
1.4
2.3
3.2
4.2
4.9
5.3
6.5
4.5
5.7
66.0 L
3.1
2.6
2.2
J.W. Coons Advisors LLC
1.2
4.2
1.7
1.4
1.3
1.5
1.7
2.1
3.2
4.1
4.8
5.7
6.8
na
5.8
67.1
2.2
1.6
2.6
ClearView Economics
1.1
4.1
1.4
1.1
1.1
1.4
1.7
2.4
3.5
4.3
4.8
5.7
6.8
4.6
5.8
70.0
3.4
2.2
2.7
MacroFin Analytics
1.0
4.2
1.0
0.9
1.1
1.3
1.5
1.8
3.2
4.2
4.8
5.1
7.2
4.6
5.3
78.5
2.3
1.4
1.3
Daiwa Securities America
1.0
4.0
1.2
1.0
1.0
1.1
1.2
2.3
3.4
4.4
5.1
5.9
7.0
4.2 L
6.1
71.0
2.5
1.5
1.5
Woodworth Holdings
1.0
4.0
1.1
1.0
1.0
1.1
1.2
1.8
3.2
3.9
4.7
5.4
6.6
4.4
5.3
74.0
5.2 H
1.4
1.8
Scotiabank
1.0
3.8
na
na
1.5
na
na
2.6
3.8
4.7
5.3
5.5
6.5
4.6
5.5
na
2.5
1.5
2.0
Cycledata Corp.
0.8
3.8
1.2
0.8
0.8
1.0
1.2
1.7
3.0
4.1
4.8
5.6
6.7
4.6
5.9
74.0
2.0
2.0
2.5
Wells Capital Management
0.8
3.8
0.8
0.7
0.6
0.7
1.1
1.7
3.1
4.2
4.6
5.2
6.0
4.3
5.8
74.8
3.5
2.3
2.5
Stone Harbor Investment Partners
0.8
3.8
1.0
1.0
0.7
1.0
1.2
2.0
3.3
4.3
5.0
5.4
7.4
na
5.8
68.0
5.0
2.0
2.7
Wayne Hummer Investments
0.7
3.7
1.1
0.8
0.7
0.7
0.9
1.9
3.1
4.1
4.8
5.7
6.6
4.7
5.5
78.4
3.2
1.6
2.1
DePrince & Assoc.
0.7
3.7
1.3
0.8
0.7
0.8
1.1
1.8
2.9
3.9
4.5
5.6
6.6
4.5
5.7
78.7
1.8
2.2
2.4
GLC Financial Economics
0.7
3.7
1.0
0.8
0.7
0.8
1.0
1.4
2.6
3.7
4.5
5.9
7.5
4.8
5.8
73.8
1.6
2.1
2.6
UBS
0.6
na
1.1
na
0.9
na
na
2.8
3.3
3.9
4.5
na
na
na
na
na
3.0
1.6
1.6
Wells Fargo
0.6
3.8
0.8
0.6
0.7
0.8
0.9
1.5
2.9
3.9
4.7
5.6
6.8
4.8
5.5
81.0
2.1
1.3
1.5
Conning & Company
0.5
3.8
na
0.5
0.3
0.4
0.7
1.2
3.0
4.0
4.8
5.6
6.7
4.6
5.8
73.0
2.5
1.2
1.8
Georgia State University
0.5
3.6
na
na
0.8
1.0
1.2
1.6
2.8
3.9
4.8
5.4
6.8
na
5.4
na
1.4
1.4
2.1
Argus Research
0.5
3.5
1.8
1.0
1.2
1.2
1.3
1.9
2.6
4.1
5.0
5.5
6.3
4.8
5.5
79.2
1.0 L
4.0 H
3.4 H
The Northern Trust Company
0.5
3.5
1.0
na
0.8
na
1.2
1.5
2.7
4.0
4.8
na
na
na
5.5
na
2.5
2.3
2.5 1.9
JPMorgan Privare Wealth Mgt.
0.5
3.5
1.0
0.6
0.6
0.6
0.8
1.5
2.9
3.9
4.7
5.6
6.8
5.0
5.6
73.9
2.6
1.4
Thredgold Economic Assoc.
0.5
3.5
0.9
0.6
0.5
0.6
0.8
1.6
2.9
4.0
4.8
5.7
7.1
4.8
5.6
75.0
2.8
1.6
2.1
Chmura Economics & Analytics
0.5
3.5
0.7
0.5
0.5
0.5
0.8
1.3
2.5
3.5
4.3
5.4
na
na
5.3
70.4
2.3
2.3
2.9
Comerica Bank
0.4
3.5
1.0
0.5
0.5
0.9
1.3
1.7
3.3
4.2
4.8
5.8
7.0
4.6
5.8
84.0 H
4.4
1.1
1.2
Kellner Economic Advisers
0.4
3.4
0.5
0.5
0.5
0.6
0.8
1.6
3.2
4.2
5.0
6.0
7.6
5.2
6.1
73.0
1.0 L
1.6
1.8
Woodley Park Research
0.4
3.4
0.9
0.8
0.6
0.7
1.0
1.5
2.5
3.4
4.9
4.9
6.1
4.4
4.9
75.7
3.2
1.5
2.1
Moody's Capital Markets
0.4
3.5
0.8
0.5
0.6
0.7
1.2
1.7
3.2
3.9
4.6
5.5
6.4
4.3
5.5
75.1
2.7
2.3
2.5
Swiss Re
0.4
3.4
0.4
0.7
0.2 L
0.4
0.5 L
1.3
2.9
3.9
4.7
5.4
6.4
na
5.7
na
2.9
4.0
1.2
Barclays Capital
0.3
3.3
0.6
0.4
0.4
1.3
1.5
2.6
3.8
4.6
5.0
6.1
7.2
5.5
6.2
na
3.5
1.0
2.4
PNC Financial Services Corp.
0.3
3.3
0.5
0.4
0.3
0.4
0.6
1.1 L
2.6
3.7
4.5
5.4
6.6
4.9
5.5
73.0
3.0
1.8
2.2
Economist Intelligence Unit
0.3
3.4
1.3
0.5
0.4
0.6
0.8
1.4
2.7
3.9
4.7
na
na
na
5.6
na
1.8
na
0.8
Loomis, Sayles & Company
0.3
3.3
0.5
0.3
0.3
0.4
1.0
2.3
3.0
4.1
4.9
5.5
6.7
4.5
5.7
73.3
3.0
0.5
0.9
Russell Investments
0.3
3.3
0.6
0.4
0.3
0.6
0.9
1.6
3.0
3.8
4.7
5.4
6.3
4.2 L
5.2
73.2
3.3
1.3
1.5
Societe Generale
0.3
3.3
0.4
na
0.2 L
0.5
na
1.5
1.7 L
4.4
4.4
5.6
6.8
na
5.5
83.0
3.2
1.0
2.4
Moody's Economy.com
0.2
3.2 L
0.8
0.7
0.4
0.8
1.1
2.2
3.0
4.7
5.5
6.6 H
7.8
na
6.4
na
2.3
0.7
2.1
RDQ Economics
0.2
3.3
0.4
0.3
0.5
0.8
0.9
1.3
3.1
4.8 H
5.7 H
6.2
7.3
5.2
6.3
71.0
2.2
2.7
2.9
Fannie Mae
0.2
3.3
na
na
0.3
na
1.8
na
na
3.8
4.4
5.2
na
na
6.0
na
3.3
0.4 L
0.7
Mesirow Financial
0.2
3.2 L
0.6
0.3
0.3
0.6
1.0
1.6
2.6
4.0
4.6
5.6
7.0
4.9
5.6
75.9
3.4
0.4 L
0.6
SunTrust Banks
0.2
3.2 L
0.3 L
0.3
0.2 L
0.4
0.5 L
1.2
2.7
3.5
4.4
5.4
6.5
5.7 H
4.0 L
70.0
4.2
1.7
1.9
Nomura Securities, Inc.
0.2
3.3
0.4
0.2 L
0.2 L
0.3 L
0.5 L
1.8
3.5
3.8
4.5
5.1
5.8 L
na
5.3
80.0
2.4
0.8
1.0
Goldman Sachs & Co.
0.2
3.3
0.4
na
0.2 L
na
na
1.1 L
2.2
3.0 L
3.7 L
4.5 L
na
na
5.0
na
1.5
0.4 L
0.1 L
BMO Capital Markets
0.1 L
3.3
0.4
0.3
0.2 L
0.3 L
1.1
2.1
3.2
4.0
4.8
5.5
6.6
4.3
5.4
72.0
2.7
1.6
2.4
Banc of America-Merrill Lynch
0.1 L
na
0.4
na
0.2 L
na
na
1.7
2.9
4.3
4.9
na
na
na
na
na
3.3
1.8
2.6
Standard & Poor's Corp.
0.1 L
3.2 L
1.0
0.6
0.5
0.7
0.8
1.3
2.8
4.0
na
5.5
6.9
5.0
5.4
81.5
2.0
1.2
2.0
October Consensus
0.6
3.6
1.0
0.7
0.7
0.9
1.2
1.8
3.0
4.1
4.8
5.6
6.8
4.8
5.6
74.6
2.8
1.7
2.0
Top 10 Avg.
1.2
4.2
1.6
1.3
1.3
1.5
1.8
2.5
3.6
4.5
5.2
6.1
7.5
5.2
6.1
80.6
4.0
2.7
2.8
Bottom 10 Avg.
0.2
3.2
0.4
0.3
0.2
0.4
0.7
1.3
2.5
3.6
4.4
5.1
6.3
4.4
5.1
69.6
1.6
0.7
0.9
September Consensus
0.7
3.8
1.1
0.9
0.8
1.0
1.3
1.9
3.1
4.2
4.8
5.7
7.1
4.9
5.7
76.6
2.7
1.6
2.1
Number of Forecasts Changed From A Month Ago: Down
15
15
32
21
24
23
28
27
27
30
24
28
30
20
24
27
14
15
18
Same
26
26
8
12
17
11
10
12
11
13
15
11
5
7
11
5
14
18
21
Up
6
4
3
6
6
7
4
7
8
4
7
4
5
6
10
3
19
13
55 %
48 %
Diffusion Index
40 %
38 %
16 %
31 %
31 %
30 %
21 %
28 %
29 %
22 %
32 %
22 %
19 %
29 %
34 %
16 %
8 39 %
8 BLUE CHIP FINANCIAL FORECASTS OCTOBER 1, 2009
Fourth Quarter 2010 Interest Rate Forecasts
Key Assumptions
----------------------------------------------------------------------Percent Per Annum -- Average For Quarter---------------------------------------------------------------
Blue Chip Financial Forecasts Panel Members
-------------------------------------Short-Term-----------------------------------1 Federal
2 Prime
3 LIBOR
4 Com.
5 Treas.
Funds
Bank
Rate
Paper
Bills
Rate
Rate
3-Mo.
1-Mo.
3-Mo.
6 Treas.
------------Intermediate-Term-----------
7 Treas.
8 Treas.
9 Treas.
Bills
Bills
Notes
Notes
6-Mo.
1-Yr.
2-Yr.
5-Yr.
10 Treas.
-----------------Long-Term------------------
11 Treas.
12 Aaa
13 Baa
Notes
Bond
Corp.
Corp.
10-Yr.
30-Yr.
Bond
Bond
14 State &
Avg. For
------(Q-Q % Change)------
---Qtr.---
------------(SAAR)-----------
15 Home
A. Fed's Major
B.
C. GDP
D. Cons.
Local
Mtg.
Currency
Real
Price
Price
Bonds
Rate
$ Index
GDP
Index
Index
Naroff Economic Advisors
2.5 H
5.5 H
3.1
2.8 H
2.8 H
3.0
3.1
3.5
4.2
4.9
5.7
6.8 H
8.5 H
5.8 H
6.5
71.0
2.3
2.2
2.7
RBS Securities
2.4
5.4
3.5 H
2.8 H
2.8 H
3.4 H
3.7 H
3.8 H
4.5 H
5.0 H
5.8
6.1
7.5
5.3
6.8 H
85.0
4.5 H
2.4
3.0
Nat'l Assn. of Realtors
2.0
5.0
2.2
2.0
2.0
2.3
2.3
2.4
3.4
4.0
4.6
5.9
7.2
5.4
5.9
na
2.6
1.9
2.3
J.W. Coons Advisors LLC
1.9
4.9
2.6
2.2
1.9
2.2
2.4
2.8
3.8
4.6
5.1
6.1
7.2
na
6.2
67.9
1.9
1.9
2.5
Bank of Toyko-Mitsubishi UFJ
1.8
4.8
2.0
1.9
1.7
1.8
1.9
2.6
3.1
4.1
4.8
5.3
6.5
4.5
5.6
65.0 L
2.8
2.7
2.4
Scotiabank
1.8
4.8
na
na
2.5
na
na
3.2
3.9
5.0
5.3
5.5
6.5
4.6
5.7
na
2.0
1.8
2.0
ClearView Economics
1.7
4.7
2.0
1.7
1.6
1.8
2.1
2.8
3.8
4.5
5.0
5.9
7.0
4.8
6.0
69.5
3.4
2.2
2.7
Argus Research
1.7
4.7
2.0
1.1
1.4
1.5
1.7
2.2
2.8
4.3
5.2
5.5
6.3
4.8
5.5
81.3
1.1 L
3.6
4.7 H
MacroFin Analytics
1.5
4.8
1.2
1.0
1.6
1.7
1.8
2.0
3.5
4.3
4.9
5.1
7.3
4.6
5.5
79.5
2.5
1.4
1.4
Action Economics
1.5
4.5
1.9
1.5
1.6
1.9
2.2
2.6
3.5
4.4
4.9
5.3
6.3
4.9
5.2
72.8
3.2
1.9
1.6
Cycledata Corp.
1.5
4.5
1.9
1.6
1.5
1.7
1.9
2.4
3.8
4.9
5.6
6.6
7.5
5.4
6.5
74.0
1.3
2.0
2.5
Daiwa Securities America
1.5
4.5
1.7
1.5
1.5
1.6
1.7
2.8
3.9
4.8
5.4
6.3
7.3
4.5
6.5
70.0
2.7
1.5
1.5
Woodworth Holdings
1.5
4.5
1.6
1.5
1.5
1.6
1.7
2.3
3.5
4.0
4.8
5.3
6.5
4.5
5.2
80.0
4.3
1.5
1.9
Stone Harbor Investment Partners
1.3
4.3
1.5
1.5
1.2
1.4
1.9
2.6
3.8
4.8
5.5
5.7
7.3
na
6.3
68.0
2.3
2.6
3.3
The Northern Trust Company
1.2
4.2
1.5
na
1.3
na
1.7
1.8
2.7
4.2
4.8
na
na
na
5.7
na
3.2
2.9
3.1
Wells Capital Management
1.1
4.1
1.1
1.0
0.9
1.0
1.3
2.0
3.1
4.3
4.8
5.3
6.0
4.4
5.9
74.7
3.8
2.3
2.7
Wayne Hummer Investments
1.1
4.1
1.4
1.2
1.3
1.4
1.6
2.1
3.3
4.3
5.0
5.8
6.7
5.1
5.6
78.1
3.3
1.7
2.2
Comerica Bank
1.1
4.1
1.6
1.1
1.1
1.5
1.9
2.3
3.6
4.5
5.0
5.8
7.0
4.8
6.2
85.0 H
4.0
1.2
1.4
DePrince & Assoc.
1.1
4.1
1.6
1.3
1.2
1.3
1.6
2.3
3.1
4.1
4.5
5.8
6.7
4.7
5.8
79.5
1.9
2.2
2.4
Wells Fargo
1.0
4.5
1.4
0.8
1.3
1.4
1.5
1.8
3.0
4.0
4.8
5.7
6.9
4.9
5.6
81.2
2.2
1.6
1.8
GLC Financial Economics
1.0
4.0
1.3
1.1
1.0
1.1
1.3
1.7
2.8
3.9
4.7
6.3
7.9
5.0
6.2
74.5
2.2
1.4
2.8
Conning & Company
1.0
4.0
na
1.0
0.8
0.9
1.1
1.6
3.4
4.2
5.0
5.8
6.8
4.6
6.0
72.0
2.0
1.4
2.0
Georgia State University
1.0
4.0
na
na
1.3
1.5
1.7
2.1
3.0
4.0
4.9
5.5
6.9
na
5.6
na
1.6
1.4
2.1
Woodley Park Research
1.0
4.0
1.4
1.4
1.1
1.2
1.4
1.9
2.8
3.7
5.1
5.2
6.3
4.6
5.1
75.0
3.4
1.5
2.2
Chmura Economics & Analytics
0.9
3.9
1.1
1.0
0.9
0.9
1.1
1.5
2.7
3.6
4.4
5.4
na
na
5.3
68.3
3.6
1.8
1.9
Kellner Economic Advisers
0.9
3.9
1.0
1.0
1.1
1.2
1.4
1.8
3.4
4.4
5.2
6.2
7.8
5.4
6.3
72.0
1.5
1.8
2.0
UBS
0.9
na
1.4
na
1.1
na
na
2.9
3.5
4.0
4.6
na
na
na
na
na
3.3
1.6
0.5
Thredgold Economic Assoc.
0.8
3.8
1.2
0.9
0.8
0.8
1.2
1.9
3.2
4.2
4.9
5.8
7.3
4.9
5.7
75.0
2.8
1.7
2.1
PNC Financial Services Corp.
0.8
3.8
1.1
0.9
0.7
0.8
1.0
1.3
2.8
3.9
4.7
5.6
6.7
5.1
5.7
73.0
3.2
1.8
2.2
Moody's Economy.com
0.8
3.8
1.3
1.1
0.8
1.1
1.4
2.6
3.1
5.0
5.8
6.7
7.9
na
6.7
na
3.0
0.7
1.8
Economist Intelligence Unit
0.8
3.8
1.8
0.8
0.8
0.8
1.2
1.6
2.8
4.0
4.8
na
na
na
5.7
na
1.6
na
0.8
Moody's Capital Markets
0.8
3.8
1.3
0.9
0.9
1.1
1.4
1.8
3.2
4.0
4.6
5.4
6.3
4.3
5.6
75.2
2.9
2.3
2.4
JPMorgan Privare Wealth Mgt.
0.8
3.8
1.2
0.9
0.8
0.9
1.1
1.7
3.1
4.2
4.9
5.9
7.0
5.3
5.9
73.5
2.7
1.4
1.9
Swiss Re
0.8
3.8
0.8
1.0
0.6
0.7
0.8
1.8
3.3
4.2
4.9
5.6
6.6
na
6.0
na
3.1
4.3 H
1.3 2.3
Barclays Capital
0.8
3.8
0.6
0.8
0.7
0.2 L
2.0
2.7
3.9
4.6
5.1
6.2
7.3
5.6
6.4
na
3.5
0.9
Loomis, Sayles & Company
0.5
3.6
0.8
0.6
0.6
0.7
1.2
2.3
3.0
4.3
5.0
5.6
6.7
4.6
5.9
73.3
3.3
0.3
0.9
BMO Capital Markets
0.5
3.5
0.8
0.7
0.5
0.6
1.5
2.4
3.5
4.2
4.9
5.6
6.7
4.4
5.5
71.5
2.9
1.8
1.5
SunTrust Banks
0.5
3.5
0.6
0.7
0.5
0.6
0.6 L
1.4
2.7
3.8
4.4
5.4
6.5
5.8 H
4.2 L
69.8
4.2
2.3
2.7
Standard & Poor's Corp.
0.5
3.5
1.4
1.0
0.9
1.1
1.2
1.8
3.0
4.2
na
5.7
7.0
5.2
5.6
79.3
3.0
1.2
2.0
Societe Generale
0.4
3.7
0.4 L
na
0.4
0.7
na
1.8
2.0 L
4.5
4.6
5.8
6.8
na
5.8
85.0 H
2.7
1.0
1.5 1.8
Russell Investments
0.3
3.3
0.8
0.5
0.5
0.8
1.1
1.7
3.1
3.9
4.7
5.5
6.5
4.2 L
5.3
73.1
3.0
1.5
Nomura Securities, Inc.
0.3
3.3
0.4 L
0.3 L
0.3
0.4
0.6 L
2.0
3.7
3.9
4.5
5.1
5.9 L
na
5.4
82.0
2.6
0.7
1.0
Fannie Mae
0.2
3.3
na
na
0.3
na
2.1
na
na
3.9
4.5
5.3
na
na
6.0
na
3.4
0.3
0.5
RDQ Economics
0.2
3.3
0.5
0.4
0.6
0.9
1.0
1.4
3.2
5.0 H
6.0 H
6.5
7.5
5.2
6.5
70.0
2.4
2.8
3.0
Mesirow Financial
0.2
3.2 L
0.7
0.3 L
0.4
0.7
1.1
1.8
2.7
4.1
4.7
5.6
7.0
5.0
5.7
75.5
3.4
0.2 L
0.4
Goldman Sachs & Co.
0.2
3.3
0.4 L
na
0.2 L
na
na
1.2 L
2.3
3.0 L
3.7 L
4.5 L
na
na
5.0
na
1.5
0.5
-0.3 L
Banc of America-Merrill Lynch
0.1 L
na
0.6
na
0.5
na
na
2.0
3.0
4.4
5.0
na
na
na
na
na
3.0
1.5
2.3
October Consensus
1.0
4.1
1.4
1.2
1.1
1.3
1.6
2.1
3.2
4.2
4.9
5.7
6.9
4.9
5.8
74.9
2.8
1.7
2.0
Top 10 Avg.
1.9
4.9
2.3
1.9
2.0
2.1
2.4
3.0
3.9
4.8
5.5
6.4
7.7
5.4
6.5
81.8
3.8
2.8
3.1
Bottom 10 Avg.
0.3
3.4
0.6
0.6
0.4
0.6
1.0
1.5
2.6
3.8
4.4
5.2
6.3
4.4
5.2
69.1
1.6
0.7
0.8
September Consensus
1.1
4.2
1.5
1.2
1.2
1.4
1.7
2.3
3.4
4.4
5.0
5.8
7.2
5.0
5.9
76.6
2.8
1.7
2.1
Number of Forecasts Changed From A Month Ago: Down
14
16
26
17
23
25
23
24
26
24
20
26
22
16
24
25
18
16
16
Same
25
22
10
14
13
7
13
15
13
18
18
12
8
8
10
5
11
16
21
Up Diffusion Index
8 44 %
7 40 %
7 28 %
8 38 %
11 37 %
9 30 %
6 30 %
7 32 %
7 29 %
5 30 %
8 37 %
5 26 %
6 28 %
5 31 %
11 36 %
5 21 %
18
14
10
50 %
48 %
44 %
OCTOBER 1, 2009 BLUE CHIP FINANCIAL FORECASTS 9
First Quarter 2011 Interest Rate Forecasts
Key Assumptions
----------------------------------------------------------------------Percent Per Annum -- Average For Quarter---------------------------------------------------------------
Blue Chip Financial Forecasts Panel Members
-------------------------------------Short-Term-----------------------------------1 Federal
2 Prime
3 LIBOR
4 Com.
5 Treas.
Funds
Bank
Rate
Paper
Bills
Rate
Rate
3-Mo.
1-Mo.
3-Mo.
6 Treas.
------------Intermediate-Term-----------
7 Treas.
8 Treas.
9 Treas.
Bills
Bills
Notes
Notes
6-Mo.
1-Yr.
2-Yr.
5-Yr.
10 Treas.
-----------------Long-Term------------------
11 Treas.
12 Aaa
13 Baa
Notes
Bond
Corp.
Corp.
10-Yr.
30-Yr.
Bond
Bond
14 State &
Avg. For
------(Q-Q % Change)------
---Qtr.---
------------(SAAR)-----------
15 Home
A. Fed's Major
B.
C. GDP
D. Cons.
Local
Mtg.
Currency
Real
Price
Price
Bonds
Rate
$ Index
GDP
Index
Index
Naroff Economic Advisors
3.8 H
6.8 H
4.2
4.5 H
4.0 H
4.1 H
4.3 H
4.6 H
5.1 H
5.5 H
6.2 H
7.3 H
8.9 H
6.3 H
7.0
72.0
2.0
2.4
3.0
RBS Securities
3.4
6.4
4.4 H
3.7
3.6
4.1 H
4.3 H
4.3
4.8
5.2
6.0
6.3
7.6
5.4
7.1 H
88.0
4.6 H
2.9
3.2
J.W. Coons Advisors LLC
2.6
5.6
3.2
2.7
2.5
2.7
3.0
3.3
4.2
4.8
5.3
6.3
7.4
na
6.5
68.4
1.9
1.8
2.5
Nat'l Assn. of Realtors
2.3
5.3
2.4
2.2
2.2
2.4
2.5
2.7
3.5
4.1
4.6
5.8
7.1
5.3
5.9
na
2.8
2.0
2.3 3.0
ClearView Economics
2.2
5.2
2.5
2.1
2.1
2.3
2.5
3.1
4.0
4.7
5.1
6.1
7.2
4.9
6.3
69.0
3.2
2.4
Action Economics
2.0
5.0
2.3
2.0
2.0
2.1
2.5
2.9
3.7
4.5
5.0
5.3
6.2
4.9
5.1
72.3
3.4
4.1
1.7
Argus Research
2.0
5.0
2.0
1.2
1.7
1.8
1.9
2.4
2.9
4.6
5.3
5.5
6.3
4.8
5.5
82.0
1.8
3.2
4.3 H
Comerica Bank
2.0
5.0
2.5
2.0
1.9
2.2
2.7
3.0
3.9
4.8
5.3
6.0
7.2
5.0
6.6
86.0
4.0
1.3
1.4
MacroFin Analytics
1.8
4.9
1.3
1.1
1.8
1.9
2.0
2.4
3.6
4.5
5.0
5.1
7.3
4.6
5.6
80.0
2.5
1.5
1.5
Bank of Toyko-Mitsubishi UFJ
1.8
4.8
2.0
1.9
1.7
1.8
1.9
2.6
3.1
4.1
4.8
5.3
6.5
4.5
5.6
65.0 L
3.4
2.7
2.4
Stone Harbor Investment Partners
1.8
4.8
2.0
2.0
1.6
1.8
2.3
3.0
4.3
5.1
5.7
6.0
7.6
na
6.6
70.0
3.0
2.0
3.0
DePrince & Associates
1.6
4.6
1.9
1.8
1.7
1.8
2.1
2.8
3.5
4.3
4.6
6.0
6.9
4.8
6.0
80.4
2.3
2.2
2.4
Cycledata Corp.
