Tag Archives: Macroview

The ECB’s decision on (T)LTRO will matter most to the euro area periphery banks who have been the biggest consumers of current TLTROs. Considering the weakness in most economic indicators the ECB should maintain an adequate degree of monetary accommodation. This will likely require delivering another longer-term refinancing operation (LTRO, targeted or not) to avoid any tightening in liquidity and credit conditions. We...

The ECB’s decision on (T)LTRO will matter most to the euro area periphery banks who have been the biggest consumers of current TLTROs.Considering the weakness in most economic indicators the ECB should maintain an adequate degree of monetary accommodation. This will likely require delivering another longer-term refinancing operation (LTRO, targeted or not) to avoid any tightening in liquidity and credit conditions.We expect the ECB to send out a strong signal at its March meeting that it...

Brent price finds support between USD60 and USD70Increased pressure from President Trump on the Saudis to halt oil production cuts last week had only a temporary impact. Brent prices are currently being underpinned by several factors, including hopes of a US-China trade deal and OPEC+ production cuts, in particular. The Saudis have been aggressively cutting their production recently. With output of 10.1m barrels/day (mbd) in February, they are already below their 10.3mbd agreed target. In so...

The CIO office’s view of the week ahead.Chinese equities stole the show last week on optimism over US-China trade negotiations and MSCI’s decision to gradually increase inclusion of Chinese A-shares from the current 5% to 20% in 2019. This will bring China’s weighting in the MSCI Emerging Market (EM) index to 3.3% in November from its current 0.71%, translating to up to USD 125 billion of Chinese domestic equity inflows this year. Market participants reacted positively, despite a weakening...

An extension of the Brexit deadline looks likely, but for what?Recent political developments in the UK and the increased focus on an extension to the current Brexit deadline in particular, have reduced the risk of a ‘no deal’ Brexit on 29 March. Prime Minster Theresa May will put her divorce deal to another Parliament vote on 12 March. While the vote will likely be much narrower than the initial vote in January, we assume that it will also be rejected.This will open the door for another vote...

With stronger US growth than expected in the fourth quarter, we do not expect a recession in 2019.Q4 2018 GDP growth was healthy at 2.6% quarter-on-quarter (q-o-q) seasonally adjusted annual rate (SAAR), close to the average over the previous three quarters (2.5%). Annual growth for 2018 was 2.9%.A particularly bright spot in Q4 was business investment, led by spending on equipment and software. Such business investment strength is particularly good news for the sustainability of the US...

Latest data point toward continued deceleration in China in February, especially in the external sector.Chinese official manufacturing and non-manufacturing purchasing manager indexes (PMI) fell again in February, following a pause in January. The manufacturing PMI came in at 49.2, down from 49.5 in the previous month. The non-manufacturing PMI, while continuing to signal expansion, also fell in February—to 54.3, from 54.7 the previous month.The data show a divergence between the...

After a difficult second half of 2018, the outlook for Germany’s economy and sovereign bonds turns brighter. A host of factors weighed on German growth in H2 2018: a sharp slowdown in global demand on the external side and several transitory factors on the domestic side impacted industrial activity. At the same time, the 10-year German Bund yield has been trending downward. The steep fall in the oil price in late 2018,...

After a difficult second half of 2018, the outlook for Germany's economy and soverign bonds turns brighter.A host of factors weighed on German growth in H2 2018: a sharp slowdown in global demand on the external side and several transitory factors on the domestic side impacted industrial activity. At the same time, the 10-year German Bund yield has been trending downward. The steep fall in the oil price in late 2018, the economic slowdown and the Bund’s safe haven status are all factors...

The CIO office’s view of the week ahead.On Sunday, President Donald Trump prolonged market calm by confirming over Twitter that he would extend the deadline for raising tariffs on USD 200 billion of Chinese goods beyond 1 March. He omitted reference to a new deadline as well as any specifics on the “substantial progress” in talks between the world’s two largest economies. Whether Trump will succeed in extracting the concessions sought from the Chinese government remains to be seen, but we...