1.5
4.5
1.9
1.6
1.5
1.7
1.9
2.4
3.8
4.9
5.6
6.6
7.5
5.4
6.5
73.0
1.3
2.0
2.5
Daiwa Securities America
1.5
4.5
1.7
1.5
1.5
1.6
1.7
2.8
3.9
4.8
5.4
6.3
7.3
4.5
6.5
70.0
2.6
1.5
1.5
Woodworth Holdings
1.5
4.5
1.6
1.5
1.5
1.6
1.7
2.3
3.5
4.0
4.8
5.3
6.5
4.5
5.2
80.0
4.3
1.5
1.9
Conning & Company
1.5
4.5
na
1.5
1.3
1.4
1.6
1.8
3.6
4.5
5.2
6.0
6.9
4.7
6.2
72.0
2.0
1.6
2.0
Woodley Park Research
1.5
4.5
1.9
2.0
1.6
1.6
1.9
2.3
3.1
3.9
5.3
5.5
6.6
4.7
5.3
74.3
2.7
1.8
2.4
PNC Financial Services Corp.
1.4
4.4
1.8
1.5
1.3
1.4
1.6
1.8
3.1
4.1
4.9
5.8
6.8
5.3
5.9
74.0
na
na
na
Georgia State University
1.4
4.4
na
na
1.8
1.9
2.1
2.5
3.1
4.1
4.9
5.6
6.9
na
5.7
na
1.7
1.8
2.4
Wells Capital Management
1.4
4.4
1.4
1.3
1.1
1.1
1.5
2.2
3.2
4.3
4.8
5.3
6.0
4.4
5.9
74.5
4.3
2.6
3.2
Chmura Economics & Analytics
1.3
4.3
1.5
1.4
1.3
1.4
1.4
1.8
2.9
3.7 L
4.6
5.4
na
na
5.5
67.3
3.0
2.0
2.3
Wells Fargo
1.3
5.3
2.1
1.0
2.0
2.1
2.2
2.2
3.1
4.1
4.9
5.9
7.1
5.0
5.7
82.4
2.7
1.8
2.2
Wayne Hummer Investments
1.3
4.3
1.5
1.4
1.5
1.6
1.8
2.3
3.5
4.7
5.3
5.9
6.7
5.2
5.7
78.6
3.4
1.8
2.3
Kellner Economic Advisers
1.3
4.3
1.4
1.5
1.4
1.4
1.7
2.1
3.6
4.6
5.6
6.6
8.0
5.4
6.8
70.0
2.0
2.0
2.4
Moody's Capital Markets
1.3
4.3
1.8
1.4
1.4
1.6
1.8
2.0
3.4
4.2
4.6
5.5
6.4
4.3
5.8
75.5
2.2
2.3
2.4
Swiss Re
1.3
4.3
1.4
1.5
1.1
1.2
1.5
2.3
3.6
4.4
5.1
5.8
6.8
na
6.3
na
3.4
4.7 H
1.3
SunTrust Banks
1.3
4.3
1.0
1.1
1.2
1.3
1.4
2.1
3.1
4.2
4.5 L
5.6
6.7
5.9
4.8 L
68.4
3.8
3.4
3.6
Moody's Economy.com
1.2
4.2
1.7
1.5
1.2
1.6
1.9
3.0
3.3
5.1
5.9
6.8
7.9
na
6.8
na
3.8
1.6
1.9
Thredgold Economic Assoc.
1.1
4.1
1.5
1.2
1.1
1.2
1.5
2.2
3.5
4.4
5.1
5.9
7.4
5.0
5.9
75.0
2.8
1.8
2.1
Societe Generale
1.0
4.3
0.5 L
na
0.9
1.1
na
2.3
2.4 L
4.7
4.8
5.0 L
6.8
na
5.8
88.0 H
2.7
1.2
1.4
Economist Intelligence Unit
1.0
4.0
2.0
0.9
0.9
1.0
1.3
1.8
2.9
4.0
4.8
na
na
na
5.7
na
0.6 L
na
1.6
GLC Financial Economics
1.0
4.0
1.3
1.1
1.0
1.1
1.3
1.6 L
2.8
3.9
4.7
6.3
7.9
5.0
6.1
75.6
2.7
2.0
3.0
BMO Capital Markets
1.0
4.0
1.3
1.2
1.0
1.2
1.7
2.6
3.6
4.3
5.0
5.7
6.8
4.5
5.6
71.0
3.0
1.9
1.8
Standard & Poor's Corp.
0.9
3.9
1.9
1.5
1.4
1.6
1.7
2.3
3.3
4.4
na
5.8
7.1
5.4
5.8
77.3
3.3
1.3
1.9
JPMorgan Privare Wealth Mgt.
0.8
3.8
1.3
0.9
0.8
0.9
1.1
1.7
3.2
4.2
4.9
5.9
7.1
5.3
5.9
73.2
2.5
1.5
2.0
Fannie Mae
0.7
3.6
na
na
0.7
na
2.4
na
na
4.0
4.6
5.3
na
na
6.1
na
4.0
0.5
0.1 L
Loomis, Sayles & Company
0.6
3.7
0.9
0.7
0.7
0.8
1.4
2.4
3.1
4.3
5.0
5.6
6.7
4.5
5.9
73.3
2.5
0.5
1.0
Nomura Securities, Inc.
0.5
3.5
0.7
0.6
0.5 L
0.6 L
0.9 L
2.3
3.9
4.0
4.6
5.1
5.6 L
na
5.5
82.0
3.2
1.0
0.9
Russell Investments
0.4
3.4
1.0
0.7
0.7
0.9
1.3
1.9
3.2
4.0
4.8
5.6
6.5
4.2 L
5.4
73.0
3.0
1.9
2.0
Mesirow Financial
0.2 L
3.2 L
0.8
0.3 L
0.5 L
0.9
1.4
2.0
2.8
4.2
4.8
5.7
7.1
5.1
5.8
75.0
4.0
0.4 L
0.1 L
October Consensus
1.5
4.5
1.8
1.6
1.5
1.7
1.9
2.5
3.5
4.4
5.1
5.8
7.0
5.0
5.9
75.2
2.9
2.0
2.1
Top 10 Avg.
2.4
5.4
2.8
2.5
2.4
2.6
2.9
3.3
4.1
5.0
5.6
6.4
7.7
5.5
6.7
82.7
4.0
3.1
3.1
Bottom 10 Avg.
0.7
3.7
1.0
0.8
0.8
1.0
1.3
1.8
2.9
4.0
4.6
5.3
6.3
4.5
5.3
69.1
1.8
1.1
1.1
September Consensus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Number of Forecasts Changed From A Month Ago: Down
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Same
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Up
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
Diffusion Index
10 BLUE CHIP FINANCIAL FORECASTS OCTOBER 1, 2009
International Interest Rate And Foreign Exchange Rate Forecasts
United States Blue Chip Forecasters Scotiabank Deutsche Bank AG WestLB ING Financial Markets Mizuho Research Institute
3 Mo. Dollar Rate In 3 Mo. In 6 Mo. In 12 Mo. 0.40 0.65 1.60 na na na 0.50 0.50 0.75 0.40 0.60 1.40 0.30 0.30 0.30
10 Yr. Gov't Bond Yield % In 3 Mo. In 6 Mo. In 12 Mo. 3.75 4.25 4.70 na na na 3.60 4.00 4.50 3.80 4.00 4.40 3.50 3.60 3.70
Fed's Major Currency $ Index In 3 Mo. In 6 Mo. In 12 Mo. na na na na na na 78.0 78.0 80.0 83.8 86.7 88.9 75.5 76.1 77.5
October Consensus
0.40
0.51
1.01
3.66
3.96
4.33
79.1
80.3
82.1
High Low Last Months Avg.
0.50 0.30 0.48
0.65 0.30 0.55
1.60 0.30 0.81
3.80 3.50 3.73
4.25 3.60 4.03
4.70 3.70 4.39
83.8 75.5 78.4
86.7 76.1 79.7
88.9 77.5 82.7
Japan Blue Chip Forecasters Scotiabank Deutsche Bank AG WestLB ING Financial Markets Mizuho Research Institute
3 Mo. Yen Rate In 3 Mo. In 6 Mo. In 12 Mo. 0.30 0.40 0.60 na na na 0.50 0.50 0.60 0.50 0.50 0.55 0.47 0.43 0.38
10 Yr. Gov't Bond Yield % In 3 Mo. In 6 Mo. In 12 Mo. 1.40 1.40 1.60 na na na 1.40 1.50 1.60 1.60 1.70 1.90 1.35 1.35 1.40
In 3 Mo. 95.0 na 95.0 90.0 90.0
Yen/USD In 6 Mo. In 12 Mo. 92.0 88.0 na na 95.0 100.0 95.0 105.0 92.0 94.0
October Consensus
0.44
0.46
0.53
1.44
1.49
1.63
92.5
93.5
96.8
High Low Last Months Avg.
0.50 0.30 0.48
0.50 0.40 0.46
0.60 0.38 0.56
1.60 1.35 1.43
1.70 1.35 1.49
1.90 1.40 1.63
95.0 90.0 96.5
95.0 92.0 97.5
105.0 88.0 100.0
United Kingdom Blue Chip Forecasters Scotiabank Deutsche Bank AG WestLB ING Financial Markets Mizuho Research Institute
3 Mo. Sterling Rate In 3 Mo. In 6 Mo. In 12 Mo. 0.50 0.80 1.20 na na na 0.80 0.90 1.25 0.70 0.90 2.15 0.85 0.85 0.80
10 Yr. Gilt Yields % In 3 Mo. In 6 Mo. In 12 Mo. 3.80 4.10 4.50 na na na 3.80 4.00 4.25 3.80 3.90 4.50 3.80 3.85 3.90
USD/Pound Sterling In 3 Mo. In 6 Mo. In 12 Mo. 1.72 1.74 1.76 na na na 1.73 1.73 1.75 1.68 1.69 1.65 na na na
October Consensus
0.71
0.86
1.35
3.80
3.96
4.29
1.71
1.72
1.72
High Low Last Months Avg.
0.85 0.50 0.84
0.90 0.80 0.93
2.15 0.80 1.48
3.80 3.80 3.80
4.10 3.85 3.96
4.50 3.90 4.30
1.73 1.68 1.72
1.74 1.69 1.73
1.76 1.65 1.75
Switzerland Blue Chip Forecasters Scotiabank Deutsche Bank AG WestLB ING Financial Markets Mizuho Research Institute
3 Mo. Franc Rate % In 3 Mo. In 6 Mo. In 12 Mo. 0.30 0.40 0.70 na na na 0.30 0.40 0.65 0.30 0.30 0.45 na na na
10 Yr. Gov't Bond Yield % In 3 Mo. In 6 Mo. In 12 Mo. 2.00 2.30 2.50 na na na 2.00 2.25 2.50 2.20 2.40 2.55 na na na
In 3 Mo. 1.03 na 1.05 1.12 na
CHF/USD In 6 Mo. In 12 Mo. 1.02 1.01 na na 1.05 1.03 1.16 1.24 na na
October Consensus
0.30
0.37
0.60
2.07
2.32
2.52
1.07
1.08
1.09
High Low Last Months Avg.
0.30 0.30 0.32
0.40 0.30 0.37
0.70 0.45 0.60
2.20 2.00 2.03
2.40 2.25 2.25
2.55 2.50 2.52
1.12 1.03 1.07
1.16 1.02 1.08
1.24 1.01 1.09
Canada Blue Chip Forecasters Scotiabank Deutsche Bank AG WestLB ING Financial Markets Mizuho Research Institute
3 Mo. Dollar Rate In 3 Mo. In 6 Mo. In 12 Mo. 0.55 0.90 1.60 na na na 0.70 0.80 0.90 0.45 0.45 1.40 na na na
10 Yr. Gov't Bond Yield % In 3 Mo. In 6 Mo. In 12 Mo. 3.50 4.00 4.40 na na na 3.70 3.90 4.50 3.80 4.00 4.35 na na na
In 3 Mo. 0.96 na 1.07 1.08 na
CAD/USD In 6 Mo. In 12 Mo. 0.97 1.00 na na 1.07 1.10 1.14 1.24 na na
October Consensus
0.57
0.72
1.30
3.67
3.97
4.42
1.04
1.06
1.11
High Low Last Months Avg.
0.70 0.45 0.70
0.90 0.45 0.78
1.60 0.90 0.92
3.80 3.50 3.72
4.00 3.90 4.03
4.50 4.35 4.52
1.08 0.96 1.09
1.14 0.97 1.11
1.24 1.00 1.15
OCTOBER 1, 2009 BLUE CHIP FINANCIAL FORECASTS 11
International Interest Rate And Foreign Exchange Rate Forecasts
Australia 3 Mo. Dollar Rate In 3 Mo. In 6 Mo. In 12 Mo. 3.40 3.60 3.90 na na na 3.40 3.50 3.75 na na na na na na
Blue Chip Forecasters Scotiabank Deutsche Bank AG WestLB ING Financial Markets Mizuho Research Institute
10 Yr. Gov't Bond Yield % In 3 Mo. In 6 Mo. In 12 Mo. 5.50 5.60 5.80 na na na 5.50 5.60 5.90 na na na na na na
In 3 Mo. 0.88 na 0.86 0.89 na
USD/AUD In 6 Mo. In 12 Mo. 0.90 0.94 na na 0.88 0.90 0.85 0.82 na na
October Consensus
3.40
3.55
3.83
5.50
5.60
5.85
0.88
0.88
0.89
High Low Last Months Avg.
3.40 3.40 3.40
3.60 3.50 3.50
3.90 3.75 3.78
5.50 5.50 5.50
5.60 5.60 5.60
5.90 5.80 5.85
0.89 0.86 0.86
0.90 0.85 0.86
0.94 0.82 0.87
Eurozone 3 Mo. Euro Rate In 3 Mo. In 6 Mo. In 12 Mo. 0.80 1.00 1.60 na na na 1.00 1.00 1.35 0.80 1.10 1.35 0.70 0.60 0.60
Blue Chip Forecasters Scotiabank Deutsche Bank AG WestLB ING Financial Markets Mizuho Research Institute
10 Yr. Euro Bond Yield % In 3 Mo. In 6 Mo. In 12 Mo. 3.40 3.50 3.80 na na na 3.60 3.65 3.95 3.50 3.60 3.80 na na na
In 3 Mo. 1.50 na 1.45 1.55 1.44
USD/EUR In 6 Mo. In 12 Mo. 1.53 1.58 na na 1.50 1.55 1.52 1.40 1.43 1.40
October Consensus
0.83
0.93
1.23
3.50
3.58
3.85
1.49
1.50
1.48
High Low Last Months Avg.
1.00 0.70 0.93
1.10 0.60 0.96
1.60 0.60 1.23
3.60 3.40 3.50
3.65 3.50 3.58
3.95 3.80 3.85
1.55 1.44 1.43
1.53 1.43 1.43
1.58 1.40 1.44
10 Yr. Gov't Bond Yields % Germany Blue Chip Forecasters Scotiabank West LB ING Financial Markets Mizuho Research Institute
In 3 Mo. 3.40 3.30 3.50 3.45
France
In 6 Mo. In 12 Mo. In 3 Mo. 3.50 3.80 3.70 3.35 3.65 3.50 3.60 3.80 3.75 3.50 3.55 3.75
Italy
In 6 Mo. In 12 Mo. In 3 Mo. 3.80 4.00 4.10 3.55 3.85 4.10 3.85 4.05 4.20 3.80 3.85 4.35
Spain
In 6 Mo. In 12 Mo. In 3 Mo. 4.30 4.50 4.00 4.15 4.45 3.80 4.30 4.50 4.00 4.35 4.35 4.10
In 6 Mo. In 12 Mo. 4.10 4.20 3.85 4.15 4.10 4.30 4.10 4.15
October Consensus
3.41
3.49
3.70
3.68
3.75
3.94
4.19
4.28
4.45
3.98
4.04
4.20
High Low Last Months Avg.
3.50 3.30 3.41
3.60 3.35 3.49
3.80 3.55 3.70
3.75 3.50 3.69
3.85 3.55 3.74
4.05 3.85 3.91
4.35 4.10 4.19
4.35 4.15 4.26
4.50 4.35 4.40
4.10 3.80 3.98
4.10 3.85 4.04
4.30 4.15 4.18
Consensus Forecasts 10-year Bond Yields vs U.S. Yield Japan United Kingdom Switzerland Canada Australia Germany France Italy Spain Eurozone
Current -2.07 0.31 -1.30 0.02 2.03 -0.07 0.18 0.65 0.44 0.48
In 3 Mo. -2.23 0.14 -1.60 0.00 1.84 -0.25 0.01 0.53 0.31 -0.16
In 6 Mo. -2.48 0.00 -1.65 0.00 1.64 -0.48 -0.21 0.31 0.07 -0.38
In 12 Mo. -2.70 -0.04 -1.81 0.09 1.53 -0.63 -0.39 0.12 -0.12 -0.48
Consensus Forecasts 3 Mo. Interest Rates vs U.S. Rate Japan United Kingdom Switzerland Canada Australia Eurozone
Current -0.27 0.05 -0.33 -0.12 3.02 0.00
In 3 Mo. 0.04 0.31 -0.10 0.17 3.00 0.43
In 6 Mo. -0.97 0.35 -0.15 0.20 3.04 0.41
In 12 Mo. -0.48 0.34 -0.41 0.29 2.81 0.21
12 BLUE CHIP FINANCIAL FORECASTS OCTOBER 1, 2009
Viewpoints:
A Sampling of Views on the Economy, Financial Markets and Government Policy Excerpted from Recent Reports Issued by our Blue Chip Panel Members and Others
Tracking The Bounce Following the weaker-than-expected numbers on home sales and durable goods, the risks to our 3% GDP forecast for 2009Q3 again look roughly balanced. While none of the downside surprises were large by themselves, what caught my eye is the fact that all measures of bigticket demand except auto sales (which benefited from cash-forclunkers) have flattened or declined in the past 1-2 months after significant gains in Q2. This could well mean that the earlier gains were overstated by a bounce from the financial disruptions before April. Suppose that “planned” big-ticket demand was $100 in Q4, $90 in Q1, $90 in Q2, and $90 in Q3. But also suppose that $10 of planned demand wasn’t financeable in Q1 because of credit market disruptions and had to be delayed until Q2. In that case, observed sales would be been $100 in Q4, $80 in Q1, $100 in Q2, and $90 in Q3. This would create the erroneous impression of a sharp rebound in big-ticket demand in Q2, followed by a renewed drop in Q3, when in fact demand was flat all along. While this example is clearly a caricature, it will be important to track the big-ticket demand data in coming months to see how important a factor the underlying mechanism might have been. Growth is likely to stay around 3% in Q4, but we still expect a renewed slowdown in 2010 as the economy loses the temporary boost from fiscal stimulus and the inventory cycle. By our estimates, the impact of these factors will go from 4 percentage points in 2009H2 to around 0 in 2010H2. This means that underlying final demand needs to accelerate by 4 percentage points over the next year to keep the economy growing at the same pace. Some acceleration is likely, but I don’t expect anything close to 4 percentage points given the continued weakness in household income, the upward pressure on the saving rate, and all the other headwinds on final demand in a post-bubble economy. Our most out-of-consensus view remains the call for a further sharp slowdown in core CPI inflation to around 0% by late 2010. The rent and owners’ equivalent rent (OER) indexes, which together account for nearly 40% of the total core, are important to this view. Rent and OER inflation is highly sensitive to the rental vacancy rate, which currently stands at a historical record of 10.6% and still seems to be rising as more foreclosed homes end up on the rental market. As a result, rent and OER look set for outright declines in 2010 (the 3-month annualized rate is already below 0.5%). That would go a long way to push core CPI inflation toward zero, supporting our call for no Fed rate hikes through the end of 2010. th
So how should we interpret the September 25 Wall Street Journal article and Chicago speech by Fed Governor Kevin Warsh, and his statement that he “…would hazard the view that prudent risk management indicates that policy likely will need to begin normalization before it is obvious that it is necessary, possibly with greater force than is customary”? Although this clearly sounds hawkish, I don’t think it is such a strong signal. In the speech (though not the WSJ article), Warsh further elaborates with the following sentence: “In my view, if policymakers insist on waiting until the level of real activity has plainly and substantially returned to normal--and the economy has returned to selfsustaining trend growth--they will almost certainly have waited too long.” Warsh simply seems to be saying that a) the tightening process needs to have started by the time the unemployment gets back to the Fed’s estimate of the sustainable rate and b) when the hikes come, they are likely to be faster than the 25bp every 6 weeks seen in 2004-2006. Most people would agree with this, and given how far the unemployment rate is from a normal level, it doesn't mean that rate hikes are likely anytime soon. One increasingly popular counterargument against our Fed view is that monetary policy might become more reactive to asset bubbles in the
future. While a standard “Taylor rule” might say that the funds rate “should” be deeply negative, the argument goes, it’s time to move away from monetary policy rules that don’t take into account potential asset price misalignments. What should we make of this? I agree that Fed officials should (and probably will) pay more attention to asset price misalignments in the future than they have in the past, i.e. the Fed’s reaction function might well change. But I don’t think this argument is very relevant at the moment, for two reasons: For policymakers to worry about a “bubble,” a big asset price gain isn’t enough. You also need some evidence that valuation levels are sufficiently out of line with standard “fair value” metrics to send a reliable signal to policymakers. I am not aware of any market where this is close to being the case. As research at the Bank for International Settlements showed in the years leading up to the crisis, overvalued asset prices are most dangerous when they are accompanied by a credit boom. The experience of the past decade is a great example of this—while the bursting of the unleveraged stock market bubble of the 1990s had few effects on the financial system, the bursting of the leveraged housing bubble of the 2000s caused the biggest financial crisis since the 1930s. This is important to the re-emerging “bubble” debate because right now, credit is still contracting across the board. That’s another reason why it is very premature to expect Fed officials to deviate from a focus on the real economy in favor of “bubble busting” in my view, even if their reaction function ultimately moves in that direction. Jan Hatzius, Goldman Sachs, New York, NY Can Pickup Persist? Hardly a day goes by without another sign that an economic recovery is underway. Looking at a basket of individual indicators, in July and again in August, there appeared to be a bottoming in the composite coincident indicators index, which includes some key components used by the National Bureau of Economic Research (NBER) Business Cycle Dating Committee to help identify business cycle peaks and troughs. Moreover, with the leading economic indicators (LEI) index up for the fifth straight month in August, more good news on coincident indicators likely lies ahead. In this setting, we remain comfortable with our forecasts of quarterly annualized real GDP growth of 2.5% in Q309, 3.0% in Q409, and 2.6% in calendar 2010. Recessions are started for a variety of reasons in different business cycles; however, exits from cyclical downturns have much more in common. In the public sector, there are countercyclical monetary and fiscal policy responses once the downturn becomes reasonably obvious. In the private sector, firms slashing labor, inventories, and capex eventually stop doing so once they have reduced those inputs into better alignment with below-normal output and sales levels. Households naturally become more cautious during a recession, as they postpone some expenditures and typically raise their savings rate. However, legislated tax cuts and Fed-induced interest rate reductions stimulate consumer spending, and at some point, households become more satisfied with a higher savings level commensurate with their changed economic and financial circumstances. In the second half of 2009, this history is starting to repeat itself. Countercyclical monetary policy has played a pivotal role in the recent recession as the Fed addressed an unprecedented financial system crisis and credit crunch with an also unprecedented surge in its balance sheet. The accompanying succor for the global financial markets has been evidenced in the sharp compression of yields versus Treasury rates in the US mortgage-linked and corporate bond markets. Note: From a funds flow perspective, the Fed has been (continued on next page)
OCTOBER 1, 2009 BLUE CHIP FINANCIAL FORECASTS 13
Viewpoints
A Sampling of Views on the Economy, Financial Markets and Government Policy Excerpted from Recent Reports Issued by our Blue Chip Panel Members and Others
buying mortgage-linked, agency, and Treasury securities from sellers who have directed part of those proceeds to the corporate bond market.)
in Q209, when real final sales edged up at a 0.4% annual rate after falling at a 3.9% annual rate over the three previous quarters.
Fiscal policy stimulus has also been unprecedented. Federal income tax cuts and higher transfer payments started to boost after-tax, disposable personal incomes in H109, and more of the planned stimulus on the spending side of the ledger has started to come through in Q309.
While cutting jobs, capex, and inventories made sense in response to slumping product demand, continuing to do so once demand stabilizes starts to raise market share and competition-related risks. Firms apparently already are starting to appreciate that the rapid pace of inventory liquidation earlier this year now entails growing risks of losing sales due to inadequate inventories of goods for sale. And continuing to delay addressing critical capital replacement needs entails growing competitive cost disadvantages versus those domestic and foreign competitors that have forged ahead with the adoption of the latest cost-saving technologies. Thus, capex orders have been just about stabilizing even at very low industrial capacity utilization rates. In addition, headcounts can be cut too much, with negative consequences for retaining talent and maintaining quality of services for customers.
While countercyclical public policies have been playing a powerful stabilizing role so far this year, there are limits to how far policymakers can proactively raise the Federal deficit and the Fed’s balance sheet. Such actions are necessary to initiate a recovery. However, there must be follow-through from households— by far the largest element of aggregate demand. And that follow-through reflects two critical considerations—incomes and the personal saving rate. Although the personal saving rate has risen, as it usually does during recessions, it remains comparatively low versus its longer-term history. Thus, an ongoing debate is whether American consumers must save still more to reduce debt and build financial assets in the wake of the sizable declines, on balance, in the prices of stocks and residential real estate in recent years. Our view has been that the approximate 3.0 percentage point upward personal saving rate adjustment from its 2005 level of just 1.4%—the lowest calendar average level in the past half century—to around 4.4% in H109 represents about as much adjustment as should occur, at least on a multi-quarter measurement basis. That is because our research indicates that the net worth (NW)/disposable personal income (DPI) ratio and interest rates are much more tightly correlated with savings behavior than is the unemployment rate, which has increased to almost 10%. Recently, our estimated personal saving rate model with both NW/DPI and the three-month Treasury bill rate as explanatory variables was consistent with a Q209 personal saving rate of 4.8% versus the actual reported 5.0%. Our saving rate model suggests that the personal saving rate has remained much less than in past similarly serious recessions for two main reasons. First, relatively low interest rates have been limiting interest income—a comparatively highly-saved form of personal income. Also, the NW/DPI ratio, despite being at around its lowest level of the current decade, still has been higher than in past serious recessions. The other critical consideration for consumer spending is income formation. In H109, household purchasing power was boosted by Federal income tax cuts and higher transfer payments (eg, a 5.8% Social Security cost-of-living adjustment). These constituted a one-time permanent boost to the DPI level but just a temporary booster of DPI growth, unless there are further tax cuts, for example. In H209 and 2010, the key to income formation will be aggregate wages and salaries—53.5% of overall pretax personal income last year. After falling sharply during most of H109, wage and salary disbursements edged up in July as job losses slowed and average hourly earnings continued to grow, albeit at a slower rate than before the recession. Labor market weakness should continue to fade. Gross job losses still exceed gross hiring. However, hiring levels rose somewhat in July. Moreover, layoffs have been declining, with the latest four-week moving average of 554,000 weekly initial claims for state unemployment insurance in the week ended September 19 being the lowest since January. As signs of more stable product demand persist, there should be fewer firms incrementally reducing their headcounts, and layoffs should fall further and closer to already stabilizing gross hiring levels. Note: One major sign of stabilizing product demand already has been reported
Firms also are influenced by pricing power, which will remain limited with still abundant spare productive capacity in the global economy. However, the related weakness in consumer prices over the past year has represented a redistribution of overall current dollar national income to the household sector. And American consumers will play a critical role in heading off a relapse into another recession in 2010. Maury Harris, UBS, New York, NY Reverse Repos -- A Form of Tightening? The Fed has started to make plans for arranging reverse repurchase agreements with primary dealers (and possibly other counterparties) in order to drain the abundant volume of reserves from the banking system. Some observers have suggested that the Fed could begin this effort well before it decides to raise interest rates, and these transactions, by this view, would represent a tightening in monetary policy. The thought has intuitive appeal, and the beginning of such transactions will represent a notable development, but we do not see reverse repos by themselves as representing tighter policy. When the Fed tightens, the shift will take the form of higher interest rates. As conditions in financial markets improve, depository institutions will naturally feel less need to hold extreme liquidity positions. They will most likely seek to lighten their holdings of excess reserves, and these efforts, all else equal, would put downward pressure on short-term interest rates -- pressure that would leave the federal funds rate close to zero. Arranging reverse repos in this environment would merely help depository institutions pare their excess reserves, thereby keeping the federal funds rate in the middle of its target range. The reverse repos in this case represent a defensive transaction, one designed to stabilize the funds rate and prevent an inadvertent easing. A reverse repo in this setting would represent an important transaction because it would signal a return to normal conditions in the money market. However, the transaction would not represent a tightening in policy. If the Fed began to arrange reverse repos while depository institutions still wished to maintain large liquidity positions, the Fed's transaction would put upward pressure on the federal funds rate and other shortterm interest rates. Such action would represent tighter policy, but it is the change in rates, not the reverse repo, that constitutes the change in policy. The Fed would probably transmit such a change by announcing an increase in the target federal funds rate or by lifting the rate paid on bank reserves. After the announcement, reverse repos would be used to carry out the change in policy. The reverse repo would be the means to the end, not the end itself. Michael Moran, Daiwa Securities America, New York, NY
14 BLUE CHIP FINANCIAL FORECASTS OCTOBER 1, 2009
Special Questions: 1. Please provide your forecasts of the quarter-to-quarter annualized percent change in Real GDP, the GDP Price Index and the Consumer Price Index during Q3 2009 Q/Q Annualized Percent change in Q3 2009 Real GDP GDP Price Index Consumer Price Index Consensus 3.2% 1.4% 2.7% Top 10 Average 4.2% 2.3% 3.7% Bottom 10 Average 2.1 0.7% 1.1% 2. Has the U.S. recession ended? (Percentage of those responding) Yes 90.9%
No 9.1%
3. Will the FOMC raise its target federal funds rate before the end of Q2 2010? (Percentage of those responding) Yes 38.6%
No 61.4%
4. Consumer credit soared over the past couple of decades as households took on more and more debt to support standards of living that could not be financed out of incomes alone. However, year-over-year growth in outstanding credit peaked in July 2008 and by July of this year was down 4.2% on a y/y basis, the sharpest rate of contraction since the mid-1940s. The decline results from decreased demand for consumer debt as households attempt to repair tattered balance sheets coupled with a reduction in the availability of consumer debt as lenders grapple with rising default rates. When will the y/y change in outstanding consumer credit once again turn positive? Q4 2009 0.0%
Q1 2010 0.0%
(Percentage of those responding) Q2 2010 Q3 2010 17.8% 37.8%
Q4 2010 24.4%
Later 20.0%
5. A. Sales of new and existing home have generally increased over the past several months, no doubt helped by the $8,000 federal tax credit for first-time home buyers. However, the tax credit expires at the end of November. WILL the $8,000 federal tax credit for first-time home buyers be extended, expanded, or both by Congress prior to the end of THIS YEAR? (Percentage of those responding) Yes 71.1%
No 28.9%
B. SHOULD the $8,000 federal tax credit for first-time home buyers be extended, expanded, or both? (Percentage of those responding) Yes 42.2%
No 57.8%
6. Do you worry that federal stimulus programs like “cash for clunkers” and the $8,000 first-time home buyers’ tax credit have merely brought demand forward, setting the stage for renewed weakness thereafter? (Percentage of those responding) Yes 68.9%
No 31.1%
7. A shrinking trade deficit contributed significantly to GDP during the first half of 2009. However, the trade deficit widened sharply in July. Will the trade sector contribute to GDP growth in the second half of 2009? Will the trade deficit shrink in 2010? (Percentage of those responding) Will trade deficit shrink in the second half of 2009 Yes No 38.6% 61.4%
Will trade deficit shrink in 2010 Yes No 26.7% 73.3%
8. What is the biggest risk faced by the U.S. economy over the next year? (Ranked according to frequency of mention) A. B. C. D. E. F. G. H.
Persistence of weak labor markets dampens growth in personal income and consumption Credit remains exceedingly tight, dampening consumption and business investment Recovery in housing sector stalls as foreclosures rise and home prices continue to fall Dollar plunges to fresh lows, inflation and long-term interest rates soar, economic growth weakens anew Recovery peters out next year as effects of fiscal and monetary stimulus fade Energy prices spike higher Renewed financial market turmoil saps consumer and business confidence Influenza pandemic has profound effect on economic activity
OCTOBER 1, 2009 BLUE CHIP FINANCIAL FORECASTS 15
Databank: 2009 Monthly Indicator Retail and Food Service Sales (a) Auto & Light Truck Sales (b) Personal Income (a, current $) Personal Consumption (a, current $) Consumer Credit (e) Consumer Sentiment (U. of Mich.) Household Employment (c) Non-farm Payroll Employment (c) Unemployment Rate (%) Average Hourly Earnings ('82$) Average Hourly Earnings (current $) Non-Farm Workweek (hrs.) Industrial Production (d) Capacity Utilization (%) ISM Manufacturing Index (g) ISM Non-Manufacturing Index (g) Housing Starts (b) Housing Permits (b) New Home Sales (1-family, c) Construction Expenditures (a) Consumer Price Index (nsa., d) CPI ex. Food and Energy (nsa., d) Producer Price Index (n.s.a., d) Durable Goods Orders (a) Leading Economic Indicators (g) Balance of Trade & Services (f) Federal Funds Rate (%) 3-Mo. Treasury Bill Rate (%) 10-Year Treasury Note Yield (%)
Jan 1.7 9.5 -1.1 0.8 3.3 61.2 -1239 -741 7.6 8.64 18.43 33.3 -10.9 71.1 35.6 42.9 .488 .531 329 -2.8 0.0 1.7 -0.9 -7.8 -0.3 -37.0 0.15 0.13 2.52
Feb 0.4 9.1 -0.8 0.4 -5.1 56.3 -351 -681 8.1 8.61 18.46 33.3 -11.3 70.6 35.8 41.6 .574 .550 354 -0.4 0.2 1.8 -1.4 1.7 -0.4 -26.6 0.22 0.30 2.87
Mar -1.2 9.8 -0.5 -0.3 -7.3 57.3 -861 -652 8.5 8.64 18.50 33.1 -12.5 69.5 36.3 40.8 .521 .511 332 -0.4 -0.4 1.8 -3.4 -2.2 -0.3 -28.9 0.18 0.21 2.82
Apr -0.3 9.3 0.2 -0.1 -8.2 65.1 120 -519 8.9 8.65 18.50 33.1 -12.4 69.2 40.1 43.7 .479 .498 345 0.5 -0.7 1.9 -3.5 1.4 1.0 -29.1 0.15 0.16 2.93
May 0.5 9.9 1.4 0.1 -4.2 68.7 -437 -303 9.4 8.65 18.53 33.1 -13.2 68.5 42.8 44.0 .551 .518 371 -1.3 -1.3 1.8 -5.0 1.4 1.3 -26.4 0.18 0.18 3.29
Jun 0.9 9.7 -1.1 0.6 -7.4 70.8 -374 -463 9.5 8.57 18.54 33.0 -13.2 68.3 44.8 47.0 .590 .570 400 0.1 -1.4 1.7 -4.6 -1.1 0.8 -27.5 0.21 0.18 3.72
Jly -0.2 11.2 0.0 0.2 -10.4 66.0 -155 -276 9.4 8.59 18.59 33.1 -12.6 69.0 48.9 46.4 .589 .564 426 -0.2 -2.1 1.5 -6.8 4.8 0.9 -32.0 0.16 0.18 3.56
Jan 0.0 15.3 0.0 0.2 5.8 78.4 23 -72 4.9 8.27 17.77 33.7 2.2 80.5 50.7 44.6 1.083 1.102 608 -0.4 4.3 2.5 7.4 -4.4 -0.5 -61.5 3.94 2.75 3.74
Feb -0.8 15.3 0.0 0.0 3.4 70.8 -242 -144 4.8 8.29 17.83 33.8 1.1 80.2 48.3 49.3 1.100 1.015 576 -0.9 4.0 2.3 6.5 1.1 -0.2 -61.8 2.98 2.12 3.74
Mar 0.5 15.0 0.1 0.5 5.9 69.0 -52 -122 5.1 8.30 17.90 33.8 0.9 79.8 49.0 49.6 .993 .968 509 1.4 4.0 2.4 6.7 -0.2 0.0 -59.4 2.60 1.34 3.51
Apr 0.0 14.4 0.1 0.3 4.2 62.6 234 -160 5.0 8.30 17.94 33.8 -0.1 79.2 48.6 52.0 1.001 .991 533 -0.5 3.9 2.3 6.4 -1.0 0.1 -62.1 2.28 1.29 3.68
May 0.2 14.3 1.6 0.2 3.3 59.8 -283 -137 5.5 8.26 17.99 33.7 -0.4 78.9 49.3 51.7 .971 .978 509 0.3 4.2 2.3 7.3 0.1 -0.1 -60.5 1.98 1.73 3.88
Jun 0.2 13.6 -0.1 0.6 4.1 56.4 -236 -161 5.6 8.18 18.04 33.6 -0.7 78.7 49.5 48.2 1.078 1.174 488 -0.2 5.0 2.4 9.1 1.4 0.1 -60.2 2.00 1.86 4.10
Jly -0.7 12.5 -0.8 -0.1 3.5 61.2 -142 -128 5.8 8.14 18.10 33.6 -1.0 78.6 49.5 49.5 .933 .924 500 -2.4 5.6 2.5 9.9 0.7 -0.7 -64.9 2.01 1.63 4.01
Aug 2.7 14.1
Sep
65.7 -392 -216 9.7
73.5
Oct
Nov
Dec
Oct -3.1 10.5 -0.3 -0.8 -1.0 57.6 -372 -380 6.6 8.34 18.28 33.5 -4.7 75.4 38.7 44.2 .763 .729 409 -0.7 3.7 2.2 5.2 -8.5 -1.0 -59.4 0.97 0.67 3.81
Nov -2.1 10.1 -0.3 -1.0 -4.2 55.3 -513 -597 6.8 8.54 18.34 33.4 -6.5 74.4 36.6 37.3 .655 .630 390 -3.5 1.1 2.0 0.4 -3.9 -0.6 -43.2 0.99 0.19 3.53
Dec -3.2 10.3 -0.3 -1.2 -3.5 60.1 -806 -681 7.2 8.65 18.40 33.3 -8.9 72.7 32.9 40.6 .556 .564 374 -3.4 0.1 1.8 -0.9 -4.6 -0.1 -41.9 0.16 0.03 2.42
18.65 33.1 -11.8 69.6 52.9 48.4 .598 .579 429 -1.5 1.4 -4.3 -2.4 0.6 0.16 0.17 3.59
2008 Monthly Indicator Retail and Food Service Sales (a) Auto & Light Truck Sales (b) Personal Income (a, current $) Personal Consumption (a, current $) Consumer Credit (e) Consumer Sentiment (U. of Mich.) Household Employment (c) Non-Farm Payroll Employment (c) Unemployment Rate (%) Average Hourly Earnings ('82$) Average Hourly Earnings (current $) Non-farm Workweek (hrs.) Industrial Production (d) Capacity Utilization (%) ISM Manufacturing Index (g) ISM Non-Manufacturing Index (g) Housing Starts (b) Housing Permits (b) New Home Sales (1-family, c) Construction Expenditures (a) Consumer Price Index (nsa., d) CPI ex. Food and Energy (nsa, d) Producer Price Index (nsa., d) Durable Goods Orders (a) Leading Economic Indicators (g) Balance of Trade & Services (f) Federal Funds Rate (%) 3-Mo. Treasury Bill Rate (%) 10-Year Treasury Note Yield (%)
Aug -0.5 13.7 0.4 0.0 -3.0 63.0 -323 -175 6.2 8.19 18.18 33.7 -2.0 77.6 49.3 50.6 .849 .857 444 2.4 5.4 2.5 9.7 -5.5 -0.8 -60.9 2.00 1.72 3.89
Sep -1.5 12.5 0.1 -0.3 3.1 70.3 -244 -321 6.2 8.21 18.21 33.6 -6.4 74.5 43.4 50.2 .822 .806 436 0.3 4.9 2.5 8.8 0.0 0.0 -60.1 1.81 1.13 3.69
(a) month-over-month % change; (b) millions, saar; (c) thousands, saar; (d) year-over-year % change; (e) annualized % change; (f) $ billions; (g) level. Most series are subject to frequent government revisions. Use with care.
16 BLUE CHIP FINANCIAL FORECASTS OCTOBER 1, 2009
Calendar Of Upcoming Economic Data Releases Monday September 28
Tuesday
Wednesday
Thursday
Friday
29
30
October 1
2
Case-Shiller Home Price Index (Jul) Consumer Confidence (Sep, Conference Board) Agricultural Prices (Sep) ABC Consumer Comfort Index Weekly Store Sales
GDP (Q2, Final) ADP Employment Survey (Sep) Corporate Profits (Q2, Final) Chicago PMI (Sep) EIA Crude Oil Stocks Mortgage Applications
ISM Manufacturing (Sep) Unit Vehicle Sales (Sep) Construction Spending (Aug) Monster Employ. Index (Sep) Challenger Survey (Sep) Personal Income & Consumption (Aug) Pending Home Sales (Aug) Weekly Jobless Claims Weekly Money Supply
Employment Report (Sep) Factory Orders (Aug)
5
6
7
8
9
ISM Non-Manufacturing (Sep)
ABC Consumer Comfort Index Weekly Store Sales
Consumer Credit (Aug) EIA Crude Oil Stocks Mortgage Applications
Wholesale Trade (Aug) Weekly Jobless Claims Weekly Money Supply
U.S. Trade (Aug)
12
13
14
15
16
Columbus Day U.S. Bond Market Closed but U.S. Equity Markets Open
Treasury Budget (Sep) FOMC Minutes (Sep 22 meeting) Weekly Store Sales ABC Consumer Comfort Index
Retail Sales (Sep) Trade Price Indexes (Sep) Business Inventories (Aug) EIA Crude Oil Stocks Mortgage Applications
Consumer Price Index (Sep) Empire State Index (Oct) Philadelphia Fed Index (Oct) Weekly Jobless Claims Weekly Money Supply
Industrial Production (Sep) Consumer Sentiment (Oct, Preliminary, University of Michigan) Treasury International Capital Flows (Aug)
19
20
21
22
23
NAHB Housing Index (Oct)
Housing Starts (Sep) Producer Price Index (Sep) Weekly Store Sales ABC Consumer Comfort Index
EIA Crude Oil Stocks Mortgage Applications
Leading Economic Indicators (Sep) Weekly Jobless Claims Weekly Money Supply
Existing Home Sales (Sep)
26
27
28
29
30
Case-Shiller Home Price Index (Aug) Consumer Confidence (Oct, Conference Board) ABC Consumer Comfort Index Weekly Store Sales
New Home Sales (Sep) Durable Goods Orders (Sep) EIA Crude Oil Stocks Mortgage Applications
Gross domestic Product (Q3, Advance) Weekly Jobless Claims Weekly Money Supply
Personal Income and Outlays (Sep) Consumer Sentiment (Oct, University of Michigan) Chicago PMI (Oct) Employment Cost Index (Q3)
November 2
3
4
5
6
ISM Manufacturing (Oct) Construction Spending (Sep) Pending Home Sales (Sep)
FOMC Meeting
FOMC Meeting
Vehicle Sales (Oct) Factory Orders (Sep) ABC Consumer Comfort Index Weekly Store Sales
ISM Non-Manufacturing Index (Oct) ADP Employment (Oct) Challenger Layoffs (Oct) Consumer Credit (Aug) EIA Crude Oil Stocks Mortgage Applications
Productivity and Costs (Q3, Preliminary) Wholesale Trade (Aug) Weekly Jobless Claims Weekly Money Supply
Employment Report (Oct) Wholesale Inentories (Sep) Consumer Credit (Sep)
.
BLUE CHIP FORECASTERS CONTRIBUTORS TO DOMESTIC SURVEY Action Economics, LLC, Boulder, CO Dr. Michael Englund Argus Research Corp., New York, NY Dr. Richard A. Yamarone Banc of America Securities-Merrill Lynch, New York, NY Dr. Ethan Harris Bank of Tokyo-Mitsubishi UFJ, Ltd., New York, NY Christopher S. Rupkey Barclays Capital, New York, NY Dr. Dean Maki BMO Capital Markets Economics, Toronto, Canada Dr. Sherry Cooper and Douglas Porter Chmura Economics & Analytics, Richmond, VA Dr. Christine Chmura and Dr. Xiaobing Shuai ClearView Economics, LLC, Cleveland, OH Dr. Kenneth T. Mayland Comerica Bank, Detroit, MI Dana B. Johnson Conning & Company, Hartford, CT James A. Griffin Jr. Cycledata Corp., San Diego, CA Robert S. Powers Daiwa Securities America, New York, NY Dr. Michael Moran Economist Intelligence Unit, New York, NY Leo Abruzzese and Jan Friederich DePrince & Associates, Murfreesburo, TN Dr. Albert E. DePrince Jr. Fannie Mae, Washington, DC Douglas Duncan Georgia State University, Atlanta, GA Dr. Rajeev Dhawan and Emin Hajiyev GLC Financial Economics, Providence, RI Gary L. Ciminero Goldman, Sachs & Co., New York, NY Jan Hatzius, Ed McKelvey, Andrew Tilton J.P. Morgan Chase, New York, NY Bruce Kasman and Robert Mellman JPMorgan Private Wealth Management, New York, NY Dr. Anthony Chan J.W. Coons Advisors, LLC, Columbus, OH James W. Coons Kellner Economic Advisers, Port Washington, NY Dr. Irwin L. Kellner Loomis, Sayles & Company, L.P., Bloomfield, MI Brian Horrigan and David Sowerby MacroFin Analytics, Wayne, NJ Dr. Parul Jain Mesirow Financial, Chicago, IL Diane Swonk Moody’s Capital Markets, New York, NY John Lonski
Moody’s Economy.com, West Chester, PA Dr. Mark M. Zandi Naroff Economic Advisors, Philadelphia, PA Dr. Joel L. Naroff National Association of Realtors, Washington, DC Dr. S. Lawrence Yun Nomura Securities International, Inc., New York, NY Dr. David H. Resler PNC Financial Services Group, Pittsburgh, PA Dr. Stuart G. Hoffman RBS, Greenwich, CT Stephen Stanley and Michelle Girard RDQ Economics, New York, NY John Ryding and Conrad DeQuadros RidgeWorth Capital Management, Richmond, VA Alan Gayle Russell Investments, Tacoma, WA Dr. Michael Dueker Scotiabank, Toronto, Canada Aron Gampel and Dr. Warren Jestin Societe Generale, NY, New York Stephen W. Gallagher Standard & Poor's Corp., New York, NY Dr. David Wyss Stone Harbor Investment Partners, LP, New York, NY Brian Keyser SunTrust Banks, Inc., Atlanta, GA Gregory L. Miller Swiss Re, New York, NY Kurt Karl The Northern Trust Company, Chicago, IL Paul L. Kasriel and Asha G. Bangalore Thredgold Economic Associates, Salt Lake City, UT Jeff K. Thredgold UBS, New York, NY Maury Harris, Samuel Coffin and Kevin Cummins Wayne Hummer Investment, LLC., Chicago, IL William B. Hummer Wells Capital Management, San Francisco, CA Gary Schlossberg Wells Fargo, Charlotte, NC Dr. John Silvia and Mark Vitner Woodley Park Research, Washington, DC Richard J. DeKaser Woodworth Holdings, Ltd., Summit, NJ Jay N. Woodworth CONTRIBUTORS TO INTERNATIONAL SURVEY Deutsche Bank AG, Frankfurt, Germany ING Financial Markets, London, England Mizuho Research Institute, Tokyo, Japan Scotiabank, Toronto, Canada WestLB AG, Dusseldorf, Germany
Blue Chip ® Financial Forecasts Top Analysts’ Forecasts Of U.S. And Foreign Interest Rates, Currency Values And The Factors That Influence Them Vol. 28, No. 10, October 1, 2009
Wolters Kluwer Law & Business
BLUE CHIP FINANCIAL FORECASTS® EXECUTIVE EDITOR: RANDELL E. MOORE 3663 Madison Ave. Kansas City, MO 64111 Phone (816) 931-0131 Fax (816) 931-0430 E-mail: [email protected] Publisher: Paul Gibson Marketing Director: Dom Cervi Blue Chip Financial Forecasts® (ISSN: 07418345) is published monthly by Aspen Publishers, 76 Ninth Avenue, New York, NY 10011. Printed in the U.S.A. Subscriptions: $875 per year for print or e-mail delivery of 12 monthly issues. $1050 per year for both print and e-mail delivery of 12 monthly issues. For multiple-copy rates and site-license agreements call Terry Watkins toll free at 866873-9156, or contact her at: [email protected] Permission requests: For information on how to obtain permission to reproduce content, please to the Aspen Publishers website at: www.aspenpublishers.com/permissions. Purchasing reprints: For customized article reprints, please contact Wright’s Reprints at 1-877652-5295 or go to the Wright’s Reprints website at www.wrightsreprints.com. Customer Service: 1-800-234-1660 To Order: 1-800-638-8437 Customer Service Fax: 1-800-901-9075 Email: [email protected] Web Sites:www.aspenpublishers.com www.bluechippubs.com Blue Chip Financial Forecasts® is a general circulation news monthly. No statement in this issue is to be construed as a recommendation to buy or sell securities or to provide investment advice. The editor and Aspen Publishers, while considering the contents to be reliable, take no responsibility for the information contained herein. © 2009 Aspen Publishers. All Rights Reserved. This material may not be used, published, broadcast, rewritten, copied, redistributed or used to create any derivative works without prior written permission from the publisher.
TABLE OF CONTENTS Domestic Commentary
p. 1
Domestic Summary Table –Table of consensus forecasts of U.S. interest rates and key economic assumptions
p. 2
International Summary Table – Table of consensus forecasts of international interest rates and foreign exchange values
p. 3
International Commentary
p. 3
Individual Panel Member’s U.S. Forecasts – Of interest rates and key assumptions for the next six quarters
p. 4-9
Individual Panel Member’s International Forecasts – Of international interest rates and foreign exchange values
p. 10-11
Viewpoints – A sampling of views on the economy and government policy excerpted from recent reports issued by our panel members p. 12-13
Special Questions – Results of special questions posed to panel members about the economy, financial markets and government policy p. 14
Databank – Monthly historical data on many key indicators of economic activity
p. 15
Calendar – Release dates for important upcoming economic Data, FOMC meetings, etc.
p. 16
List Of Contributing Economists – To Domestic and International Survey
inside of back cover
.
Consensus Still Sees Trend-Like Real GDP Growth Over Coming Year Domestic Commentary Confidence remains high that the U.S. economy began growing again this summer, ending the longest, deepest recession in the post World War II era. Indeed, more than 90% of our panelists say the recession has ended. Moreover, consensus forecasts of near-term economic growth again moved higher over the past month, extending the streak of upgrades that began in April. Nonetheless, the consensus continues to only foresee trend-like real GDP growth of 2 ¾% or so over the coming year, well short of the rebounds that followed prior recessions in the past 60 years. Among the data released since our last survey that helped lift expectations of near-term GDP growth was a four-point jump in the Institute of Supply Management’s August index of manufacturing activity to 52.9, matching its highest reading since July 2006. Other August reports also exceeded expectations, including a 2.7% surge in retail sales, a 0.8% jump in industrial production and a 1.5% increase in housing starts that left them at their highest level in nine months. Moreover, the Conference Board’s index of leading economic indicators rose for a fifth consecutive month in August and is up 4.7% over the past five months, the strongest such gain since early 1983. The news, however, was not uniformly upbeat. The unemployment rate jumped 0.3 of a percentage point to 9.7% in August. The trade deficit widened by a much larger than expected $4.5 billion in July. Sales of new single-family homes rose a smaller-than-expected 0.7% in August while sales of existing homes actually fell 2.7%, accompanied by a second-consecutive drop in the median sales price. New orders for durable goods unexpectedly declined by 2.4% in August and nondefense capital goods shipments excluding aircraft dropped 1.9% to a fresh cycle low. Early indications suggest unit sales of cars and light trucks fell dramatically in September following the “cash for clunker” induced increases in July and August. Key factors expected to cap the strength of the economic recovery over the next six quarters include: an unusually slow improvement in labor market conditions; only modest gains in consumer spending, restrained by tepid growth in personal income, tight credit and a desire by households to pare debt; an atypically muted recovery in residential investment due to still rising home foreclosures and persistently high inventories of unsold existing homes; a sharp further pullback in commercial construction; and limited improvement in capital spending resulting from the excess capacity that exists in many sectors and still-tight credit for small and mid-size businesses. As for the specifics of our September 23rd-24th survey results, the consensus predicts real GDP expanded at an annual rate of 3.2% in Q3 and will grow at a 2.5% clip in the final quarter of this year and in Q1 2010. The Q3 forecast increased 0.9 of a percentage point over the past month, the Q4 2009 and Q1 2010 estimates rose 0.2 of a percentage point and 0.1 of a point, respectively. Consensus forecasts of real GDP growth in subsequent quarters were little changed this month. Real GDP is predicted to expand at a 2.7% rate in Q2 2010, 0.1 of a point less than predicted last month. Real GDP is forecast to grow at a 2.8% rate in both Q3 and Q4 of next year, the Q3 projection 0.1 of a point better than predicted last month. Our panelists’ first stab at predicting real GDP’s growth rate in Q1 2011 produced a consensus forecast of 2.9%. Given the subdued pace of recovery, inflationary pressures are expected to remain relatively muted over the next year, according to the consensus. Since December 2008 and March 2009, respectively, the Producer Price Index (PPI) and the Consumer Price Index (CPI) have contracted on a year-over-year basis, primarily the result of the steep run-up and subsequent pull-back in energy and food prices. In July, the 12-month decline in the PPI widened to -6.8% while the decline in the CPI reached -2.1%. In August, however, the y/y change in the PPI narrowed to -4.3% while the change in the CPI shrank to 1.5%.
By late this year or early next, the y/y change in both measures of inflation is widely expected to become positive again, but largely because of less favorable year ago comparisons. On the other hand, the y/y change in inflation excluding food and energy prices is widely expected to continue working its way lower for the time being. For example, the core CPI was up 1.9% y/y in April but has declined each and every month since to stand at 1.4% in August. While the overall CPI likely rose at a seasonally-adjusted annual rate of 2.7% in the current quarter, the consensus continues to foresee growth rates of 2.0% or less between Q4 2009 and Q4 2010. In light of uncertainty about the strength of the recovery and the expectation that inflation will remain subdued, the consensus continues to believe the Federal Reserve will move very cautiously in unwinding its monetary accommodation. The policy statement issued at the conclusion of the Federal Open Market Committee’s September 22nd-23rd meeting did nothing to dissuade panelists of that belief. Policymakers’ discussion of the economic outlook was a bit more optimistic, noting signs of a pick-up in economic activity and that long-term inflation expectations remain tame. The committee also reiterated its commitment to leave the target federal funds rate unchanged “for an extended period”. The most notable news from the meeting, word that the Fed would purchase a "total" of $1.25 trillion of agency-issued mortgage-backed securities (MBS). Earlier statements said the Fed would buy "up to" $1.25 trillion. However, the FOMC retained the "up to" phrasing for its planned purchases of $200 billion of agency debt. The FOMC also announced it would slow the rate of buying for both programs and extend the purchases through the first quarter of next year. The day following conclusion of the FOMC meeting the Fed announced it would reduce the size of upcoming Term Auction Facility (TAF) and Term Securities Lending Facility (TSLF) operations in light of improving market conditions. Neither represent a tightening of policy but rather administrative moves designed to align the size of lending facilities with underlying demand. Given the unanimous vote at the FOMC meeting, credit markets were taken aback by Fed Governor Kevin Warsh’s hawkish op-ed in the September 25th Wall Street Journal. In it, Warsh said “prudent risk management indicates that policy likely will need to begin normalization before it is obvious that it is necessary, possibly with greater force than is customary”. Warsh added that “If "whatever it takes" was appropriate to arrest the panic, the refrain might turn out to be equally necessary at a stage during the recovery to ensure the Federal Reserve's institutional credibility.” Short-term rates jumped and long-term yields swooned in reaction to the op-ed. However, in the Q&A after a speech later that day, Warsh said his hawkish tone in the op-ed did not imply an imminent change in Fed policy. Consensus Forecast The consensus still predicts the FOMC will leave its target federal funds rate at 0.0%-0.25% until late next spring. By the end of 2010, the consensus thinks the FOMC will have raised its target rate by about 100 basis points. In the interim, the Fed is expected to continue unwinding its various lending facilities and purchase programs. The Treasury yield curve is expected to flatten over the coming year as short-term market rates increase faster than long-term yields. The consensus assumes the dramatic narrowing in corporate spreads seen over the past several months may struggle to continue (see page 2 for U.S. consensus forecasts). Special Questions About 70% of the panelists think that by the end of this year Congress will extend, expand or both the $8,000 federal tax credit program for first-time homebuyers. However, just 42% believe Congress should do so. About 60% of the panelists say the trade deficit will widen in the second half of this year; almost threequarters think it will widen in 2010 (see page 14).
2 BLUE CHIP FINANCIAL FORECASTS OCTOBER 1, 2009
Consensus Forecasts Of U.S. Interest Rates And Key Assumptions1 -------------------------------------History-----------------------------------------
Consensus Forecasts-Quarterly Avg.
---------Average For Week End-------- ----Average For Month---- Latest Q*
4Q 2009 0.2 3.2 0.5 0.2 0.2 0.3 0.5 1.1 2.5 3.6 4.4 5.3 6.6 4.5 5.2
Interest Rates Sep. 25 Sep. 18 Sep. 11 Federal Funds Rate 0.15 0.16 0.15 Prime Rate 3.25 3.25 3.25 LIBOR, 3-mo. 0.29 0.30 0.31 Commercial Paper, 1-mo. 0.13 0.14 0.13 Treasury bill, 3-mo. 0.10 0.11 0.14 Treasury bill, 6-mo. 0.20 0.20 0.22 Treasury bill, 1 yr. 0.41 0.40 0.40 Treasury note, 2 yr. 1.00 0.98 0.92 Treasury note, 5 yr. 2.44 2.43 2.34 Treasury note, 10 yr. 3.46 3.46 3.41 Treasury note, 30 yr. 4.21 4.24 4.25 Corporate Aaa bond 5.16 5.15 5.18 Corporate Baa bond 6.31 6.36 6.39 State & Local bonds 4.04 4.20 4.33 Home mortgage rate 5.04 5.04 5.07
Sep. 4 0.15 3.25 0.34 0.15 0.14 0.23 0.42 0.93 2.33 3.37 4.18 5.12 6.37 4.37 5.08
Aug. 0.16 3.25 0.42 0.17 0.17 0.27 0.46 1.12 2.57 3.59 4.37 5.26 6.58 4.60 5.19
July 0.16 3.25 0.52 0.18 0.18 0.28 0.48 1.02 2.46 3.56 4.41 5.41 7.09 4.72 5.22
June 0.21 3.25 0.62 0.18 0.18 0.31 0.51 1.18 2.71 3.72 4.52 5.61 7.50 4.81 5.42
3Q 2009 0.16 3.25 0.41 0.16 0.16 0.25 0.45 1.04 2.48 3.53 4.34 5.28 6.67 4.50 5.15
----------------------------------------History-------------------------------------------
4Q 2007 73.3 2.1 2.3 5.8
Key Assumptions Major Currency Index Real GDP GDP Price Index Consumer Price Index
1Q 2008 72.0 -0.7 1.9 4.5
2Q 2008 70.9 1.5 1.8 4.5
3Q 2008 73.5 -2.7 4.0 6.2
4Q 2008 81.3 -5.4 0.1 -8.3
1Q 2009 82.7 -6.4 1.9 -2.4
2Q 2009 79.4 -1.0 0.0 1.3
1Q 2010 0.2 3.2 0.5 0.3 0.3 0.4 0.7 1.3 2.7 3.7 4.5 5.4 6.7 4.6 5.3
2Q 3Q 2010 2010 0.3 0.6 3.3 3.6 0.7 1.0 0.4 0.7 0.4 0.7 0.6 0.9 0.8 1.2 1.5 1.8 2.8 3.0 3.9 4.1 4.6 4.8 5.4 5.6 6.7 6.8 4.7 4.8 5.4 5.6
4Q 2010 1.0 4.1 1.4 1.2 1.1 1.3 1.6 2.1 3.2 4.2 4.9 5.7 6.9 4.9 5.8
1Q 2011 1.5 4.5 1.8 1.6 1.5 1.7 1.9 2.5 3.5 4.4 5.1 5.8 7.0 5.0 5.9
Consensus Forecasts-Quarterly
3Q* 2009 75.4 3.2 1.4 2.7
4Q 2009 75.2 2.5 1.2 1.8
1Q 2010 75.1 2.5 1.5 1.7
2Q 3Q 2010 2010 74.6 74.6 2.7 2.8 1.6 1.7 1.6 2.0
4Q 2010 74.9 2.8 1.7 2.0
1Q 2011 75.2 2.9 2.0 2.1
Forecasts for interest rates and the Federal Reserve’s Major Currency Index represent averages for the quarter. Forecasts for Real GDP, GDP Price Index and Consumer Price Index are seasonally-adjusted annual rates of change (saar). Individual panel members’ forecasts are on pages 4 through 9. Historical data for interest rates except LIBOR is from Federal Reserve Release (FRSR) H.15. LIBOR quotes available from The Wall Street Journal. Interest rate definitions are the same as those in FRSR H.15. Treasury yields are reported on a constant maturity basis. Historical data for the Fed’ Major Currency Index is from FRSR H.10 and G.5. Historical data for Real GDP and GDP Chained Price Index are from the Bureau of Economic Analysis (BEA). Consumer Price Index (CPI) history is from the Department of Labor’s Bureau of Labor Statistics (BLS).
U.S. Treasury Yield Curve
U.S. 3-Mo. T-Bills & 10-Yr. T-Note Yield
Week ended September 25, 2009 and Year Ago vs. 4Q 2009 and 1Q 2011 Consensus Forecasts
5.00
Year Ago Week ended 9/25 Consensus 1Q 2011 Consensus 4Q 2009
4.50 4.00
4.00
5.00 4.50
3.50
4.00
4.00
3.50
3.50
3.00
3.00
2.50
2.50
2.00
2.00
2.50
2.00
2.00
1.50
1.50
1.50
1.00
1.00
1.00
0.50
0.50
0.50
0.00
0.00
0.00
1yr
2yr
5yr
10yr
Percent
2.50
6mo
1Q 2001
30yr
Maturities
Corporate Bond Spreads
2006
2007
2008
2009
5.00 4.50
1.50
Consensus
1.00 0.50
3-Month T-Bill Yield
0.00 1Q 2002
1Q 2003
1Q 2004
1Q 2005
1Q 2006
1Q 2007
1Q 2008
1Q 2009
1Q 2010
400 350 300
Basis Points
Aaa Corporate Bond Yield minus 10-Year T-Bond Yield
10-Yr. T-Note Yield.
1Q 2011
As of week ended September 25, 2009 700 650 600 550 500 450 400 350 300 250 200 150 100 50 0
Baa Corporate Bond Yield minus 10-Year T-Bond Yield
5.50
Consensus
U.S. Treasury Yield Curve
As of week ended September 25, 2009 700 650 600 550 500 450 400 350 300 250 200 150 100 50 0
6.00
4.50
3.00
3mo
Forecast
5.50
3.00
Basis Points
Percent
3.50
(Quarterly Average) History
6.00 5.00
400 10-Year T-Bond minus 3-Month T-Bill (Constant Maturity Yields)
350 300
250
250
200
200
150
150
100
100
50
50
0
0
-50
-50
-100 2006
-100 2007
2008
2009
OCTOBER 1, 2009 BLUE CHIP FINANCIAL FORECASTS 3
-------------3-Month Interest Rates1--------------------------History----------
U.S. Japan U.K. Switzerland Canada Australia Eurozone
Latest: 0.78 0.51 0.83 0.45 0.68 3.80 0.78
Month Ago: 1.00 0.46 0.85 0.44 0.70 3.80 0.95
Year Ago: 4.47 1.02 6.31 2.80 4.00 7.74 5.06
Consensus Forecasts Months From Now: 3 6 12 0.40 0.51 1.01 0.44 0.46 0.53 0.71 0.86 1.35 0.30 0.37 0.60 0.57 0.72 1.30 3.40 3.55 3.83 0.83 0.93 1.23
-----------10-Yr. Government Bond Yields1----------------History----------
U.S. Germany Japan U.K. France Italy Switzerland Canada Australia Spain Eurozone
Latest: 3.41 3.34 1.34 3.72 3.59 4.06 2.11 3.43 5.44 3.85 3.89
Month Ago: 3.45 3.26 1.33 3.55 3.51 4.03 2.02 3.40 5.47 3.77 3.85
Year Ago: 3.84 4.25 1.48 4.67 4.50 4.92 2.84 3.70 5.78 4.71 4.67
Consensus Forecasts Months From Now: 3 6 12 3.66 3.96 4.33 3.41 3.49 3.70 1.44 1.49 1.63 3.80 3.96 4.29 3.68 3.75 3.94 4.19 4.28 4.45 2.07 2.32 2.52 3.67 3.97 4.42 5.50 5.60 5.85 3.98 4.04 4.20 3.50 3.58 3.85
----------------Foreign Exchange Rates1---------------------History----------
U.S. Japan U.K. Switzerland Canada Australia Euro
Latest: 73.785 89.74 1.5945 1.0274 1.0892 0.8656 1.4686
Month Ago: 74.882 94.60 1.6503 1.0613 1.0799 0.8349 1.4305
Year Ago: 73.854 105.80 1.8558 1.0813 1.0355 0.8385 1.4737
Consensus Forecasts Months From Now: 3 6 12 79.1 80.3 82.1 92.5 93.5 96.8 1.71 1.72 1.72 1.07 1.08 1.09 1.04 1.06 1.11 0.88 0.88 0.89 1.49 1.50 1.48
Consensus 3-Month Rates vs. U.S. Rate Japan U.K. Switzerland Canada Australia Eurozone
Now
In 12 Mo.
-0.27 0.05 -0.33 -0.12 3.02 0.00
-0.48 0.34 -0.41 0.29 2.81 0.21
Consensus 10-Year Gov’t Yields vs. U.S. Yield Germany Japan U.K. France Italy Switzerland Canada Australia Spain Eurozone
Now
In 12 Mo.
-0.07 -2.07 0.31 0.18 0.65 -1.30 0.02 2.03 0.44 0.48
-0.63 -2.70 -0.04 -0.39 0.12 -1.81 0.09 1.53 -0.12 -0.48
Forecasts of individual panel members are on pages 10 and 11. Definitions of variables are as follows: 1Three month currency interest rates. Short term rates are call for the US Dollar and Yen, others: two day’s notice. Government bonds are yields to maturity. Foreign exchange rate forecasts for U.K., Australia and the Euro are currencies per U.S. dollar. For the U.S dollar, forecasts are of the U.S. Federal Reserve Board’s Major Currency Index.
International Commentary The past month delivered a mix bag of news for global financial markets to chew on. Data continued to indicate the global economy will emerge from recession during the second half of this year. The rebound has been especially striking in nonJapan Asia, but improving activity, if sometimes more uneven, continued to be see in North American and European economies. As a result, forecasts of economic growth over the forecast horizon are still rising. Nonetheless, most analysts still predict the recovery in Western economies will be more subdued than is usual given the considerable headwinds (tighter credit, persistently high levels of unemployment, etc.) that are likely to prevail well into next year. That would be especially true, many argue, if policymakers prematurely begin an unwinding of the massive fiscal and monetary stimulus put in place over the past year, dampening prospects for a self-sustaining upturn in economic activity. As for the markets, global equity indices generally moved higher over the past month though there were some signs of back-tracking as September wound down. Sovereign bond markets were directionless, with yields up a little in some nations and down elsewhere. However, spread product generally continued to perform well, especially were governments were acting as financiers. Perhaps the most notable development was in the foreign exchange markets where the U.S. dollar continued to slide, dropping to it lowest level in more than a year against many currencies. The European Central Bank (ECB) left its refi rate unchanged at 1.0% at the September meeting and also announced that its next 12-month tender would again be allocated at 1.0%, signaling to markets its intention to keep rates lows for the foreseeable future. While ECB officials have warned against overdone optimism about the growth outlook, recent data still point to recover. PMI data for both the manufacturing and service sectors continues to improve with the latter in September indicating out-right growth. Factory orders are up and business sentiment is still increasing. However, retail sales fell in July, and possibly August, after being unchanged in June, demand dampened by still rising unemployment and damp income growth. The ECB is not expected to raise interest rates until next spring. At its September meeting, the Bank of England (BoE) held its asset purchase target steady at 175 billion pounds and the repo rate was left unchanged. Minutes from the meeting indicated there was no discussion of lowering the interest rate paid on reserves held at the Bank of England. However, speculation on a BoE deposit rate cut continued when City economists were invited to a special meeting at the bank. Governor King had previously acknowledged the BoE was looking into the possibility of following the Riksbank and cutting its deposit rate to offer negative rates on bank reserves to encourage banks to lend rather than to hoard the cash. Real GDP is expected to expand this quarter, snapping a five-quarter string of declines. However, growth of just 1.0% or so still is expected in 2010. The Bank of Canada (BoC) left its policy rate at 0.25% in September and maintained its conditional commitment to leave rates unchanged until June of next year. While the bank has voiced more optimism about GDP growth going forward the persistent strength of the loonie recently prompted BoC president Carney to threaten the use quantitative easing to combat its upward trajectory. The Bank of Japan (BoJ) maintained its call rate at 0.1% on September 17th where it’s been stuck since last December. While the BoJ noted "economic conditions are showing signs of recovery" and that financial conditions "increasingly (are) showing signs of improvement," the "risks to the economy are still on the downside.” Real GDP grew at a downwardly revised rate of just 2.3% in Q2 versus the 3.7% originally estimated. Prices continue to fall at an alarming clip with the national core CPI down a record -2.2% y/y in July and headed lower (see 10 and 11 for individual panel members’ forecasts).
4 BLUE CHIP FINANCIAL FORECASTS OCTOBER 1, 2009
Fourth Quarter 2009 Interest Rate Forecasts
Key Assumptions
----------------------------------------------------------------------Percent Per Annum -- Average For Quarter---------------------------------------------------------------
Blue Chip Financial Forecasts Panel Members
-------------------------------------Short-Term-----------------------------------1 Federal
2 Prime
3 LIBOR
4 Com.
5 Treas.
Funds
Bank
Rate
Paper
Bills
Rate
Rate
3-Mo.
1-Mo.
3-Mo.
6 Treas.
------------Intermediate-Term-----------
7 Treas.
8 Treas.
9 Treas.
Bills
Bills
Notes
Notes
6-Mo.
1-Yr.
2-Yr.
5-Yr.
10 Treas.
-----------------Long-Term------------------
11 Treas.
12 Aaa
13 Baa
Notes
Bond
Corp.
Corp.
10-Yr.
30-Yr.
Bond
Bond
14 State &
Avg. For
------(Q-Q % Change)------
---Qtr.---
------------(SAAR)-----------
15 Home
A. Fed's Major
B.
C. GDP
D. Cons.
Local
Mtg.
Currency
Real
Price
Price
Bonds
Rate
$ Index
GDP
Index
Index
Stone Harbor Investment Partners
0.3 H
3.3 H
0.6
0.4
0.2
0.3
0.5
1.1
2.7
3.7
4.4
6.3 H
9.2 H
na
5.2
74.0
1.5
1.2
2.5
Bank of Toyko-Mitsubishi UFJ
0.3 H
3.3 H
0.3
0.3
0.2
0.3
0.4 L
1.4
3.1
4.1 H
4.8
5.1
6.3
4.5
5.7 H
72.0 L
3.8
2.7
2.0
Swiss Re
0.3 H
3.3 H
0.3
0.6 H
0.1 L
0.3
0.5
1.0
2.5
3.6
4.4
5.2
6.6
na
5.4
na
1.9
2.1
0.4 L
Scotiabank
0.3 H
3.3 H
na
na
0.3 L
na
na
1.1
2.6
3.8
4.5
5.2
6.5
4.5
5.3
na
2.0
1.0
1.2
MacroFin Analytics
0.2
3.3 H
0.5
0.3
0.2
0.4 H
0.6
1.1
2.6
3.6
4.4
5.3
6.9
4.4
5.1
76.0
1.5
0.9
1.2
PNC Financial Services Corp.
0.2
3.3 H
0.4
0.3
0.2
0.3
0.5
1.0
2.5
3.5
4.3
5.3
6.5
4.7
5.3
76.0
1.8
1.8
2.2
RDQ Economics
0.2
3.3 H
0.4
0.2
0.3 H
0.4 H
0.6
1.1
2.5
3.8
4.5
5.3
6.3
4.6
5.2
74.0
2.1
2.8 H
2.5
Woodley Park Research
0.2
3.3 H
0.4
0.3
0.2
0.3
0.5
1.1
2.4
3.5
5.1 H
5.1
6.4
4.3
5.1
76.2
3.2
0.2
1.2
The Northern Trust Company
0.2
3.3 H
0.4
na
0.2
na
0.5
1.0
2.4
3.6
4.4
na
na
na
5.2
na
1.9
2.3
2.5
Societe Generale
0.2
3.3 H
0.3
na
0.2
0.3
na
1.1
1.1 L
3.7
4.4
5.4
6.9
na
5.4
73.0
4.0
1.2
2.4
Russell Investments
0.2
3.3 H
0.2 L
0.2
0.2
0.4 H
0.7 H
1.2
2.6
3.5
4.5
5.2
6.2
4.2 L
5.1
74.0
2.2
1.4
1.3
Conning & Company
0.2
3.3 H
na
0.2
0.2
0.3
0.5
1.0
2.5
3.5
4.2
5.2
6.5
4.5
5.3
74.0
2.5
0.5
1.4
Fannie Mae
0.2
3.3 H
na
na
0.2
na
0.7 H
na
na
3.5
4.1
5.3
na
na
na
na
2.4
0.4
1.7
Wayne Hummer Investments
0.2
3.2
0.6
0.2
0.2
0.3
0.4 L
1.4
2.7
3.7
4.3
5.3
6.4
4.3
5.1
79.5
2.4
1.4
1.6
Thredgold Economic Assoc.
0.2
3.2
0.6
0.3
0.2
0.3
0.5
1.1
2.5
3.5
4.4
5.4
6.9
4.7
5.2
75.0
2.8
1.5
1.8
Kellner Economic Advisers
0.2
3.2
0.6
0.3
0.2
0.3
0.5
1.2
2.6
3.6
4.4
5.4
7.0
5.0
5.5
76.0
2.5
1.5
2.2
Mesirow Financial
0.2
3.2
0.5
0.3
0.2
0.4 H
0.7 H
1.3
2.3
3.6
4.3
5.4
6.8
4.7
5.3
76.6
2.4
0.1
1.4
Woodworth Holdings
0.2
3.2
0.5
0.2
0.2
0.3
0.4 L
1.0
2.4
3.4
4.2
5.2
6.4
4.2 L
5.1
72.5
3.4
0.7
1.7
Cycledata Corp.
0.2
3.2
0.4
0.2
0.1 L
0.2 L
0.5
0.9 L
2.4
3.5
4.2
5.3
6.5
4.3
5.1
75.0
4.0
1.6
2.5
Action Economics
0.2
3.3 H
0.5
0.3
0.3 H
0.4 H
0.6
1.2
2.5
3.7
4.3
5.2
6.4
4.4
5.1
73.8
2.0
1.6
2.2
RBS Securities
0.2
3.3 H
0.4
0.2
0.3 H
0.4 H
0.7 H
1.2
2.6
3.7
4.5
5.4
6.6
4.4
5.2
74.5
2.1
2.0
2.2
SunTrust Banks
0.2
3.2
0.3
0.2
0.1 L
0.3
0.4 L
1.0
2.5
3.4
4.2
5.2
6.3
5.5 H
4.5 L
74.5
4.5 H
0.5
2.4
ClearView Economics
0.2
3.3 H
0.3
0.2
0.1 L
0.2 L
0.4 L
1.0
2.5
3.5
4.3
5.2
6.3
4.3
5.1
73.8
4.0
2.0
2.4
Nomura Securities, Inc.
0.2
3.3 H
0.4
0.2
0.2
0.3
0.4 L
1.2
3.2 H
3.5
4.3
5.1
6.2
na
5.1
75.0
2.1
0.7
1.1
Chmura Economics & Analytics
0.2
3.3 H
0.6
0.2
0.2
0.2 L
0.5
1.1
2.4
3.6
4.3
5.4
na
na
5.1
76.8
0.5
Goldman Sachs & Co.
0.2
3.3 H
0.4
na
0.2
na
na
1.0
2.4
3.3
4.0
5.5
na
na
5.3
na
3.0
Daiwa Securities America
0.2
3.3 H
0.4
0.3
0.2
0.3
0.5
1.3
2.5
3.5
4.3
5.2
6.4
4.2 L
5.1
74.0
3.0
2.0
1.8
Loomis, Sayles & Company
0.2
3.3 H
0.4
0.2
0.2
0.3
0.6
1.1
2.5
3.6
4.4
5.3
6.6
4.5
5.2
73.3
2.6
0.2
2.2
1.3 -0.2 L
0.9 1.5
Wells Fargo
0.2
3.3 H
0.3
0.2
0.2
0.3
0.4 L
1.1
2.6
3.6
4.4
5.5
6.8
4.7
5.2
77.0
2.5
0.8
0.7
Wells Capital Management
0.2
3.3 H
0.2 L
0.1 L
0.1 L
0.3
0.7 H
1.2
2.6
3.9
4.4
5.1
6.1 L
4.3
5.5
74.1
3.0
2.0
2.3
DePrince & Assoc.
0.2
3.2
1.3 H
0.2
0.2
0.3
0.5
1.1
2.4
3.5
4.3
5.3
6.4
4.4
5.2
76.1
0.4
1.5
1.0
JPMorgan Privare Wealth Mgt.
0.2
3.2
0.6
0.2
0.1 L
0.2 L
0.4 L
1.0
2.5
3.5
4.2
5.2
6.4
4.6
5.2
74.2
2.7
1.3
1.7 3.2 H
Comerica Bank
0.1 L
3.3 H
0.5
0.2
0.2
0.3
0.5
1.1
2.6
3.7
4.4
5.6
7.4
4.6
5.2
78.3
3.0
2.1
BMO Capital Markets
0.1 L
3.3 H
0.3
0.2
0.2
0.2 L
0.5
1.2
2.5
3.6
4.4
5.2
6.4
4.2 L
5.1
74.0
3.1
0.7
1.6
Moody's Capital Markets
0.1 L
3.3 H
0.3
0.2
0.2
0.3
0.6
1.0
2.5
3.6
4.4
5.3
6.5
4.4
5.1
74.5
2.3
1.5
2.0
Economist Intelligence Unit
0.1 L
3.2
0.9
0.2
0.2
0.3
0.4 L
1.1
2.5
3.5
4.3
na
na
na
5.1
na
1.6
na
0.8
Moody's Economy.com
0.1 L
3.2
0.8
0.3
0.3 H
0.4 H
0.6
1.2
2.7
4.0
4.8
6.2
8.3
na
5.5
na
2.1
1.5
1.1
J.W. Coons Advisors LLC
0.1 L
3.1
0.6
0.5
0.3 H
0.4 H
0.5
1.0
2.3
3.3
4.1
5.0 L
6.2
na
5.0
73.8
3.4
1.0
1.2
Argus Research
0.1 L
3.1
0.5
0.2
0.2
0.3
0.4 L
0.9 L
2.4
3.5
4.3
5.3
6.5
4.5
5.1
75.3
-0.1
2.2
2.9
GLC Financial Economics
0.1 L
3.1
0.4
0.2
0.1 L
0.2 L
0.4 L
1.0
2.4
3.4
4.3
5.2
6.5
4.5
5.0
74.2
2.6
1.4
2.2
J.P. Morgan Chase
0.1 L
na
0.5
na
0.2
na
na
0.9 L
2.0
3.0 L
3.7 L
na
na
na
na
na
3.0
0.9
2.2
UBS
0.1 L
na
0.5
na
0.2
na
na
1.6 H
2.9
3.8
4.4
na
na
na
na
na
3.0
1.2
1.1
Banc of America-Merrill Lynch
0.1 L
na
0.4
na
0.2
na
na
1.0
2.5
4.0
4.6
na
na
na
na
na
3.5
1.3
2.9
1.3
-0.1
1.3
Standard & Poor's Corp.
0.1 L
3.2
0.6
0.3
0.2
0.3
0.5
1.1
2.6
3.6
na
5.4
6.7
4.7
5.2
87.6 H
Georgia State University
0.1 L
3.3 H
na
na
0.2
0.2 L
0.4 L
1.0
2.5
3.6
4.3
5.3
6.5
na
5.2
na
Naroff Economic Advisors
0.1 L
3.3 H
0.8
0.3
0.2
0.4 H
0.5
1.1
2.6
3.7
4.4
5.3
6.6
4.5
5.2
Barclays Capital
0.1 L
3.3 H
0.3
0.3
0.2
0.4 H
0.6
1.3
2.8
3.7
4.6
5.5
7.0
5.0
Nat'l Assn. of Realtors
0.1 L
3.1 L
0.6
0.2
0.2
0.4 H
0.7 H
1.2
2.6
3.5
4.2
5.4
6.8
4.9
-0.2 L
0.2
1.2
73.8
2.8
1.1
3.0
5.5
na
4.0
1.1
2.6
5.5
na
1.8
1.3
1.8
October Consensus
0.2
3.2
0.5
0.2
0.2
0.3
0.5
1.1
2.5
3.6
4.4
5.3
6.6
4.5
5.2
75.2
2.5
1.2
1.8
Top 10 Avg.
0.2
3.3
0.7
0.4
0.2
0.4
0.7
1.3
2.8
3.8
4.6
5.6
7.3
4.8
5.5
78.0
3.8
2.2
2.7
Bottom 10 Avg.
0.1
3.2
0.3
0.2
0.1
0.2
0.4
1.0
2.2
3.4
3.7
5.1
6.3
4.3
5.0
73.4
1.0
0.3
0.9
September Consensus
0.2
3.2
0.6
0.3
0.2
0.4
0.6
1.2
2.6
3.7
4.5
5.5
7.0
4.8
5.3
76.1
2.3
1.4
1.8
16
Number of Forecasts Changed From A Month Ago: Down
9
4
35
25
36
32
31
33
34
38
34
36
32
26
28
25
14
18
Same
37
39
6
11
12
8
9
10
9
8
9
5
4
4
9
5
7
19
12
Up
2
2
3
3
0
1
2
4
4
2
4
2
4
3
7
5
27
10
20
64 %
41 %
54 %
Diffusion Index
43 %
48 %
14 %
22 %
13 %
12 %
15 %
19 %
18 %
13 %
18 %
10 %
15 %
15 %
26 %
21 %
OCTOBER 1, 2009 BLUE CHIP FINANCIAL FORECASTS 5
First Quarter 2010 Interest Rate Forecasts
Key Assumptions
--------------------------------------------------------------------Percent Per Annum -- Average For Quarter--------------------------------------------------------------
Blue Chip Financial Forecasts Panel Members
-------------------------------------Short-Term-----------------------------------1 Federal
2 Prime
3 LIBOR
4 Com.
5 Treas.
Funds
Bank
Rate
Paper
Bills
Rate
Rate
3-Mo.
1-Mo.
3-Mo.
6 Treas.
------------Intermediate-Term-----------
7 Treas.
8 Treas.
9 Treas.
Bills
Bills
Notes
Notes
6-Mo.
1-Yr.
2-Yr.
5-Yr.
10 Treas.
-----------------Long-Term------------------
11 Treas.
12 Aaa
13 Baa
Notes
Bond
Corp.
Corp.
10-Yr.
30-Yr.
Bond
Bond
14 State &
Avg. For
------(Q-Q % Change)------
---Qtr.---
------------(SAAR)-----------
15 Home
A. Fed's Major
B.
C. GDP
D. Cons.
Local
Mtg.
Currency
Real
Price
Price
Bonds
Rate
$ Index
GDP
Index
Index 1.7
Woodworth Holdings
0.5 H
3.5 H
0.7
0.5
0.5
0.6
0.7
1.3
2.7
3.6
4.4
5.3
6.5
4.3
5.2
71.0
3.3
1.0
Action Economics
0.3
3.3
0.7
0.3
0.4
0.6
1.1
1.7
2.8
4.0
4.6
5.3
6.5
4.7
5.2
73.3
2.3
2.3
1.6
RBS Securities
0.3
3.3
0.7
0.3
0.6 H
0.9 H
1.3 H
1.8
3.1
4.1
5.0
5.6
6.9
4.7
5.6
76.0
3.7
2.8
2.0 1.4
Russell Investments
0.3
3.3
0.5
0.3
0.2
0.5
0.8
1.4
2.7
3.5
4.4
5.2
6.2
4.1 L
5.1
73.7
2.2
1.4
Stone Harbor Investment Partners
0.3
3.3
0.5
0.5
0.2
0.3
0.7
1.4
2.9
3.9
4.8
5.5
7.9
na
5.4
72.0
1.3
2.3
2.3
The Northern Trust Company
0.3
3.3
0.5
na
0.2
na
0.6
1.1
2.4
3.7
4.5
na
na
na
5.2
na
1.9
2.3
2.5
Bank of Toyko-Mitsubishi UFJ
0.3
3.3
0.4
0.3
0.2
0.3
0.4 L
1.5
3.2
4.2
4.9
5.2
6.4
4.5
5.7
70.0 L
2.9
2.8
2.3
Swiss Re
0.3
3.3
0.3
0.6 H
0.1 L
0.3
0.5
1.0 L
2.5
3.6
4.4
5.2
6.4
na
5.4
na
2.1
3.5 H
1.4
Scotiabank
0.3
3.3
na
na
0.4
na
na
1.5
3.0
4.3 H
4.8
5.3
6.6
4.6
5.3
na
5.0
1.5
1.9
ClearView Economics
0.2
3.3
0.5
0.2
0.2
0.4
0.8
1.4
2.8
3.7
4.4
5.3
6.4
4.4
5.2
72.5
4.2
2.0
2.4
DePrince & Assoc.
0.2
3.2
1.2 H
0.3
0.3
0.4
0.6
1.3
2.5
3.6
4.3
5.4
6.4
4.4
5.3
77.3
1.4
1.9
1.7
MacroFin Analytics
0.2
3.3
0.6
0.5
0.4
0.5
0.8
1.3
2.7
3.9
4.5
5.2
7.1
4.5
5.1
76.5
1.8
1.0
0.8
PNC Financial Services Corp.
0.2
3.3
0.4
0.3
0.2
0.3
0.5
1.0 L
2.5
3.5
4.3
5.3
6.5
4.7
5.3
74.0
2.5
1.8
2.2
RDQ Economics
0.2
3.3
0.3
0.3
0.4
0.5
0.7
1.2
2.7
4.2
5.0
5.5
6.7
5.0
5.7
73.0
2.2
2.7
2.7
Woodley Park Research
0.2
3.3
0.6
0.4
0.3
0.4
0.6
1.2
2.4
3.4
5.0
5.0
6.2
4.3
5.0
76.9
3.4
1.4
0.2
Wells Fargo
0.2
3.3
0.3
0.3
0.3
0.4
0.5
1.2
2.7
3.7
4.5
5.6
6.8
4.8
5.3
78.5
2.0
0.9
1.1
Societe Generale
0.2
3.3
0.3
na
0.2
0.3
na
1.2
1.4 L
3.9
4.3
5.4
6.7
na
5.4
72.0
2.6
1.0
0.9
Fannie Mae
0.2
3.3
na
na
0.2
na
1.0
na
na
3.6
4.2
5.3
na
na
5.8 H
na
2.6
1.0
1.1
Conning & Company
0.2
3.3
na
0.2
0.2
0.3
0.5
1.0 L
2.6
3.7
4.4
5.4
6.7
4.5
5.5
74.0
1.5
1.0
1.6
Wayne Hummer Investments
0.2
3.2
0.6
0.2
0.3
0.4
0.6
1.6
2.8
3.8
4.5
5.4
6.5
4.4
5.2
79.0
2.7
1.6
1.7
Thredgold Economic Assoc.
0.2
3.2
0.6
0.3
0.2
0.3
0.5
1.1
2.5
3.6
4.5
5.5
7.0
4.7
5.2
75.0
2.8
1.5
1.8
Mesirow Financial
0.2
3.2
0.5
0.3
0.2
0.4
0.8
1.4
2.4
3.7
4.4
5.5
6.9
4.8
5.4
76.9
2.6
1.0
0.1 L
Kellner Economic Advisers
0.2
3.2
0.5
0.3
0.3
0.4
0.6
1.3
2.8
3.8
4.6
5.6
7.2
5.0
5.7
75.0
1.6
2.0
Cycledata Corp.
0.2
3.2
0.4
0.2
0.2
0.3
0.5
1.0 L
2.5
3.6
4.3
5.4
6.5
4.4
5.2
75.0
-1.5 L 3.5
2.0
2.9
J.W. Coons Advisors LLC
0.2
3.2
0.6
0.5
0.4
0.5
0.7
1.1
2.4
3.4
4.3
5.1
6.3
na
5.1
72.3
3.3
1.3
2.4
SunTrust Banks
0.2
3.2
0.3
0.2
0.1 L
0.3
0.4 L
1.0 L
2.5
3.4
4.2
5.2
6.3
5.5 H
4.5 L
74.1
5.4 H
0.8
2.5
Nomura Securities, Inc.
0.2
3.3
0.4
0.2
0.2
0.3
0.5
1.5
3.4 H
3.7
4.4
5.2
5.9 L
na
5.2
77.0
2.3
1.0
1.1 2.5
Naroff Economic Advisors
0.2
3.3
0.9
0.4
0.4
0.5
0.8
1.3
3.2
4.1
4.8
5.8
7.4
4.9
5.5
72.5
1.6
1.4
Daiwa Securities America
0.2
3.3
0.5
0.3
0.3
0.4
0.6
1.5
2.7
3.8
4.5
5.4
6.5
4.2
5.4
72.0
2.8
1.8
1.8
Loomis, Sayles & Company
0.2
3.3
0.4
0.2
0.2
0.3
0.7
1.5
2.6
3.8
4.5
5.4
6.6
4.6
5.4
73.3
2.9
1.0
0.8
Goldman Sachs & Co.
0.2
3.3
0.4
na
0.2
na
na
1.0 L
2.2
3.1 L
3.8 L
4.8 L
na
na
5.1
na
2.0
0.0
1.1
Wells Capital Management
0.2
3.3
0.2 L
0.1 L
0.1 L
0.3
0.7
1.2
2.7
3.9
4.4
5.1
6.0
4.2
5.5
74.2
3.5
1.9
1.8 1.5
JPMorgan Privare Wealth Mgt.
0.2
3.2
0.6
0.2
0.1 L
0.2 L
0.4 L
1.0 L
2.5
3.5
4.2
5.2
6.4
4.6
5.2
74.0
2.8
1.2
Comerica Bank
0.1 L
3.3
0.7
0.3
0.3
0.6
1.0
1.4
3.0
4.0
4.7
5.7
7.1
4.6
5.6
82.0
4.5
2.0
1.2
Chmura Economics & Analytics
0.1 L
3.3
0.4
0.2
0.2
0.4
0.6
1.2
2.8
3.8
4.5
5.6
7.3
4.4
5.3
81.0
2.5
1.0
1.4
BMO Capital Markets
0.1 L
3.3
0.3
0.2
0.2
0.2 L
0.7
1.6
2.8
3.8
4.6
5.4
6.5
4.3
5.3
73.5
2.3
1.0
1.5
Moody's Capital Markets
0.1 L
3.3
0.3
0.2
0.2
0.4
0.7
1.1
2.8
3.7
4.5
5.4
6.6
4.4
5.3
74.8
2.3
1.9
2.3
na
0.8
Economist Intelligence Unit
0.1 L
3.2
1.0
0.3
0.3
0.4
0.5
1.2
2.5
3.7
4.4
na
na
na
5.2
na
1.0
Moody's Economy.com
0.1 L
3.2
0.8
0.6 H
0.3
0.7
0.9
1.8
2.5
4.2
5.1 H
6.3 H
8.1 H
na
5.8 H
na
1.0
Argus Research
0.1 L
3.1 L
0.6
0.2
0.3
0.4
0.6
1.0 L
2.4
3.7
4.5
5.5
6.3
4.7
5.3
76.0
1.8
2.5
4.8 H
GLC Financial Economics
0.1 L
3.1 L
0.4
0.2
0.1 L
0.3
0.4 L
1.0 L
2.3
3.4
4.2
5.3
6.7
4.5
5.1
73.8
1.5
2.1
2.2
UBS
0.1 L
na
0.5
na
0.3
na
na
2.0 H
3.1
3.8
4.4
na
na
na
na
na
2.5
1.6
1.7
J.P. Morgan Chase
0.1 L
na
0.5
na
0.2
na
na
1.0 L
2.2
3.3
3.9
na
na
na
na
na
3.0
0.8
1.1
Banc of America-Merrill Lynch
0.1 L
na
0.4
na
0.2
na
na
1.2
2.6
4.1
4.7
na
na
na
na
na
3.5
1.5
2.3 0.1
-0.4 L
1.6
Georgia State University
0.1 L
3.3
na
na
0.2
0.3
0.5
1.0 L
2.6
3.6
4.5
5.3
6.7
na
5.2
na
1.0
1.2
Barclays Capital
0.1 L
3.3
0.4
0.3
0.2
0.6
0.8
1.7
3.2
4.0
4.9
5.7
7.1
5.1
5.8 H
na
5.0
1.2
2.2
Nat'l Assn. of Realtors
0.1 L
3.1 L
0.8
0.3
0.3
0.6
0.9
1.3
2.8
3.7
4.4
5.5
6.9
5.1
5.6
na
2.3
1.4
1.9
Standard & Poor's Corp.
0.1 L
3.2
0.7
0.4
0.3
0.4
0.5
1.1
2.6
3.8
na
5.5
6.8
4.8
5.3
85.1 H
1.7
1.7
1.1
October Consensus
0.2
3.2
0.5
0.3
0.3
0.4
0.7
1.3
2.7
3.7
4.5
5.4
6.7
4.6
5.3
75.1
2.5
1.5
1.7
Top 10 Avg.
0.3
3.3
0.8
0.5
0.4
0.6
0.9
1.7
3.1
4.1
4.9
5.7
7.3
5.0
5.7
79.0
4.2
2.5
2.7
Bottom 10 Avg.
0.1
3.2
0.3
0.2
0.1
0.3
0.5
1.0
2.2
3.4
4.2
5.1
6.2
4.3
5.0
72.1
1.0
0.7
0.7
September Consensus
0.2
3.3
0.6
0.3
0.3
0.5
0.8
1.4
2.8
3.9
4.6
5.6
7.0
4.8
5.4
76.2
2.4
1.4
1.7
12
Number of Forecasts Changed From A Month Ago: Down
10
6
34
20
28
28
27
28
27
34
30
33
31
23
27
25
17
13
Same
37
38
7
16
17
12
12
14
13
10
12
7
5
7
10
5
9
16
18
Up
1
1
3
3
3
1
3
5
7
4
5
3
4
3
8
5
22
18
18
41 %
44 %
15 %
28 %
24 %
17 %
21 %
26 %
29 %
19 %
23 %
15 %
16 %
20 %
29 %
21 %
55 %
55 %
56 %
Diffusion Index
6 BLUE CHIP FINANCIAL FORECASTS OCTOBER 1, 2009
Second Quarter 2010 Interest Rate Forecasts
Key Assumptions
----------------------------------------------------------------------Percent Per Annum -- Average For Quarter---------------------------------------------------------------
Blue Chip Financial Forecasts Panel Members
-------------------------------------Short-Term------------------------------------
------------Intermediate-Term-----------
1 Federal
2 Prime
7 Treas.
8 Treas.
9 Treas.
Funds
Bank
Rate
Paper
Bills
Bills
Bills
Notes
Notes
Rate
Rate
3-Mo.
1-Mo.
3-Mo.
6-Mo.
1-Yr.
2-Yr.
5-Yr.
3 LIBOR
4 Com.
5 Treas.
6 Treas.
10 Treas.
-----------------Long-Term------------------
11 Treas.
12 Aaa
13 Baa
Notes
Bond
Corp.
Corp.
10-Yr.
30-Yr.
Bond
Bond
14 State &
Avg. For
------(Q-Q % Change)------
---Qtr.---
------------(SAAR)-----------
15 Home
A. Fed's Major
B.
C. GDP
D. Cons.
Local
Mtg.
Currency
Real
Price
Price
Bonds
Rate
$ Index
GDP
Index
Index 1.3
Action Economics
0.8 H
3.8 H
1.3 H
0.8
0.9 H
1.1
1.5
2.0
3.1
4.2
4.8
5.4
6.5
4.8
5.2
73.3
2.6
1.7
Woodworth Holdings
0.8 H
3.8 H
0.9
0.8
0.7
0.8
1.0
1.6
3.0
3.8
4.6
5.3
6.5
4.3
5.2
71.5
4.3
1.2
1.8
Bank of Toyko-Mitsubishi UFJ
0.8 H
3.8 H
0.9
0.8
0.7
0.8
0.9
2.0
3.4
4.4
5.1
5.3
6.5
4.6
5.9
68.0 L
2.6
2.9
2.0 2.7
J.W. Coons Advisors LLC
0.7
3.7
1.1
1.0 H
0.8
1.0
1.2
1.6
2.8
3.7
4.5
5.4
6.6
na
5.4
68.6
3.2
0.8
ClearView Economics
0.7
3.7
1.0
0.7
0.7
1.0
1.3
2.0
3.2
4.1
4.7
5.6
6.6
4.5
5.6
71.0
4.0
2.0
2.4
Wells Capital Management
0.5
3.6
0.5
0.5
0.5
0.6
1.1
1.6
3.0
4.2
4.7
5.3
6.1
4.4
5.8
74.4
3.2
2.0
2.1
MacroFin Analytics
0.5
3.8 H
0.9
0.7
0.7
0.9
1.1
1.5
2.9
4.0
4.0
5.1
7.2
4.6
5.2
77.5
2.2
1.3
1.0
Daiwa Securities America
0.5
3.5
0.8
0.6
0.6
0.7
0.9
1.8
3.0
4.0
4.8
5.6
6.7
4.0 L
5.7
72.0
2.5
1.6
1.6
Scotiabank
0.5
3.5
na
na
0.8
na
na
2.0
3.5
4.5 H
5.2
5.4
6.7
4.7
5.4
na
3.0
1.5
1.9
DePrince & Associates
0.4
3.4
1.2
0.5
0.5
0.6
0.8
1.5
2.7
3.8
4.4
5.5
6.5
4.5
5.5
78.1
1.8
2.2
UBS
0.3
na
0.8
na
0.6
na
na
2.5 H
3.2
3.8
4.4
na
na
na
na
na
2.8
1.6
Nat'l Assn. of Realtors
0.3
3.3
1.0
0.6
0.8
1.0
1.2
1.7
3.1
3.8
4.5
5.6
7.0
5.2
5.7
na
2.5
1.7
2.0
Wayne Hummer Investments
0.3
3.3
0.7
0.4
0.5
0.6
0.8
1.8
2.9
3.9
4.6
5.5
6.5
4.5
5.3
78.7
3.0
1.6
1.8
2.3 -0.6 L
Kellner Economic Advisers
0.3
3.3
0.4
0.4
0.4
0.5
0.7
1.4
3.0
4.0
4.8
5.8
7.4
5.2
5.9
74.0
0.0 L
1.5
1.8
RBS Securities
0.3
3.3
1.1
0.5
0.8
1.2 H
1.7 H
2.5 H
3.7 H
4.5 H
5.4 H
5.7
7.2
5.0
6.1 H
78.0
4.2
2.0
2.4
The Northern Trust Company
0.3
3.3
0.5
na
0.3
na
0.8
1.2
2.6
3.9
4.6
na
na
na
5.4
na
2.3
2.3
2.5
Naroff Economic Advisors
0.3
3.5
1.0
0.7
0.6
0.9
1.2
1.6
3.5
4.3
5.1
6.2
7.8 H
5.2
5.8
71.0
2.3
1.7
2.3 1.5
Russell Investments
0.3
3.3
0.6
0.3
0.2
0.5
0.8
1.4
2.7
3.6
4.5
5.2
6.2
4.1
5.2
73.4
3.1
1.3
Stone Harbor Investment Partners
0.3
3.3
0.5
0.5
0.3
0.5
0.9
1.8
3.0
4.0
4.8
5.3
7.5
na
5.5
70.0
3.2
2.4
2.4
Societe Generale
0.3
3.3
0.4
na
0.2
0.4
na
1.3
1.5 L
4.1
4.3
5.4
6.7
na
5.5
77.0
3.0
0.9
-0.5
Swiss Re
0.3
3.3
0.3 L
0.6
0.1 L
0.3 L
0.5 L
1.0 L
2.6
3.7
4.4
5.2
6.3
na
5.4
na
2.2
3.1
1.0
GLC Financial Economics
0.2
3.2
0.5
0.3
0.2
0.4
0.6
1.0 L
2.3
3.4
4.3
5.4
6.9
4.5
5.2
73.6
1.6
2.0
2.1
PNC Financial Services Corp.
0.2
3.3
0.4
0.3
0.2
0.3
0.5
1.0 L
2.5
3.6
4.4
5.3
6.5
4.8
5.4
72.0
3.0
1.8
2.2
RDQ Economics
0.2
3.3
0.4
0.3
0.5
0.7
0.8
1.3
2.9
4.5 H
5.3
5.8
7.0
5.1
6.0
72.0
2.3
2.6
2.8
Woodley Park Research
0.2
3.3
0.7
0.5
0.4
0.5
0.7
1.3
2.4
3.4
4.9
4.9
6.1
4.3
4.9
76.4
3.2
1.4
Barclays Capital
0.2
3.3
0.5
0.3
0.3
0.8
1.1
2.3
3.6
4.4
5.0
5.9
7.2
5.1
6.0
na
3.0
1.0
1.1 -0.6 L
Wells Fargo
0.2
3.3
0.5
0.3
0.4
0.5
0.6
1.3
2.8
3.8
4.6
5.6
6.8
4.8
5.4
80.3
1.8
1.0
Fannie Mae
0.2
3.3
na
na
0.2
na
1.4
na
na
3.7
4.3
5.2
na
na
5.9
na
3.2
0.6
1.3 1.0
Conning & Company
0.2
3.3
na
0.2 L
0.2
0.3 L
0.5 L
1.1
2.8
3.8
4.5
5.4
6.7
4.5
5.6
73.0
2.0
1.0
1.8
Thredgold Economic Assoc.
0.2
3.2
0.6
0.3
0.2
0.3 L
0.6
1.3
2.7
3.8
4.6
5.5
7.0
4.7
5.4
75.0
2.8
1.5
1.8
Mesirow Financial
0.2
3.2
0.5
0.3
0.2
0.5
1.0
1.5
2.4
3.8
4.5
5.6
7.0
4.8
5.5
76.4
3.0
0.6
1.0
Cycledata Corp.
0.2
3.2
0.5
0.2 L
0.2
0.4
0.6
1.1
2.6
3.6
4.3
5.5
6.6
4.5
5.2
74.0
2.2
2.0
2.5 2.5
SunTrust Banks
0.2
3.2
0.3 L
0.3
0.2
0.3 L
0.5 L
1.1
2.6
3.5
4.3
5.2
6.3
5.6 H
4.3 L
72.2
4.0
1.2
Nomura Securities, Inc.
0.2
3.3
0.4
0.2 L
0.2
0.3 L
0.5 L
1.6
3.4
3.7
4.4
5.1
5.8 L
na
5.3
79.0
2.9
0.9
1.1
Loomis, Sayles & Company
0.2
3.3
0.4
0.2 L
0.2
0.3 L
0.9
2.0
2.8
3.9
4.6
5.4
6.6
4.5
5.5
73.3
2.9
0.6
1.0
Goldman Sachs & Co.
0.2
3.3
0.4
na
0.2
na
na
1.0 L
2.2
3.0 L
3.7 L
4.5 L
na
na
5.0
na
2.0
0.4
0.6
Chmura Economics & Analytics
0.2
3.3
0.4
0.2 L
0.2
0.3 L
0.5 L
1.1
2.3
3.4
4.2
5.4
na
na
5.0
72.2
1.7
2.2
1.9
JPMorgan Privare Wealth Mgt.
0.2
3.2
0.6
0.3
0.2
0.3 L
0.5 L
1.1
2.5
3.6
4.3
5.3
6.4
4.7
5.3
73.8
2.7
1.3
1.6
Comerica Bank
0.1 L
3.3
0.7
0.3
0.3
0.6
1.0
1.4
3.0
4.0
4.7
5.7
7.1
4.6
5.6
82.0
4.5 H
2.0
1.2 2.3
Moody's Capital Markets
0.1 L
3.3
0.4
0.2 L
0.4
0.6
0.9
1.2
3.0
3.9
4.6
5.5
6.6
4.4
5.5
75.0
3.4
2.2
BMO Capital Markets
0.1 L
3.3
0.3 L
0.2 L
0.2
0.3 L
0.9
2.0
3.1
4.0
4.7
5.5
6.6
4.3
5.4
73.0
2.5
1.4
2.6
Moody's Economy.com
0.1 L
3.2
0.9
0.7
0.4
0.7
1.0
2.1
2.8
4.4
5.2
6.4 H
7.8 H
na
6.1 H
na
2.0
0.9
1.2
Economist Intelligence Unit
0.1 L
3.2
1.1
0.3
0.4
0.5
0.5 L
1.3
2.6
3.8
4.5
na
na
na
5.3
na
0.9
na
0.8
Argus Research
0.1 L
3.1 L
1.1
0.5
0.6
0.7
0.8
1.2
2.5
3.9
4.8
5.5
6.3
4.7
5.5
78.0
1.7
4.0 H
3.9 H 1.0
J.P. Morgan Chase
0.1 L
na
0.5
na
0.2
na
na
1.1
2.4
3.5
4.1
na
na
na
na
na
4.0
0.6
Banc of America-Merrill Lynch
0.1 L
na
0.4
na
0.2
na
na
1.5
2.8
4.2
4.8
na
na
na
na
na
3.3
0.0 L
0.2
Georgia State University
0.1 L
3.3
na
na
0.3
0.4
0.6
1.1
2.7
3.7
4.6
5.3
6.6
na
5.3
na
1.3
1.2
1.0
Standard & Poor's Corp.
0.1 L
3.2
0.8
0.4
0.3
0.4
0.5 L
1.1
2.7
3.8
na
5.5
6.8
4.9
5.4
83.4 H
1.6
1.5
1.5
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
October Consensus
0.3
3.3
0.7
0.4
0.4
0.6
0.8
1.5
2.8
3.9
4.6
5.4
6.7
4.7
5.4
74.6
2.7
1.6
1.6
Top 10 Avg.
0.6
3.7
1.1
0.7
0.7
0.9
1.3
2.1
3.4
4.3
5.1
5.8
7.3
5.1
5.9
79.2
3.8
2.6
2.7
Bottom 10 Avg.
0.1
3.2
0.4
0.2
0.2
0.3
0.5
1.1
2.3
3.5
4.2
5.1
6.3
4.3
5.0
70.8
1.4
0.6
0.4
September Consensus
0.4
3.4
0.8
0.5
0.5
0.7
1.0
1.6
2.9
4.0
4.7
5.6
7.0
4.8
5.6
76.4
2.8
1.5
1.6
Number of Forecasts Changed From A Month Ago: Down
17
13
33
20
28
25
27
29
27
32
29
32
29
19
26
25
21
14
14
Same
29
29
8
13
17
12
12
13
12
12
13
8
5
9
12
4
14
18
21
3
13
15
13
42 %
51 %
49 %
Up Diffusion Index
2 34 %
2 38 %
3 16 %
5 30 %
3 24 %
3 23 %
2 20 %
5 24 %
8 30 %
4 21 %
5 24 %
2 14 %
4 17 %
3 24 %
6 27 %
16 %
OCTOBER 1, 2009 BLUE CHIP FINANCIAL FORECASTS 7
Third Quarter 2010 Interest Rate Forecasts
Key Assumptions
----------------------------------------------------------------------Percent Per Annum -- Average For Quarter---------------------------------------------------------------
Blue Chip Financial Forecasts Panel Members
-------------------------------------Short-Term-----------------------------------1 Federal
2 Prime
3 LIBOR
4 Com.
5 Treas.
Funds
Bank
Rate
Paper
Bills
Rate
Rate
3-Mo.
1-Mo.
3-Mo.
6 Treas.
------------Intermediate-Term-----------
7 Treas.
8 Treas.
9 Treas.
Bills
Bills
Notes
Notes
6-Mo.
1-Yr.
2-Yr.
5-Yr.
10 Treas.
-----------------Long-Term------------------
11 Treas.
12 Aaa
13 Baa
Notes
Bond
Corp.
Corp.
10-Yr.
30-Yr.
Bond
Bond
14 State &
Avg. For
------(Q-Q % Change)------
---Qtr.---
------------(SAAR)-----------
15 Home
A. Fed's Major
B.
C. GDP
D. Cons.
Local
Mtg.
Currency
Real
Price
Price
Bonds
Rate
$ Index
GDP
Index
Index
Nat'l Assn. of Realtors
1.5 H
4.5 H
1.7
1.6
1.6
1.7
1.9
2.2
3.3
3.9
4.6
5.8
7.1
5.3
5.8
na
2.6
1.9
2.1
RBS Securities
1.3
4.3
2.4 H
1.7 H
1.7 H
2.3 H
2.7 H
3.2 H
4.1 H
4.8 H
5.6
5.9
7.4
5.2
6.5 H
82.0
4.5
2.2
2.8
Naroff Economic Advisors Action Economics
1.3 1.3
4.3 4.3
1.9 1.6
1.7 H 1.3
1.7 H 1.2
1.9 1.5
2.2 1.8
2.6 2.3
3.9 3.3
4.6 4.3
5.4 4.8
6.5 5.4
8.1 H 6.5
5.4 4.9
6.1 5.2
70.4 72.8
1.8 3.0
2.0 1.5
2.6 1.3
Bank of Toyko-Mitsubishi UFJ
1.3
4.3
1.5
1.4
1.2
1.3
1.4
2.3
3.2
4.2
4.9
5.3
6.5
4.5
5.7
66.0 L
3.1
2.6
2.2
J.W. Coons Advisors LLC
1.2
4.2
1.7
1.4
1.3
1.5
1.7
2.1
3.2
4.1
4.8
5.7
6.8
na
5.8
67.1
2.2
1.6
2.6
ClearView Economics
1.1
4.1
1.4
1.1
1.1
1.4
1.7
2.4
3.5
4.3
4.8
5.7
6.8
4.6
5.8
70.0
3.4
2.2
2.7
MacroFin Analytics
1.0
4.2
1.0
0.9
1.1
1.3
1.5
1.8
3.2
4.2
4.8
5.1
7.2
4.6
5.3
78.5
2.3
1.4
1.3
Daiwa Securities America
1.0
4.0
1.2
1.0
1.0
1.1
1.2
2.3
3.4
4.4
5.1
5.9
7.0
4.2 L
6.1
71.0
2.5
1.5
1.5
Woodworth Holdings
1.0
4.0
1.1
1.0
1.0
1.1
1.2
1.8
3.2
3.9
4.7
5.4
6.6
4.4
5.3
74.0
5.2 H
1.4
1.8
Scotiabank
1.0
3.8
na
na
1.5
na
na
2.6
3.8
4.7
5.3
5.5
6.5
4.6
5.5
na
2.5
1.5
2.0
Cycledata Corp.
0.8
3.8
1.2
0.8
0.8
1.0
1.2
1.7
3.0
4.1
4.8
5.6
6.7
4.6
5.9
74.0
2.0
2.0
2.5
Wells Capital Management
0.8
3.8
0.8
0.7
0.6
0.7
1.1
1.7
3.1
4.2
4.6
5.2
6.0
4.3
5.8
74.8
3.5
2.3
2.5
Stone Harbor Investment Partners
0.8
3.8
1.0
1.0
0.7
1.0
1.2
2.0
3.3
4.3
5.0
5.4
7.4
na
5.8
68.0
5.0
2.0
2.7
Wayne Hummer Investments
0.7
3.7
1.1
0.8
0.7
0.7
0.9
1.9
3.1
4.1
4.8
5.7
6.6
4.7
5.5
78.4
3.2
1.6
2.1
DePrince & Assoc.
0.7
3.7
1.3
0.8
0.7
0.8
1.1
1.8
2.9
3.9
4.5
5.6
6.6
4.5
5.7
78.7
1.8
2.2
2.4
GLC Financial Economics
0.7
3.7
1.0
0.8
0.7
0.8
1.0
1.4
2.6
3.7
4.5
5.9
7.5
4.8
5.8
73.8
1.6
2.1
2.6
UBS
0.6
na
1.1
na
0.9
na
na
2.8
3.3
3.9
4.5
na
na
na
na
na
3.0
1.6
1.6
Wells Fargo
0.6
3.8
0.8
0.6
0.7
0.8
0.9
1.5
2.9
3.9
4.7
5.6
6.8
4.8
5.5
81.0
2.1
1.3
1.5
Conning & Company
0.5
3.8
na
0.5
0.3
0.4
0.7
1.2
3.0
4.0
4.8
5.6
6.7
4.6
5.8
73.0
2.5
1.2
1.8
Georgia State University
0.5
3.6
na
na
0.8
1.0
1.2
1.6
2.8
3.9
4.8
5.4
6.8
na
5.4
na
1.4
1.4
2.1
Argus Research
0.5
3.5
1.8
1.0
1.2
1.2
1.3
1.9
2.6
4.1
5.0
5.5
6.3
4.8
5.5
79.2
1.0 L
4.0 H
3.4 H
The Northern Trust Company
0.5
3.5
1.0
na
0.8
na
1.2
1.5
2.7
4.0
4.8
na
na
na
5.5
na
2.5
2.3
2.5 1.9
JPMorgan Privare Wealth Mgt.
0.5
3.5
1.0
0.6
0.6
0.6
0.8
1.5
2.9
3.9
4.7
5.6
6.8
5.0
5.6
73.9
2.6
1.4
Thredgold Economic Assoc.
0.5
3.5
0.9
0.6
0.5
0.6
0.8
1.6
2.9
4.0
4.8
5.7
7.1
4.8
5.6
75.0
2.8
1.6
2.1
Chmura Economics & Analytics
0.5
3.5
0.7
0.5
0.5
0.5
0.8
1.3
2.5
3.5
4.3
5.4
na
na
5.3
70.4
2.3
2.3
2.9
Comerica Bank
0.4
3.5
1.0
0.5
0.5
0.9
1.3
1.7
3.3
4.2
4.8
5.8
7.0
4.6
5.8
84.0 H
4.4
1.1
1.2
Kellner Economic Advisers
0.4
3.4
0.5
0.5
0.5
0.6
0.8
1.6
3.2
4.2
5.0
6.0
7.6
5.2
6.1
73.0
1.0 L
1.6
1.8
Woodley Park Research
0.4
3.4
0.9
0.8
0.6
0.7
1.0
1.5
2.5
3.4
4.9
4.9
6.1
4.4
4.9
75.7
3.2
1.5
2.1
Moody's Capital Markets
0.4
3.5
0.8
0.5
0.6
0.7
1.2
1.7
3.2
3.9
4.6
5.5
6.4
4.3
5.5
75.1
2.7
2.3
2.5
Swiss Re
0.4
3.4
0.4
0.7
0.2 L
0.4
0.5 L
1.3
2.9
3.9
4.7
5.4
6.4
na
5.7
na
2.9
4.0
1.2
Barclays Capital
0.3
3.3
0.6
0.4
0.4
1.3
1.5
2.6
3.8
4.6
5.0
6.1
7.2
5.5
6.2
na
3.5
1.0
2.4
PNC Financial Services Corp.
0.3
3.3
0.5
0.4
0.3
0.4
0.6
1.1 L
2.6
3.7
4.5
5.4
6.6
4.9
5.5
73.0
3.0
1.8
2.2
Economist Intelligence Unit
0.3
3.4
1.3
0.5
0.4
0.6
0.8
1.4
2.7
3.9
4.7
na
na
na
5.6
na
1.8
na
0.8
Loomis, Sayles & Company
0.3
3.3
0.5
0.3
0.3
0.4
1.0
2.3
3.0
4.1
4.9
5.5
6.7
4.5
5.7
73.3
3.0
0.5
0.9
Russell Investments
0.3
3.3
0.6
0.4
0.3
0.6
0.9
1.6
3.0
3.8
4.7
5.4
6.3
4.2 L
5.2
73.2
3.3
1.3
1.5
Societe Generale
0.3
3.3
0.4
na
0.2 L
0.5
na
1.5
1.7 L
4.4
4.4
5.6
6.8
na
5.5
83.0
3.2
1.0
2.4
Moody's Economy.com
0.2
3.2 L
0.8
0.7
0.4
0.8
1.1
2.2
3.0
4.7
5.5
6.6 H
7.8
na
6.4
na
2.3
0.7
2.1
RDQ Economics
0.2
3.3
0.4
0.3
0.5
0.8
0.9
1.3
3.1
4.8 H
5.7 H
6.2
7.3
5.2
6.3
71.0
2.2
2.7
2.9
Fannie Mae
0.2
3.3
na
na
0.3
na
1.8
na
na
3.8
4.4
5.2
na
na
6.0
na
3.3
0.4 L
0.7
Mesirow Financial
0.2
3.2 L
0.6
0.3
0.3
0.6
1.0
1.6
2.6
4.0
4.6
5.6
7.0
4.9
5.6
75.9
3.4
0.4 L
0.6
SunTrust Banks
0.2
3.2 L
0.3 L
0.3
0.2 L
0.4
0.5 L
1.2
2.7
3.5
4.4
5.4
6.5
5.7 H
4.0 L
70.0
4.2
1.7
1.9
Nomura Securities, Inc.
0.2
3.3
0.4
0.2 L
0.2 L
0.3 L
0.5 L
1.8
3.5
3.8
4.5
5.1
5.8 L
na
5.3
80.0
2.4
0.8
1.0
Goldman Sachs & Co.
0.2
3.3
0.4
na
0.2 L
na
na
1.1 L
2.2
3.0 L
3.7 L
4.5 L
na
na
5.0
na
1.5
0.4 L
0.1 L
BMO Capital Markets
0.1 L
3.3
0.4
0.3
0.2 L
0.3 L
1.1
2.1
3.2
4.0
4.8
5.5
6.6
4.3
5.4
72.0
2.7
1.6
2.4
Banc of America-Merrill Lynch
0.1 L
na
0.4
na
0.2 L
na
na
1.7
2.9
4.3
4.9
na
na
na
na
na
3.3
1.8
2.6
Standard & Poor's Corp.
0.1 L
3.2 L
1.0
0.6
0.5
0.7
0.8
1.3
2.8
4.0
na
5.5
6.9
5.0
5.4
81.5
2.0
1.2
2.0
October Consensus
0.6
3.6
1.0
0.7
0.7
0.9
1.2
1.8
3.0
4.1
4.8
5.6
6.8
4.8
5.6
74.6
2.8
1.7
2.0
Top 10 Avg.
1.2
4.2
1.6
1.3
1.3
1.5
1.8
2.5
3.6
4.5
5.2
6.1
7.5
5.2
6.1
80.6
4.0
2.7
2.8
Bottom 10 Avg.
0.2
3.2
0.4
0.3
0.2
0.4
0.7
1.3
2.5
3.6
4.4
5.1
6.3
4.4
5.1
69.6
1.6
0.7
0.9
September Consensus
0.7
3.8
1.1
0.9
0.8
1.0
1.3
1.9
3.1
4.2
4.8
5.7
7.1
4.9
5.7
76.6
2.7
1.6
2.1
Number of Forecasts Changed From A Month Ago: Down
15
15
32
21
24
23
28
27
27
30
24
28
30
20
24
27
14
15
18
Same
26
26
8
12
17
11
10
12
11
13
15
11
5
7
11
5
14
18
21
Up
6
4
3
6
6
7
4
7
8
4
7
4
5
6
10
3
19
13
55 %
48 %
Diffusion Index
40 %
38 %
16 %
31 %
31 %
30 %
21 %
28 %
29 %
22 %
32 %
22 %
19 %
29 %
34 %
16 %
8 39 %
8 BLUE CHIP FINANCIAL FORECASTS OCTOBER 1, 2009
Fourth Quarter 2010 Interest Rate Forecasts
Key Assumptions
----------------------------------------------------------------------Percent Per Annum -- Average For Quarter---------------------------------------------------------------
Blue Chip Financial Forecasts Panel Members
-------------------------------------Short-Term-----------------------------------1 Federal
2 Prime
3 LIBOR
4 Com.
5 Treas.
Funds
Bank
Rate
Paper
Bills
Rate
Rate
3-Mo.
1-Mo.
3-Mo.
6 Treas.
------------Intermediate-Term-----------
7 Treas.
8 Treas.
9 Treas.
Bills
Bills
Notes
Notes
6-Mo.
1-Yr.
2-Yr.
5-Yr.
10 Treas.
-----------------Long-Term------------------
11 Treas.
12 Aaa
13 Baa
Notes
Bond
Corp.
Corp.
10-Yr.
30-Yr.
Bond
Bond
14 State &
Avg. For
------(Q-Q % Change)------
---Qtr.---
------------(SAAR)-----------
15 Home
A. Fed's Major
B.
C. GDP
D. Cons.
Local
Mtg.
Currency
Real
Price
Price
Bonds
Rate
$ Index
GDP
Index
Index
Naroff Economic Advisors
2.5 H
5.5 H
3.1
2.8 H
2.8 H
3.0
3.1
3.5
4.2
4.9
5.7
6.8 H
8.5 H
5.8 H
6.5
71.0
2.3
2.2
2.7
RBS Securities
2.4
5.4
3.5 H
2.8 H
2.8 H
3.4 H
3.7 H
3.8 H
4.5 H
5.0 H
5.8
6.1
7.5
5.3
6.8 H
85.0
4.5 H
2.4
3.0
Nat'l Assn. of Realtors
2.0
5.0
2.2
2.0
2.0
2.3
2.3
2.4
3.4
4.0
4.6
5.9
7.2
5.4
5.9
na
2.6
1.9
2.3
J.W. Coons Advisors LLC
1.9
4.9
2.6
2.2
1.9
2.2
2.4
2.8
3.8
4.6
5.1
6.1
7.2
na
6.2
67.9
1.9
1.9
2.5
Bank of Toyko-Mitsubishi UFJ
1.8
4.8
2.0
1.9
1.7
1.8
1.9
2.6
3.1
4.1
4.8
5.3
6.5
4.5
5.6
65.0 L
2.8
2.7
2.4
Scotiabank
1.8
4.8
na
na
2.5
na
na
3.2
3.9
5.0
5.3
5.5
6.5
4.6
5.7
na
2.0
1.8
2.0
ClearView Economics
1.7
4.7
2.0
1.7
1.6
1.8
2.1
2.8
3.8
4.5
5.0
5.9
7.0
4.8
6.0
69.5
3.4
2.2
2.7
Argus Research
1.7
4.7
2.0
1.1
1.4
1.5
1.7
2.2
2.8
4.3
5.2
5.5
6.3
4.8
5.5
81.3
1.1 L
3.6
4.7 H
MacroFin Analytics
1.5
4.8
1.2
1.0
1.6
1.7
1.8
2.0
3.5
4.3
4.9
5.1
7.3
4.6
5.5
79.5
2.5
1.4
1.4
Action Economics
1.5
4.5
1.9
1.5
1.6
1.9
2.2
2.6
3.5
4.4
4.9
5.3
6.3
4.9
5.2
72.8
3.2
1.9
1.6
Cycledata Corp.
1.5
4.5
1.9
1.6
1.5
1.7
1.9
2.4
3.8
4.9
5.6
6.6
7.5
5.4
6.5
74.0
1.3
2.0
2.5
Daiwa Securities America
1.5
4.5
1.7
1.5
1.5
1.6
1.7
2.8
3.9
4.8
5.4
6.3
7.3
4.5
6.5
70.0
2.7
1.5
1.5
Woodworth Holdings
1.5
4.5
1.6
1.5
1.5
1.6
1.7
2.3
3.5
4.0
4.8
5.3
6.5
4.5
5.2
80.0
4.3
1.5
1.9
Stone Harbor Investment Partners
1.3
4.3
1.5
1.5
1.2
1.4
1.9
2.6
3.8
4.8
5.5
5.7
7.3
na
6.3
68.0
2.3
2.6
3.3
The Northern Trust Company
1.2
4.2
1.5
na
1.3
na
1.7
1.8
2.7
4.2
4.8
na
na
na
5.7
na
3.2
2.9
3.1
Wells Capital Management
1.1
4.1
1.1
1.0
0.9
1.0
1.3
2.0
3.1
4.3
4.8
5.3
6.0
4.4
5.9
74.7
3.8
2.3
2.7
Wayne Hummer Investments
1.1
4.1
1.4
1.2
1.3
1.4
1.6
2.1
3.3
4.3
5.0
5.8
6.7
5.1
5.6
78.1
3.3
1.7
2.2
Comerica Bank
1.1
4.1
1.6
1.1
1.1
1.5
1.9
2.3
3.6
4.5
5.0
5.8
7.0
4.8
6.2
85.0 H
4.0
1.2
1.4
DePrince & Assoc.
1.1
4.1
1.6
1.3
1.2
1.3
1.6
2.3
3.1
4.1
4.5
5.8
6.7
4.7
5.8
79.5
1.9
2.2
2.4
Wells Fargo
1.0
4.5
1.4
0.8
1.3
1.4
1.5
1.8
3.0
4.0
4.8
5.7
6.9
4.9
5.6
81.2
2.2
1.6
1.8
GLC Financial Economics
1.0
4.0
1.3
1.1
1.0
1.1
1.3
1.7
2.8
3.9
4.7
6.3
7.9
5.0
6.2
74.5
2.2
1.4
2.8
Conning & Company
1.0
4.0
na
1.0
0.8
0.9
1.1
1.6
3.4
4.2
5.0
5.8
6.8
4.6
6.0
72.0
2.0
1.4
2.0
Georgia State University
1.0
4.0
na
na
1.3
1.5
1.7
2.1
3.0
4.0
4.9
5.5
6.9
na
5.6
na
1.6
1.4
2.1
Woodley Park Research
1.0
4.0
1.4
1.4
1.1
1.2
1.4
1.9
2.8
3.7
5.1
5.2
6.3
4.6
5.1
75.0
3.4
1.5
2.2
Chmura Economics & Analytics
0.9
3.9
1.1
1.0
0.9
0.9
1.1
1.5
2.7
3.6
4.4
5.4
na
na
5.3
68.3
3.6
1.8
1.9
Kellner Economic Advisers
0.9
3.9
1.0
1.0
1.1
1.2
1.4
1.8
3.4
4.4
5.2
6.2
7.8
5.4
6.3
72.0
1.5
1.8
2.0
UBS
0.9
na
1.4
na
1.1
na
na
2.9
3.5
4.0
4.6
na
na
na
na
na
3.3
1.6
0.5
Thredgold Economic Assoc.
0.8
3.8
1.2
0.9
0.8
0.8
1.2
1.9
3.2
4.2
4.9
5.8
7.3
4.9
5.7
75.0
2.8
1.7
2.1
PNC Financial Services Corp.
0.8
3.8
1.1
0.9
0.7
0.8
1.0
1.3
2.8
3.9
4.7
5.6
6.7
5.1
5.7
73.0
3.2
1.8
2.2
Moody's Economy.com
0.8
3.8
1.3
1.1
0.8
1.1
1.4
2.6
3.1
5.0
5.8
6.7
7.9
na
6.7
na
3.0
0.7
1.8
Economist Intelligence Unit
0.8
3.8
1.8
0.8
0.8
0.8
1.2
1.6
2.8
4.0
4.8
na
na
na
5.7
na
1.6
na
0.8
Moody's Capital Markets
0.8
3.8
1.3
0.9
0.9
1.1
1.4
1.8
3.2
4.0
4.6
5.4
6.3
4.3
5.6
75.2
2.9
2.3
2.4
JPMorgan Privare Wealth Mgt.
0.8
3.8
1.2
0.9
0.8
0.9
1.1
1.7
3.1
4.2
4.9
5.9
7.0
5.3
5.9
73.5
2.7
1.4
1.9
Swiss Re
0.8
3.8
0.8
1.0
0.6
0.7
0.8
1.8
3.3
4.2
4.9
5.6
6.6
na
6.0
na
3.1
4.3 H
1.3 2.3
Barclays Capital
0.8
3.8
0.6
0.8
0.7
0.2 L
2.0
2.7
3.9
4.6
5.1
6.2
7.3
5.6
6.4
na
3.5
0.9
Loomis, Sayles & Company
0.5
3.6
0.8
0.6
0.6
0.7
1.2
2.3
3.0
4.3
5.0
5.6
6.7
4.6
5.9
73.3
3.3
0.3
0.9
BMO Capital Markets
0.5
3.5
0.8
0.7
0.5
0.6
1.5
2.4
3.5
4.2
4.9
5.6
6.7
4.4
5.5
71.5
2.9
1.8
1.5
SunTrust Banks
0.5
3.5
0.6
0.7
0.5
0.6
0.6 L
1.4
2.7
3.8
4.4
5.4
6.5
5.8 H
4.2 L
69.8
4.2
2.3
2.7
Standard & Poor's Corp.
0.5
3.5
1.4
1.0
0.9
1.1
1.2
1.8
3.0
4.2
na
5.7
7.0
5.2
5.6
79.3
3.0
1.2
2.0
Societe Generale
0.4
3.7
0.4 L
na
0.4
0.7
na
1.8
2.0 L
4.5
4.6
5.8
6.8
na
5.8
85.0 H
2.7
1.0
1.5 1.8
Russell Investments
0.3
3.3
0.8
0.5
0.5
0.8
1.1
1.7
3.1
3.9
4.7
5.5
6.5
4.2 L
5.3
73.1
3.0
1.5
Nomura Securities, Inc.
0.3
3.3
0.4 L
0.3 L
0.3
0.4
0.6 L
2.0
3.7
3.9
4.5
5.1
5.9 L
na
5.4
82.0
2.6
0.7
1.0
Fannie Mae
0.2
3.3
na
na
0.3
na
2.1
na
na
3.9
4.5
5.3
na
na
6.0
na
3.4
0.3
0.5
RDQ Economics
0.2
3.3
0.5
0.4
0.6
0.9
1.0
1.4
3.2
5.0 H
6.0 H
6.5
7.5
5.2
6.5
70.0
2.4
2.8
3.0
Mesirow Financial
0.2
3.2 L
0.7
0.3 L
0.4
0.7
1.1
1.8
2.7
4.1
4.7
5.6
7.0
5.0
5.7
75.5
3.4
0.2 L
0.4
Goldman Sachs & Co.
0.2
3.3
0.4 L
na
0.2 L
na
na
1.2 L
2.3
3.0 L
3.7 L
4.5 L
na
na
5.0
na
1.5
0.5
-0.3 L
Banc of America-Merrill Lynch
0.1 L
na
0.6
na
0.5
na
na
2.0
3.0
4.4
5.0
na
na
na
na
na
3.0
1.5
2.3
October Consensus
1.0
4.1
1.4
1.2
1.1
1.3
1.6
2.1
3.2
4.2
4.9
5.7
6.9
4.9
5.8
74.9
2.8
1.7
2.0
Top 10 Avg.
1.9
4.9
2.3
1.9
2.0
2.1
2.4
3.0
3.9
4.8
5.5
6.4
7.7
5.4
6.5
81.8
3.8
2.8
3.1
Bottom 10 Avg.
0.3
3.4
0.6
0.6
0.4
0.6
1.0
1.5
2.6
3.8
4.4
5.2
6.3
4.4
5.2
69.1
1.6
0.7
0.8
September Consensus
1.1
4.2
1.5
1.2
1.2
1.4
1.7
2.3
3.4
4.4
5.0
5.8
7.2
5.0
5.9
76.6
2.8
1.7
2.1
Number of Forecasts Changed From A Month Ago: Down
14
16
26
17
23
25
23
24
26
24
20
26
22
16
24
25
18
16
16
Same
25
22
10
14
13
7
13
15
13
18
18
12
8
8
10
5
11
16
21
Up Diffusion Index
8 44 %
7 40 %
7 28 %
8 38 %
11 37 %
9 30 %
6 30 %
7 32 %
7 29 %
5 30 %
8 37 %
5 26 %
6 28 %
5 31 %
11 36 %
5 21 %
18
14
10
50 %
48 %
44 %
OCTOBER 1, 2009 BLUE CHIP FINANCIAL FORECASTS 9
First Quarter 2011 Interest Rate Forecasts
Key Assumptions
----------------------------------------------------------------------Percent Per Annum -- Average For Quarter---------------------------------------------------------------
Blue Chip Financial Forecasts Panel Members
-------------------------------------Short-Term-----------------------------------1 Federal
2 Prime
3 LIBOR
4 Com.
5 Treas.
Funds
Bank
Rate
Paper
Bills
Rate
Rate
3-Mo.
1-Mo.
3-Mo.
6 Treas.
------------Intermediate-Term-----------
7 Treas.
8 Treas.
9 Treas.
Bills
Bills
Notes
Notes
6-Mo.
1-Yr.
2-Yr.
5-Yr.
10 Treas.
-----------------Long-Term------------------
11 Treas.
12 Aaa
13 Baa
Notes
Bond
Corp.
Corp.
10-Yr.
30-Yr.
Bond
Bond
14 State &
Avg. For
------(Q-Q % Change)------
---Qtr.---
------------(SAAR)-----------
15 Home
A. Fed's Major
B.
C. GDP
D. Cons.
Local
Mtg.
Currency
Real
Price
Price
Bonds
Rate
$ Index
GDP
Index
Index
Naroff Economic Advisors
3.8 H
6.8 H
4.2
4.5 H
4.0 H
4.1 H
4.3 H
4.6 H
5.1 H
5.5 H
6.2 H
7.3 H
8.9 H
6.3 H
7.0
72.0
2.0
2.4
3.0
RBS Securities
3.4
6.4
4.4 H
3.7
3.6
4.1 H
4.3 H
4.3
4.8
5.2
6.0
6.3
7.6
5.4
7.1 H
88.0
4.6 H
2.9
3.2
J.W. Coons Advisors LLC
2.6
5.6
3.2
2.7
2.5
2.7
3.0
3.3
4.2
4.8
5.3
6.3
7.4
na
6.5
68.4
1.9
1.8
2.5
Nat'l Assn. of Realtors
2.3
5.3
2.4
2.2
2.2
2.4
2.5
2.7
3.5
4.1
4.6
5.8
7.1
5.3
5.9
na
2.8
2.0
2.3 3.0
ClearView Economics
2.2
5.2
2.5
2.1
2.1
2.3
2.5
3.1
4.0
4.7
5.1
6.1
7.2
4.9
6.3
69.0
3.2
2.4
Action Economics
2.0
5.0
2.3
2.0
2.0
2.1
2.5
2.9
3.7
4.5
5.0
5.3
6.2
4.9
5.1
72.3
3.4
4.1
1.7
Argus Research
2.0
5.0
2.0
1.2
1.7
1.8
1.9
2.4
2.9
4.6
5.3
5.5
6.3
4.8
5.5
82.0
1.8
3.2
4.3 H
Comerica Bank
2.0
5.0
2.5
2.0
1.9
2.2
2.7
3.0
3.9
4.8
5.3
6.0
7.2
5.0
6.6
86.0
4.0
1.3
1.4
MacroFin Analytics
1.8
4.9
1.3
1.1
1.8
1.9
2.0
2.4
3.6
4.5
5.0
5.1
7.3
4.6
5.6
80.0
2.5
1.5
1.5
Bank of Toyko-Mitsubishi UFJ
1.8
4.8
2.0
1.9
1.7
1.8
1.9
2.6
3.1
4.1
4.8
5.3
6.5
4.5
5.6
65.0 L
3.4
2.7
2.4
Stone Harbor Investment Partners
1.8
4.8
2.0
2.0
1.6
1.8
2.3
3.0
4.3
5.1
5.7
6.0
7.6
na
6.6
70.0
3.0
2.0
3.0
DePrince & Associates
1.6
4.6
1.9
1.8
1.7
1.8
2.1
2.8
3.5
4.3
4.6
6.0
6.9
4.8
6.0
80.4
2.3
2.2
2.4
Cycledata Corp.
1.5
4.5
1.9
1.6
1.5
1.7
1.9
2.4
3.8
4.9
5.6
6.6
7.5
5.4
6.5
73.0
1.3
2.0
2.5
Daiwa Securities America
1.5
4.5
1.7
1.5
1.5
1.6
1.7
2.8
3.9
4.8
5.4
6.3
7.3
4.5
6.5
70.0
2.6
1.5
1.5
Woodworth Holdings
1.5
4.5
1.6
1.5
1.5
1.6
1.7
2.3
3.5
4.0
4.8
5.3
6.5
4.5
5.2
80.0
4.3
1.5
1.9
Conning & Company
1.5
4.5
na
1.5
1.3
1.4
1.6
1.8
3.6
4.5
5.2
6.0
6.9
4.7
6.2
72.0
2.0
1.6
2.0
Woodley Park Research
1.5
4.5
1.9
2.0
1.6
1.6
1.9
2.3
3.1
3.9
5.3
5.5
6.6
4.7
5.3
74.3
2.7
1.8
2.4
PNC Financial Services Corp.
1.4
4.4
1.8
1.5
1.3
1.4
1.6
1.8
3.1
4.1
4.9
5.8
6.8
5.3
5.9
74.0
na
na
na
Georgia State University
1.4
4.4
na
na
1.8
1.9
2.1
2.5
3.1
4.1
4.9
5.6
6.9
na
5.7
na
1.7
1.8
2.4
Wells Capital Management
1.4
4.4
1.4
1.3
1.1
1.1
1.5
2.2
3.2
4.3
4.8
5.3
6.0
4.4
5.9
74.5
4.3
2.6
3.2
Chmura Economics & Analytics
1.3
4.3
1.5
1.4
1.3
1.4
1.4
1.8
2.9
3.7 L
4.6
5.4
na
na
5.5
67.3
3.0
2.0
2.3
Wells Fargo
1.3
5.3
2.1
1.0
2.0
2.1
2.2
2.2
3.1
4.1
4.9
5.9
7.1
5.0
5.7
82.4
2.7
1.8
2.2
Wayne Hummer Investments
1.3
4.3
1.5
1.4
1.5
1.6
1.8
2.3
3.5
4.7
5.3
5.9
6.7
5.2
5.7
78.6
3.4
1.8
2.3
Kellner Economic Advisers
1.3
4.3
1.4
1.5
1.4
1.4
1.7
2.1
3.6
4.6
5.6
6.6
8.0
5.4
6.8
70.0
2.0
2.0
2.4
Moody's Capital Markets
1.3
4.3
1.8
1.4
1.4
1.6
1.8
2.0
3.4
4.2
4.6
5.5
6.4
4.3
5.8
75.5
2.2
2.3
2.4
Swiss Re
1.3
4.3
1.4
1.5
1.1
1.2
1.5
2.3
3.6
4.4
5.1
5.8
6.8
na
6.3
na
3.4
4.7 H
1.3
SunTrust Banks
1.3
4.3
1.0
1.1
1.2
1.3
1.4
2.1
3.1
4.2
4.5 L
5.6
6.7
5.9
4.8 L
68.4
3.8
3.4
3.6
Moody's Economy.com
1.2
4.2
1.7
1.5
1.2
1.6
1.9
3.0
3.3
5.1
5.9
6.8
7.9
na
6.8
na
3.8
1.6
1.9
Thredgold Economic Assoc.
1.1
4.1
1.5
1.2
1.1
1.2
1.5
2.2
3.5
4.4
5.1
5.9
7.4
5.0
5.9
75.0
2.8
1.8
2.1
Societe Generale
1.0
4.3
0.5 L
na
0.9
1.1
na
2.3
2.4 L
4.7
4.8
5.0 L
6.8
na
5.8
88.0 H
2.7
1.2
1.4
Economist Intelligence Unit
1.0
4.0
2.0
0.9
0.9
1.0
1.3
1.8
2.9
4.0
4.8
na
na
na
5.7
na
0.6 L
na
1.6
GLC Financial Economics
1.0
4.0
1.3
1.1
1.0
1.1
1.3
1.6 L
2.8
3.9
4.7
6.3
7.9
5.0
6.1
75.6
2.7
2.0
3.0
BMO Capital Markets
1.0
4.0
1.3
1.2
1.0
1.2
1.7
2.6
3.6
4.3
5.0
5.7
6.8
4.5
5.6
71.0
3.0
1.9
1.8
Standard & Poor's Corp.
0.9
3.9
1.9
1.5
1.4
1.6
1.7
2.3
3.3
4.4
na
5.8
7.1
5.4
5.8
77.3
3.3
1.3
1.9
JPMorgan Privare Wealth Mgt.
0.8
3.8
1.3
0.9
0.8
0.9
1.1
1.7
3.2
4.2
4.9
5.9
7.1
5.3
5.9
73.2
2.5
1.5
2.0
Fannie Mae
0.7
3.6
na
na
0.7
na
2.4
na
na
4.0
4.6
5.3
na
na
6.1
na
4.0
0.5
0.1 L
Loomis, Sayles & Company
0.6
3.7
0.9
0.7
0.7
0.8
1.4
2.4
3.1
4.3
5.0
5.6
6.7
4.5
5.9
73.3
2.5
0.5
1.0
Nomura Securities, Inc.
0.5
3.5
0.7
0.6
0.5 L
0.6 L
0.9 L
2.3
3.9
4.0
4.6
5.1
5.6 L
na
5.5
82.0
3.2
1.0
0.9
Russell Investments
0.4
3.4
1.0
0.7
0.7
0.9
1.3
1.9
3.2
4.0
4.8
5.6
6.5
4.2 L
5.4
73.0
3.0
1.9
2.0
Mesirow Financial
0.2 L
3.2 L
0.8
0.3 L
0.5 L
0.9
1.4
2.0
2.8
4.2
4.8
5.7
7.1
5.1
5.8
75.0
4.0
0.4 L
0.1 L
October Consensus
1.5
4.5
1.8
1.6
1.5
1.7
1.9
2.5
3.5
4.4
5.1
5.8
7.0
5.0
5.9
75.2
2.9
2.0
2.1
Top 10 Avg.
2.4
5.4
2.8
2.5
2.4
2.6
2.9
3.3
4.1
5.0
5.6
6.4
7.7
5.5
6.7
82.7
4.0
3.1
3.1
Bottom 10 Avg.
0.7
3.7
1.0
0.8
0.8
1.0
1.3
1.8
2.9
4.0
4.6
5.3
6.3
4.5
5.3
69.1
1.8
1.1
1.1
September Consensus
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Number of Forecasts Changed From A Month Ago: Down
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Same
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
Up
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
na %
Diffusion Index
10 BLUE CHIP FINANCIAL FORECASTS OCTOBER 1, 2009
International Interest Rate And Foreign Exchange Rate Forecasts
United States Blue Chip Forecasters Scotiabank Deutsche Bank AG WestLB ING Financial Markets Mizuho Research Institute
3 Mo. Dollar Rate In 3 Mo. In 6 Mo. In 12 Mo. 0.40 0.65 1.60 na na na 0.50 0.50 0.75 0.40 0.60 1.40 0.30 0.30 0.30
10 Yr. Gov't Bond Yield % In 3 Mo. In 6 Mo. In 12 Mo. 3.75 4.25 4.70 na na na 3.60 4.00 4.50 3.80 4.00 4.40 3.50 3.60 3.70
Fed's Major Currency $ Index In 3 Mo. In 6 Mo. In 12 Mo. na na na na na na 78.0 78.0 80.0 83.8 86.7 88.9 75.5 76.1 77.5
October Consensus
0.40
0.51
1.01
3.66
3.96
4.33
79.1
80.3
82.1
High Low Last Months Avg.
0.50 0.30 0.48
0.65 0.30 0.55
1.60 0.30 0.81
3.80 3.50 3.73
4.25 3.60 4.03
4.70 3.70 4.39
83.8 75.5 78.4
86.7 76.1 79.7
88.9 77.5 82.7
Japan Blue Chip Forecasters Scotiabank Deutsche Bank AG WestLB ING Financial Markets Mizuho Research Institute
3 Mo. Yen Rate In 3 Mo. In 6 Mo. In 12 Mo. 0.30 0.40 0.60 na na na 0.50 0.50 0.60 0.50 0.50 0.55 0.47 0.43 0.38
10 Yr. Gov't Bond Yield % In 3 Mo. In 6 Mo. In 12 Mo. 1.40 1.40 1.60 na na na 1.40 1.50 1.60 1.60 1.70 1.90 1.35 1.35 1.40
In 3 Mo. 95.0 na 95.0 90.0 90.0
Yen/USD In 6 Mo. In 12 Mo. 92.0 88.0 na na 95.0 100.0 95.0 105.0 92.0 94.0
October Consensus
0.44
0.46
0.53
1.44
1.49
1.63
92.5
93.5
96.8
High Low Last Months Avg.
0.50 0.30 0.48
0.50 0.40 0.46
0.60 0.38 0.56
1.60 1.35 1.43
1.70 1.35 1.49
1.90 1.40 1.63
95.0 90.0 96.5
95.0 92.0 97.5
105.0 88.0 100.0
United Kingdom Blue Chip Forecasters Scotiabank Deutsche Bank AG WestLB ING Financial Markets Mizuho Research Institute
3 Mo. Sterling Rate In 3 Mo. In 6 Mo. In 12 Mo. 0.50 0.80 1.20 na na na 0.80 0.90 1.25 0.70 0.90 2.15 0.85 0.85 0.80
10 Yr. Gilt Yields % In 3 Mo. In 6 Mo. In 12 Mo. 3.80 4.10 4.50 na na na 3.80 4.00 4.25 3.80 3.90 4.50 3.80 3.85 3.90
USD/Pound Sterling In 3 Mo. In 6 Mo. In 12 Mo. 1.72 1.74 1.76 na na na 1.73 1.73 1.75 1.68 1.69 1.65 na na na
October Consensus
0.71
0.86
1.35
3.80
3.96
4.29
1.71
1.72
1.72
High Low Last Months Avg.
0.85 0.50 0.84
0.90 0.80 0.93
2.15 0.80 1.48
3.80 3.80 3.80
4.10 3.85 3.96
4.50 3.90 4.30
1.73 1.68 1.72
1.74 1.69 1.73
1.76 1.65 1.75
Switzerland Blue Chip Forecasters Scotiabank Deutsche Bank AG WestLB ING Financial Markets Mizuho Research Institute
3 Mo. Franc Rate % In 3 Mo. In 6 Mo. In 12 Mo. 0.30 0.40 0.70 na na na 0.30 0.40 0.65 0.30 0.30 0.45 na na na
10 Yr. Gov't Bond Yield % In 3 Mo. In 6 Mo. In 12 Mo. 2.00 2.30 2.50 na na na 2.00 2.25 2.50 2.20 2.40 2.55 na na na
In 3 Mo. 1.03 na 1.05 1.12 na
CHF/USD In 6 Mo. In 12 Mo. 1.02 1.01 na na 1.05 1.03 1.16 1.24 na na
October Consensus
0.30
0.37
0.60
2.07
2.32
2.52
1.07
1.08
1.09
High Low Last Months Avg.
0.30 0.30 0.32
0.40 0.30 0.37
0.70 0.45 0.60
2.20 2.00 2.03
2.40 2.25 2.25
2.55 2.50 2.52
1.12 1.03 1.07
1.16 1.02 1.08
1.24 1.01 1.09
Canada Blue Chip Forecasters Scotiabank Deutsche Bank AG WestLB ING Financial Markets Mizuho Research Institute
3 Mo. Dollar Rate In 3 Mo. In 6 Mo. In 12 Mo. 0.55 0.90 1.60 na na na 0.70 0.80 0.90 0.45 0.45 1.40 na na na
10 Yr. Gov't Bond Yield % In 3 Mo. In 6 Mo. In 12 Mo. 3.50 4.00 4.40 na na na 3.70 3.90 4.50 3.80 4.00 4.35 na na na
In 3 Mo. 0.96 na 1.07 1.08 na
CAD/USD In 6 Mo. In 12 Mo. 0.97 1.00 na na 1.07 1.10 1.14 1.24 na na
October Consensus
0.57
0.72
1.30
3.67
3.97
4.42
1.04
1.06
1.11
High Low Last Months Avg.
0.70 0.45 0.70
0.90 0.45 0.78
1.60 0.90 0.92
3.80 3.50 3.72
4.00 3.90 4.03
4.50 4.35 4.52
1.08 0.96 1.09
1.14 0.97 1.11
1.24 1.00 1.15
OCTOBER 1, 2009 BLUE CHIP FINANCIAL FORECASTS 11
International Interest Rate And Foreign Exchange Rate Forecasts
Australia 3 Mo. Dollar Rate In 3 Mo. In 6 Mo. In 12 Mo. 3.40 3.60 3.90 na na na 3.40 3.50 3.75 na na na na na na
Blue Chip Forecasters Scotiabank Deutsche Bank AG WestLB ING Financial Markets Mizuho Research Institute
10 Yr. Gov't Bond Yield % In 3 Mo. In 6 Mo. In 12 Mo. 5.50 5.60 5.80 na na na 5.50 5.60 5.90 na na na na na na
In 3 Mo. 0.88 na 0.86 0.89 na
USD/AUD In 6 Mo. In 12 Mo. 0.90 0.94 na na 0.88 0.90 0.85 0.82 na na
October Consensus
3.40
3.55
3.83
5.50
5.60
5.85
0.88
0.88
0.89
High Low Last Months Avg.
3.40 3.40 3.40
3.60 3.50 3.50
3.90 3.75 3.78
5.50 5.50 5.50
5.60 5.60 5.60
5.90 5.80 5.85
0.89 0.86 0.86
0.90 0.85 0.86
0.94 0.82 0.87
Eurozone 3 Mo. Euro Rate In 3 Mo. In 6 Mo. In 12 Mo. 0.80 1.00 1.60 na na na 1.00 1.00 1.35 0.80 1.10 1.35 0.70 0.60 0.60
Blue Chip Forecasters Scotiabank Deutsche Bank AG WestLB ING Financial Markets Mizuho Research Institute
10 Yr. Euro Bond Yield % In 3 Mo. In 6 Mo. In 12 Mo. 3.40 3.50 3.80 na na na 3.60 3.65 3.95 3.50 3.60 3.80 na na na
In 3 Mo. 1.50 na 1.45 1.55 1.44
USD/EUR In 6 Mo. In 12 Mo. 1.53 1.58 na na 1.50 1.55 1.52 1.40 1.43 1.40
October Consensus
0.83
0.93
1.23
3.50
3.58
3.85
1.49
1.50
1.48
High Low Last Months Avg.
1.00 0.70 0.93
1.10 0.60 0.96
1.60 0.60 1.23
3.60 3.40 3.50
3.65 3.50 3.58
3.95 3.80 3.85
1.55 1.44 1.43
1.53 1.43 1.43
1.58 1.40 1.44
10 Yr. Gov't Bond Yields % Germany Blue Chip Forecasters Scotiabank West LB ING Financial Markets Mizuho Research Institute
In 3 Mo. 3.40 3.30 3.50 3.45
France
In 6 Mo. In 12 Mo. In 3 Mo. 3.50 3.80 3.70 3.35 3.65 3.50 3.60 3.80 3.75 3.50 3.55 3.75
Italy
In 6 Mo. In 12 Mo. In 3 Mo. 3.80 4.00 4.10 3.55 3.85 4.10 3.85 4.05 4.20 3.80 3.85 4.35
Spain
In 6 Mo. In 12 Mo. In 3 Mo. 4.30 4.50 4.00 4.15 4.45 3.80 4.30 4.50 4.00 4.35 4.35 4.10
In 6 Mo. In 12 Mo. 4.10 4.20 3.85 4.15 4.10 4.30 4.10 4.15
October Consensus
3.41
3.49
3.70
3.68
3.75
3.94
4.19
4.28
4.45
3.98
4.04
4.20
High Low Last Months Avg.
3.50 3.30 3.41
3.60 3.35 3.49
3.80 3.55 3.70
3.75 3.50 3.69
3.85 3.55 3.74
4.05 3.85 3.91
4.35 4.10 4.19
4.35 4.15 4.26
4.50 4.35 4.40
4.10 3.80 3.98
4.10 3.85 4.04
4.30 4.15 4.18
Consensus Forecasts 10-year Bond Yields vs U.S. Yield Japan United Kingdom Switzerland Canada Australia Germany France Italy Spain Eurozone
Current -2.07 0.31 -1.30 0.02 2.03 -0.07 0.18 0.65 0.44 0.48
In 3 Mo. -2.23 0.14 -1.60 0.00 1.84 -0.25 0.01 0.53 0.31 -0.16
In 6 Mo. -2.48 0.00 -1.65 0.00 1.64 -0.48 -0.21 0.31 0.07 -0.38
In 12 Mo. -2.70 -0.04 -1.81 0.09 1.53 -0.63 -0.39 0.12 -0.12 -0.48
Consensus Forecasts 3 Mo. Interest Rates vs U.S. Rate Japan United Kingdom Switzerland Canada Australia Eurozone
Current -0.27 0.05 -0.33 -0.12 3.02 0.00
In 3 Mo. 0.04 0.31 -0.10 0.17 3.00 0.43
In 6 Mo. -0.97 0.35 -0.15 0.20 3.04 0.41
In 12 Mo. -0.48 0.34 -0.41 0.29 2.81 0.21
12 BLUE CHIP FINANCIAL FORECASTS OCTOBER 1, 2009
Viewpoints:
A Sampling of Views on the Economy, Financial Markets and Government Policy Excerpted from Recent Reports Issued by our Blue Chip Panel Members and Others
Tracking The Bounce Following the weaker-than-expected numbers on home sales and durable goods, the risks to our 3% GDP forecast for 2009Q3 again look roughly balanced. While none of the downside surprises were large by themselves, what caught my eye is the fact that all measures of bigticket demand except auto sales (which benefited from cash-forclunkers) have flattened or declined in the past 1-2 months after significant gains in Q2. This could well mean that the earlier gains were overstated by a bounce from the financial disruptions before April. Suppose that “planned” big-ticket demand was $100 in Q4, $90 in Q1, $90 in Q2, and $90 in Q3. But also suppose that $10 of planned demand wasn’t financeable in Q1 because of credit market disruptions and had to be delayed until Q2. In that case, observed sales would be been $100 in Q4, $80 in Q1, $100 in Q2, and $90 in Q3. This would create the erroneous impression of a sharp rebound in big-ticket demand in Q2, followed by a renewed drop in Q3, when in fact demand was flat all along. While this example is clearly a caricature, it will be important to track the big-ticket demand data in coming months to see how important a factor the underlying mechanism might have been. Growth is likely to stay around 3% in Q4, but we still expect a renewed slowdown in 2010 as the economy loses the temporary boost from fiscal stimulus and the inventory cycle. By our estimates, the impact of these factors will go from 4 percentage points in 2009H2 to around 0 in 2010H2. This means that underlying final demand needs to accelerate by 4 percentage points over the next year to keep the economy growing at the same pace. Some acceleration is likely, but I don’t expect anything close to 4 percentage points given the continued weakness in household income, the upward pressure on the saving rate, and all the other headwinds on final demand in a post-bubble economy. Our most out-of-consensus view remains the call for a further sharp slowdown in core CPI inflation to around 0% by late 2010. The rent and owners’ equivalent rent (OER) indexes, which together account for nearly 40% of the total core, are important to this view. Rent and OER inflation is highly sensitive to the rental vacancy rate, which currently stands at a historical record of 10.6% and still seems to be rising as more foreclosed homes end up on the rental market. As a result, rent and OER look set for outright declines in 2010 (the 3-month annualized rate is already below 0.5%). That would go a long way to push core CPI inflation toward zero, supporting our call for no Fed rate hikes through the end of 2010. th
So how should we interpret the September 25 Wall Street Journal article and Chicago speech by Fed Governor Kevin Warsh, and his statement that he “…would hazard the view that prudent risk management indicates that policy likely will need to begin normalization before it is obvious that it is necessary, possibly with greater force than is customary”? Although this clearly sounds hawkish, I don’t think it is such a strong signal. In the speech (though not the WSJ article), Warsh further elaborates with the following sentence: “In my view, if policymakers insist on waiting until the level of real activity has plainly and substantially returned to normal--and the economy has returned to selfsustaining trend growth--they will almost certainly have waited too long.” Warsh simply seems to be saying that a) the tightening process needs to have started by the time the unemployment gets back to the Fed’s estimate of the sustainable rate and b) when the hikes come, they are likely to be faster than the 25bp every 6 weeks seen in 2004-2006. Most people would agree with this, and given how far the unemployment rate is from a normal level, it doesn't mean that rate hikes are likely anytime soon. One increasingly popular counterargument against our Fed view is that monetary policy might become more reactive to asset bubbles in the
future. While a standard “Taylor rule” might say that the funds rate “should” be deeply negative, the argument goes, it’s time to move away from monetary policy rules that don’t take into account potential asset price misalignments. What should we make of this? I agree that Fed officials should (and probably will) pay more attention to asset price misalignments in the future than they have in the past, i.e. the Fed’s reaction function might well change. But I don’t think this argument is very relevant at the moment, for two reasons: For policymakers to worry about a “bubble,” a big asset price gain isn’t enough. You also need some evidence that valuation levels are sufficiently out of line with standard “fair value” metrics to send a reliable signal to policymakers. I am not aware of any market where this is close to being the case. As research at the Bank for International Settlements showed in the years leading up to the crisis, overvalued asset prices are most dangerous when they are accompanied by a credit boom. The experience of the past decade is a great example of this—while the bursting of the unleveraged stock market bubble of the 1990s had few effects on the financial system, the bursting of the leveraged housing bubble of the 2000s caused the biggest financial crisis since the 1930s. This is important to the re-emerging “bubble” debate because right now, credit is still contracting across the board. That’s another reason why it is very premature to expect Fed officials to deviate from a focus on the real economy in favor of “bubble busting” in my view, even if their reaction function ultimately moves in that direction. Jan Hatzius, Goldman Sachs, New York, NY Can Pickup Persist? Hardly a day goes by without another sign that an economic recovery is underway. Looking at a basket of individual indicators, in July and again in August, there appeared to be a bottoming in the composite coincident indicators index, which includes some key components used by the National Bureau of Economic Research (NBER) Business Cycle Dating Committee to help identify business cycle peaks and troughs. Moreover, with the leading economic indicators (LEI) index up for the fifth straight month in August, more good news on coincident indicators likely lies ahead. In this setting, we remain comfortable with our forecasts of quarterly annualized real GDP growth of 2.5% in Q309, 3.0% in Q409, and 2.6% in calendar 2010. Recessions are started for a variety of reasons in different business cycles; however, exits from cyclical downturns have much more in common. In the public sector, there are countercyclical monetary and fiscal policy responses once the downturn becomes reasonably obvious. In the private sector, firms slashing labor, inventories, and capex eventually stop doing so once they have reduced those inputs into better alignment with below-normal output and sales levels. Households naturally become more cautious during a recession, as they postpone some expenditures and typically raise their savings rate. However, legislated tax cuts and Fed-induced interest rate reductions stimulate consumer spending, and at some point, households become more satisfied with a higher savings level commensurate with their changed economic and financial circumstances. In the second half of 2009, this history is starting to repeat itself. Countercyclical monetary policy has played a pivotal role in the recent recession as the Fed addressed an unprecedented financial system crisis and credit crunch with an also unprecedented surge in its balance sheet. The accompanying succor for the global financial markets has been evidenced in the sharp compression of yields versus Treasury rates in the US mortgage-linked and corporate bond markets. Note: From a funds flow perspective, the Fed has been (continued on next page)
OCTOBER 1, 2009 BLUE CHIP FINANCIAL FORECASTS 13
Viewpoints
A Sampling of Views on the Economy, Financial Markets and Government Policy Excerpted from Recent Reports Issued by our Blue Chip Panel Members and Others
buying mortgage-linked, agency, and Treasury securities from sellers who have directed part of those proceeds to the corporate bond market.)
in Q209, when real final sales edged up at a 0.4% annual rate after falling at a 3.9% annual rate over the three previous quarters.
Fiscal policy stimulus has also been unprecedented. Federal income tax cuts and higher transfer payments started to boost after-tax, disposable personal incomes in H109, and more of the planned stimulus on the spending side of the ledger has started to come through in Q309.
While cutting jobs, capex, and inventories made sense in response to slumping product demand, continuing to do so once demand stabilizes starts to raise market share and competition-related risks. Firms apparently already are starting to appreciate that the rapid pace of inventory liquidation earlier this year now entails growing risks of losing sales due to inadequate inventories of goods for sale. And continuing to delay addressing critical capital replacement needs entails growing competitive cost disadvantages versus those domestic and foreign competitors that have forged ahead with the adoption of the latest cost-saving technologies. Thus, capex orders have been just about stabilizing even at very low industrial capacity utilization rates. In addition, headcounts can be cut too much, with negative consequences for retaining talent and maintaining quality of services for customers.
While countercyclical public policies have been playing a powerful stabilizing role so far this year, there are limits to how far policymakers can proactively raise the Federal deficit and the Fed’s balance sheet. Such actions are necessary to initiate a recovery. However, there must be follow-through from households— by far the largest element of aggregate demand. And that follow-through reflects two critical considerations—incomes and the personal saving rate. Although the personal saving rate has risen, as it usually does during recessions, it remains comparatively low versus its longer-term history. Thus, an ongoing debate is whether American consumers must save still more to reduce debt and build financial assets in the wake of the sizable declines, on balance, in the prices of stocks and residential real estate in recent years. Our view has been that the approximate 3.0 percentage point upward personal saving rate adjustment from its 2005 level of just 1.4%—the lowest calendar average level in the past half century—to around 4.4% in H109 represents about as much adjustment as should occur, at least on a multi-quarter measurement basis. That is because our research indicates that the net worth (NW)/disposable personal income (DPI) ratio and interest rates are much more tightly correlated with savings behavior than is the unemployment rate, which has increased to almost 10%. Recently, our estimated personal saving rate model with both NW/DPI and the three-month Treasury bill rate as explanatory variables was consistent with a Q209 personal saving rate of 4.8% versus the actual reported 5.0%. Our saving rate model suggests that the personal saving rate has remained much less than in past similarly serious recessions for two main reasons. First, relatively low interest rates have been limiting interest income—a comparatively highly-saved form of personal income. Also, the NW/DPI ratio, despite being at around its lowest level of the current decade, still has been higher than in past serious recessions. The other critical consideration for consumer spending is income formation. In H109, household purchasing power was boosted by Federal income tax cuts and higher transfer payments (eg, a 5.8% Social Security cost-of-living adjustment). These constituted a one-time permanent boost to the DPI level but just a temporary booster of DPI growth, unless there are further tax cuts, for example. In H209 and 2010, the key to income formation will be aggregate wages and salaries—53.5% of overall pretax personal income last year. After falling sharply during most of H109, wage and salary disbursements edged up in July as job losses slowed and average hourly earnings continued to grow, albeit at a slower rate than before the recession. Labor market weakness should continue to fade. Gross job losses still exceed gross hiring. However, hiring levels rose somewhat in July. Moreover, layoffs have been declining, with the latest four-week moving average of 554,000 weekly initial claims for state unemployment insurance in the week ended September 19 being the lowest since January. As signs of more stable product demand persist, there should be fewer firms incrementally reducing their headcounts, and layoffs should fall further and closer to already stabilizing gross hiring levels. Note: One major sign of stabilizing product demand already has been reported
Firms also are influenced by pricing power, which will remain limited with still abundant spare productive capacity in the global economy. However, the related weakness in consumer prices over the past year has represented a redistribution of overall current dollar national income to the household sector. And American consumers will play a critical role in heading off a relapse into another recession in 2010. Maury Harris, UBS, New York, NY Reverse Repos -- A Form of Tightening? The Fed has started to make plans for arranging reverse repurchase agreements with primary dealers (and possibly other counterparties) in order to drain the abundant volume of reserves from the banking system. Some observers have suggested that the Fed could begin this effort well before it decides to raise interest rates, and these transactions, by this view, would represent a tightening in monetary policy. The thought has intuitive appeal, and the beginning of such transactions will represent a notable development, but we do not see reverse repos by themselves as representing tighter policy. When the Fed tightens, the shift will take the form of higher interest rates. As conditions in financial markets improve, depository institutions will naturally feel less need to hold extreme liquidity positions. They will most likely seek to lighten their holdings of excess reserves, and these efforts, all else equal, would put downward pressure on short-term interest rates -- pressure that would leave the federal funds rate close to zero. Arranging reverse repos in this environment would merely help depository institutions pare their excess reserves, thereby keeping the federal funds rate in the middle of its target range. The reverse repos in this case represent a defensive transaction, one designed to stabilize the funds rate and prevent an inadvertent easing. A reverse repo in this setting would represent an important transaction because it would signal a return to normal conditions in the money market. However, the transaction would not represent a tightening in policy. If the Fed began to arrange reverse repos while depository institutions still wished to maintain large liquidity positions, the Fed's transaction would put upward pressure on the federal funds rate and other shortterm interest rates. Such action would represent tighter policy, but it is the change in rates, not the reverse repo, that constitutes the change in policy. The Fed would probably transmit such a change by announcing an increase in the target federal funds rate or by lifting the rate paid on bank reserves. After the announcement, reverse repos would be used to carry out the change in policy. The reverse repo would be the means to the end, not the end itself. Michael Moran, Daiwa Securities America, New York, NY
14 BLUE CHIP FINANCIAL FORECASTS OCTOBER 1, 2009
Special Questions: 1. Please provide your forecasts of the quarter-to-quarter annualized percent change in Real GDP, the GDP Price Index and the Consumer Price Index during Q3 2009 Q/Q Annualized Percent change in Q3 2009 Real GDP GDP Price Index Consumer Price Index Consensus 3.2% 1.4% 2.7% Top 10 Average 4.2% 2.3% 3.7% Bottom 10 Average 2.1 0.7% 1.1% 2. Has the U.S. recession ended? (Percentage of those responding) Yes 90.9%
No 9.1%
3. Will the FOMC raise its target federal funds rate before the end of Q2 2010? (Percentage of those responding) Yes 38.6%
No 61.4%
4. Consumer credit soared over the past couple of decades as households took on more and more debt to support standards of living that could not be financed out of incomes alone. However, year-over-year growth in outstanding credit peaked in July 2008 and by July of this year was down 4.2% on a y/y basis, the sharpest rate of contraction since the mid-1940s. The decline results from decreased demand for consumer debt as households attempt to repair tattered balance sheets coupled with a reduction in the availability of consumer debt as lenders grapple with rising default rates. When will the y/y change in outstanding consumer credit once again turn positive? Q4 2009 0.0%
Q1 2010 0.0%
(Percentage of those responding) Q2 2010 Q3 2010 17.8% 37.8%
Q4 2010 24.4%
Later 20.0%
5. A. Sales of new and existing home have generally increased over the past several months, no doubt helped by the $8,000 federal tax credit for first-time home buyers. However, the tax credit expires at the end of November. WILL the $8,000 federal tax credit for first-time home buyers be extended, expanded, or both by Congress prior to the end of THIS YEAR? (Percentage of those responding) Yes 71.1%
No 28.9%
B. SHOULD the $8,000 federal tax credit for first-time home buyers be extended, expanded, or both? (Percentage of those responding) Yes 42.2%
No 57.8%
6. Do you worry that federal stimulus programs like “cash for clunkers” and the $8,000 first-time home buyers’ tax credit have merely brought demand forward, setting the stage for renewed weakness thereafter? (Percentage of those responding) Yes 68.9%
No 31.1%
7. A shrinking trade deficit contributed significantly to GDP during the first half of 2009. However, the trade deficit widened sharply in July. Will the trade sector contribute to GDP growth in the second half of 2009? Will the trade deficit shrink in 2010? (Percentage of those responding) Will trade deficit shrink in the second half of 2009 Yes No 38.6% 61.4%
Will trade deficit shrink in 2010 Yes No 26.7% 73.3%
8. What is the biggest risk faced by the U.S. economy over the next year? (Ranked according to frequency of mention) A. B. C. D. E. F. G. H.
Persistence of weak labor markets dampens growth in personal income and consumption Credit remains exceedingly tight, dampening consumption and business investment Recovery in housing sector stalls as foreclosures rise and home prices continue to fall Dollar plunges to fresh lows, inflation and long-term interest rates soar, economic growth weakens anew Recovery peters out next year as effects of fiscal and monetary stimulus fade Energy prices spike higher Renewed financial market turmoil saps consumer and business confidence Influenza pandemic has profound effect on economic activity
OCTOBER 1, 2009 BLUE CHIP FINANCIAL FORECASTS 15
Databank: 2009 Monthly Indicator Retail and Food Service Sales (a) Auto & Light Truck Sales (b) Personal Income (a, current $) Personal Consumption (a, current $) Consumer Credit (e) Consumer Sentiment (U. of Mich.) Household Employment (c) Non-farm Payroll Employment (c) Unemployment Rate (%) Average Hourly Earnings ('82$) Average Hourly Earnings (current $) Non-Farm Workweek (hrs.) Industrial Production (d) Capacity Utilization (%) ISM Manufacturing Index (g) ISM Non-Manufacturing Index (g) Housing Starts (b) Housing Permits (b) New Home Sales (1-family, c) Construction Expenditures (a) Consumer Price Index (nsa., d) CPI ex. Food and Energy (nsa., d) Producer Price Index (n.s.a., d) Durable Goods Orders (a) Leading Economic Indicators (g) Balance of Trade & Services (f) Federal Funds Rate (%) 3-Mo. Treasury Bill Rate (%) 10-Year Treasury Note Yield (%)
Jan 1.7 9.5 -1.1 0.8 3.3 61.2 -1239 -741 7.6 8.64 18.43 33.3 -10.9 71.1 35.6 42.9 .488 .531 329 -2.8 0.0 1.7 -0.9 -7.8 -0.3 -37.0 0.15 0.13 2.52
Feb 0.4 9.1 -0.8 0.4 -5.1 56.3 -351 -681 8.1 8.61 18.46 33.3 -11.3 70.6 35.8 41.6 .574 .550 354 -0.4 0.2 1.8 -1.4 1.7 -0.4 -26.6 0.22 0.30 2.87
Mar -1.2 9.8 -0.5 -0.3 -7.3 57.3 -861 -652 8.5 8.64 18.50 33.1 -12.5 69.5 36.3 40.8 .521 .511 332 -0.4 -0.4 1.8 -3.4 -2.2 -0.3 -28.9 0.18 0.21 2.82
Apr -0.3 9.3 0.2 -0.1 -8.2 65.1 120 -519 8.9 8.65 18.50 33.1 -12.4 69.2 40.1 43.7 .479 .498 345 0.5 -0.7 1.9 -3.5 1.4 1.0 -29.1 0.15 0.16 2.93
May 0.5 9.9 1.4 0.1 -4.2 68.7 -437 -303 9.4 8.65 18.53 33.1 -13.2 68.5 42.8 44.0 .551 .518 371 -1.3 -1.3 1.8 -5.0 1.4 1.3 -26.4 0.18 0.18 3.29
Jun 0.9 9.7 -1.1 0.6 -7.4 70.8 -374 -463 9.5 8.57 18.54 33.0 -13.2 68.3 44.8 47.0 .590 .570 400 0.1 -1.4 1.7 -4.6 -1.1 0.8 -27.5 0.21 0.18 3.72
Jly -0.2 11.2 0.0 0.2 -10.4 66.0 -155 -276 9.4 8.59 18.59 33.1 -12.6 69.0 48.9 46.4 .589 .564 426 -0.2 -2.1 1.5 -6.8 4.8 0.9 -32.0 0.16 0.18 3.56
Jan 0.0 15.3 0.0 0.2 5.8 78.4 23 -72 4.9 8.27 17.77 33.7 2.2 80.5 50.7 44.6 1.083 1.102 608 -0.4 4.3 2.5 7.4 -4.4 -0.5 -61.5 3.94 2.75 3.74
Feb -0.8 15.3 0.0 0.0 3.4 70.8 -242 -144 4.8 8.29 17.83 33.8 1.1 80.2 48.3 49.3 1.100 1.015 576 -0.9 4.0 2.3 6.5 1.1 -0.2 -61.8 2.98 2.12 3.74
Mar 0.5 15.0 0.1 0.5 5.9 69.0 -52 -122 5.1 8.30 17.90 33.8 0.9 79.8 49.0 49.6 .993 .968 509 1.4 4.0 2.4 6.7 -0.2 0.0 -59.4 2.60 1.34 3.51
Apr 0.0 14.4 0.1 0.3 4.2 62.6 234 -160 5.0 8.30 17.94 33.8 -0.1 79.2 48.6 52.0 1.001 .991 533 -0.5 3.9 2.3 6.4 -1.0 0.1 -62.1 2.28 1.29 3.68
May 0.2 14.3 1.6 0.2 3.3 59.8 -283 -137 5.5 8.26 17.99 33.7 -0.4 78.9 49.3 51.7 .971 .978 509 0.3 4.2 2.3 7.3 0.1 -0.1 -60.5 1.98 1.73 3.88
Jun 0.2 13.6 -0.1 0.6 4.1 56.4 -236 -161 5.6 8.18 18.04 33.6 -0.7 78.7 49.5 48.2 1.078 1.174 488 -0.2 5.0 2.4 9.1 1.4 0.1 -60.2 2.00 1.86 4.10
Jly -0.7 12.5 -0.8 -0.1 3.5 61.2 -142 -128 5.8 8.14 18.10 33.6 -1.0 78.6 49.5 49.5 .933 .924 500 -2.4 5.6 2.5 9.9 0.7 -0.7 -64.9 2.01 1.63 4.01
Aug 2.7 14.1
Sep
65.7 -392 -216 9.7
73.5
Oct
Nov
Dec
Oct -3.1 10.5 -0.3 -0.8 -1.0 57.6 -372 -380 6.6 8.34 18.28 33.5 -4.7 75.4 38.7 44.2 .763 .729 409 -0.7 3.7 2.2 5.2 -8.5 -1.0 -59.4 0.97 0.67 3.81
Nov -2.1 10.1 -0.3 -1.0 -4.2 55.3 -513 -597 6.8 8.54 18.34 33.4 -6.5 74.4 36.6 37.3 .655 .630 390 -3.5 1.1 2.0 0.4 -3.9 -0.6 -43.2 0.99 0.19 3.53
Dec -3.2 10.3 -0.3 -1.2 -3.5 60.1 -806 -681 7.2 8.65 18.40 33.3 -8.9 72.7 32.9 40.6 .556 .564 374 -3.4 0.1 1.8 -0.9 -4.6 -0.1 -41.9 0.16 0.03 2.42
18.65 33.1 -11.8 69.6 52.9 48.4 .598 .579 429 -1.5 1.4 -4.3 -2.4 0.6 0.16 0.17 3.59
2008 Monthly Indicator Retail and Food Service Sales (a) Auto & Light Truck Sales (b) Personal Income (a, current $) Personal Consumption (a, current $) Consumer Credit (e) Consumer Sentiment (U. of Mich.) Household Employment (c) Non-Farm Payroll Employment (c) Unemployment Rate (%) Average Hourly Earnings ('82$) Average Hourly Earnings (current $) Non-farm Workweek (hrs.) Industrial Production (d) Capacity Utilization (%) ISM Manufacturing Index (g) ISM Non-Manufacturing Index (g) Housing Starts (b) Housing Permits (b) New Home Sales (1-family, c) Construction Expenditures (a) Consumer Price Index (nsa., d) CPI ex. Food and Energy (nsa, d) Producer Price Index (nsa., d) Durable Goods Orders (a) Leading Economic Indicators (g) Balance of Trade & Services (f) Federal Funds Rate (%) 3-Mo. Treasury Bill Rate (%) 10-Year Treasury Note Yield (%)
Aug -0.5 13.7 0.4 0.0 -3.0 63.0 -323 -175 6.2 8.19 18.18 33.7 -2.0 77.6 49.3 50.6 .849 .857 444 2.4 5.4 2.5 9.7 -5.5 -0.8 -60.9 2.00 1.72 3.89
Sep -1.5 12.5 0.1 -0.3 3.1 70.3 -244 -321 6.2 8.21 18.21 33.6 -6.4 74.5 43.4 50.2 .822 .806 436 0.3 4.9 2.5 8.8 0.0 0.0 -60.1 1.81 1.13 3.69
(a) month-over-month % change; (b) millions, saar; (c) thousands, saar; (d) year-over-year % change; (e) annualized % change; (f) $ billions; (g) level. Most series are subject to frequent government revisions. Use with care.
16 BLUE CHIP FINANCIAL FORECASTS OCTOBER 1, 2009
Calendar Of Upcoming Economic Data Releases Monday September 28
Tuesday
Wednesday
Thursday
Friday
29
30
October 1
2
Case-Shiller Home Price Index (Jul) Consumer Confidence (Sep, Conference Board) Agricultural Prices (Sep) ABC Consumer Comfort Index Weekly Store Sales
GDP (Q2, Final) ADP Employment Survey (Sep) Corporate Profits (Q2, Final) Chicago PMI (Sep) EIA Crude Oil Stocks Mortgage Applications
ISM Manufacturing (Sep) Unit Vehicle Sales (Sep) Construction Spending (Aug) Monster Employ. Index (Sep) Challenger Survey (Sep) Personal Income & Consumption (Aug) Pending Home Sales (Aug) Weekly Jobless Claims Weekly Money Supply
Employment Report (Sep) Factory Orders (Aug)
5
6
7
8
9
ISM Non-Manufacturing (Sep)
ABC Consumer Comfort Index Weekly Store Sales
Consumer Credit (Aug) EIA Crude Oil Stocks Mortgage Applications
Wholesale Trade (Aug) Weekly Jobless Claims Weekly Money Supply
U.S. Trade (Aug)
12
13
14
15
16
Columbus Day U.S. Bond Market Closed but U.S. Equity Markets Open
Treasury Budget (Sep) FOMC Minutes (Sep 22 meeting) Weekly Store Sales ABC Consumer Comfort Index
Retail Sales (Sep) Trade Price Indexes (Sep) Business Inventories (Aug) EIA Crude Oil Stocks Mortgage Applications
Consumer Price Index (Sep) Empire State Index (Oct) Philadelphia Fed Index (Oct) Weekly Jobless Claims Weekly Money Supply
Industrial Production (Sep) Consumer Sentiment (Oct, Preliminary, University of Michigan) Treasury International Capital Flows (Aug)
19
20
21
22
23
NAHB Housing Index (Oct)
Housing Starts (Sep) Producer Price Index (Sep) Weekly Store Sales ABC Consumer Comfort Index
EIA Crude Oil Stocks Mortgage Applications
Leading Economic Indicators (Sep) Weekly Jobless Claims Weekly Money Supply
Existing Home Sales (Sep)
26
27
28
29
30
Case-Shiller Home Price Index (Aug) Consumer Confidence (Oct, Conference Board) ABC Consumer Comfort Index Weekly Store Sales
New Home Sales (Sep) Durable Goods Orders (Sep) EIA Crude Oil Stocks Mortgage Applications
Gross domestic Product (Q3, Advance) Weekly Jobless Claims Weekly Money Supply
Personal Income and Outlays (Sep) Consumer Sentiment (Oct, University of Michigan) Chicago PMI (Oct) Employment Cost Index (Q3)
November 2
3
4
5
6
ISM Manufacturing (Oct) Construction Spending (Sep) Pending Home Sales (Sep)
FOMC Meeting
FOMC Meeting
Vehicle Sales (Oct) Factory Orders (Sep) ABC Consumer Comfort Index Weekly Store Sales
ISM Non-Manufacturing Index (Oct) ADP Employment (Oct) Challenger Layoffs (Oct) Consumer Credit (Aug) EIA Crude Oil Stocks Mortgage Applications
Productivity and Costs (Q3, Preliminary) Wholesale Trade (Aug) Weekly Jobless Claims Weekly Money Supply
Employment Report (Oct) Wholesale Inentories (Sep) Consumer Credit (Sep)
.
BLUE CHIP FORECASTERS CONTRIBUTORS TO DOMESTIC SURVEY Action Economics, LLC, Boulder, CO Dr. Michael Englund Argus Research Corp., New York, NY Dr. Richard A. Yamarone Banc of America Securities-Merrill Lynch, New York, NY Dr. Ethan Harris Bank of Tokyo-Mitsubishi UFJ, Ltd., New York, NY Christopher S. Rupkey Barclays Capital, New York, NY Dr. Dean Maki BMO Capital Markets Economics, Toronto, Canada Dr. Sherry Cooper and Douglas Porter Chmura Economics & Analytics, Richmond, VA Dr. Christine Chmura and Dr. Xiaobing Shuai ClearView Economics, LLC, Cleveland, OH Dr. Kenneth T. Mayland Comerica Bank, Detroit, MI Dana B. Johnson Conning & Company, Hartford, CT James A. Griffin Jr. Cycledata Corp., San Diego, CA Robert S. Powers Daiwa Securities America, New York, NY Dr. Michael Moran Economist Intelligence Unit, New York, NY Leo Abruzzese and Jan Friederich DePrince & Associates, Murfreesburo, TN Dr. Albert E. DePrince Jr. Fannie Mae, Washington, DC Douglas Duncan Georgia State University, Atlanta, GA Dr. Rajeev Dhawan and Emin Hajiyev GLC Financial Economics, Providence, RI Gary L. Ciminero Goldman, Sachs & Co., New York, NY Jan Hatzius, Ed McKelvey, Andrew Tilton J.P. Morgan Chase, New York, NY Bruce Kasman and Robert Mellman JPMorgan Private Wealth Management, New York, NY Dr. Anthony Chan J.W. Coons Advisors, LLC, Columbus, OH James W. Coons Kellner Economic Advisers, Port Washington, NY Dr. Irwin L. Kellner Loomis, Sayles & Company, L.P., Bloomfield, MI Brian Horrigan and David Sowerby MacroFin Analytics, Wayne, NJ Dr. Parul Jain Mesirow Financial, Chicago, IL Diane Swonk Moody’s Capital Markets, New York, NY John Lonski
Moody’s Economy.com, West Chester, PA Dr. Mark M. Zandi Naroff Economic Advisors, Philadelphia, PA Dr. Joel L. Naroff National Association of Realtors, Washington, DC Dr. S. Lawrence Yun Nomura Securities International, Inc., New York, NY Dr. David H. Resler PNC Financial Services Group, Pittsburgh, PA Dr. Stuart G. Hoffman RBS, Greenwich, CT Stephen Stanley and Michelle Girard RDQ Economics, New York, NY John Ryding and Conrad DeQuadros RidgeWorth Capital Management, Richmond, VA Alan Gayle Russell Investments, Tacoma, WA Dr. Michael Dueker Scotiabank, Toronto, Canada Aron Gampel and Dr. Warren Jestin Societe Generale, NY, New York Stephen W. Gallagher Standard & Poor's Corp., New York, NY Dr. David Wyss Stone Harbor Investment Partners, LP, New York, NY Brian Keyser SunTrust Banks, Inc., Atlanta, GA Gregory L. Miller Swiss Re, New York, NY Kurt Karl The Northern Trust Company, Chicago, IL Paul L. Kasriel and Asha G. Bangalore Thredgold Economic Associates, Salt Lake City, UT Jeff K. Thredgold UBS, New York, NY Maury Harris, Samuel Coffin and Kevin Cummins Wayne Hummer Investment, LLC., Chicago, IL William B. Hummer Wells Capital Management, San Francisco, CA Gary Schlossberg Wells Fargo, Charlotte, NC Dr. John Silvia and Mark Vitner Woodley Park Research, Washington, DC Richard J. DeKaser Woodworth Holdings, Ltd., Summit, NJ Jay N. Woodworth CONTRIBUTORS TO INTERNATIONAL SURVEY Deutsche Bank AG, Frankfurt, Germany ING Financial Markets, London, England Mizuho Research Institute, Tokyo, Japan Scotiabank, Toronto, Canada WestLB AG, Dusseldorf, Germany
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