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Having been fixated by slowing demand this summer, financial markets now have to deal with the supply side – what does the attack on Saudi facilities mean for the global economy? Unless production is quickly restored, the disruption looks set to add to recessionary fears, keeping yield curves flat and, barring a dovish surprise from the Fed, the dollar bid
Belgium hasn't had a government for the last four months, but a pragmatic consensus to form a new government has been reached in Wallonia. This could be an important step to boost negotiations at the federal level, but the main question that remains is whether this asymmetrical coalition will work, given the broad spectrum of parties
• As of 1 November 2019 the ECB will restart its net APP purchases at a monthly pace of €20bn for as long as necessary, while continuing to reinvest redemptions. In the future, the central bank can also buy assets with yields below the deposit facility rate (DFR) under all private sector purchase programmes, including the CBPP3. In our view, the net monthly covered bond purchases will, by themselves, not offer a massive performance support (we expect roughly €1bn net covered purchases per month). That said, the removal of the DFR restriction may see more covered bonds move into the below -0.5%...
Low inflation, subdued activity and continued fiscal consolidation progress bode well for another 50bp policy rate cut this week. An additional 50bp cut that brings the SELIC rate to 5% in October is also likely, but we expect a mid-cycle pause after that. FX concerns would be a primary reason to pause, to better assess policy implications
AUD/NZD: Long-term trend: Up. Bullish price pattern suggests long-term target around 1.1175; Short-term trend: Up. Breaking above horizontal resistance around 1.0710.
AUD/USD: Long-term trend: Down. Sell signal after weekly close, below horizontal support around 0.6840; Short-term trend: Up. Prices are developing a base above the MA-50 line at 0.6852.
EUR/CHF: Long-term trend: Neutral. Bottoming above horizontal support around 1.0800; Short-term trend: Up. Expecting a rally after the recent trend change.
EUR/GBP: Long-term trend: Up. Overhead horizontal resistance between 0.9265 and 0.9415;...
We are taking profit on our buy recommendation on MACEDO €2.75% 25s (NR/BB-/BB+; 107.4 bid / 1.3% / Z+165bp) from 18 June 2019. This implies 39bp of tightening over the past three months on bid-ask adjusted Z-Spread levels, meaningfully beyond those of other CEE and Balkan peers.
Despite the fact that some thought the ECB package would be a little more aggressive, we do think it is bullish for European credit. The ECB will continue to support credit and spreads will tighten even after last week's initial bullish reception. Month on month spreads are still wider and thus last week's tightening is just a partial retracement of the widening that was caused by recent uncertainty. Some claim the net effect of CSPP2 will be limited as it is likely to be just €3bn in volume every month (running at CSPP1 rate of 12% of APP). That amount, in combination with increasing reinvest...
Turkey's seasonally adjusted unemployment rate has been increasing since early 2018 but dipped marginally in June to 13.9% despite the slightly higher labour force participation
China's fixed asset investments and industrial production were very weak in August while retail sales growth was moderate. Even Premier Li Keqiang has said that 6% GDP growth will be hard to achieve. As such, we are cutting our growth forecasts for this year and expect more stimulus to come
Your daily roundup of commodities news and ING views
Current account deficit continues to widen
Telefónica mulling partial acquisition of OI; TELEFO1.495 9/25 and TELEFO1.447 1/27 favoured
Belgian telecoms: backlash against VOO mgt ‘secretly' selling to US group Providence.
Brunel, Randstad: tipped as Star Group buyers - Brunel not interested, Randstad unlikely.
Proximus: CEO to leave early, by 20 September
This week, the Fed, BOJ, and BOE pick-up the baton from the ECB. The Fed is arguably the most important of the three in shaping global rates direction and market sentiment. Trade tension de-escalation and a blockbuster core inflation print have greatly reduced Fed cut expectations next year. Our US economist is looking for a rate cut of 25bp but little else by way of dovish communication. In spite of the rise in geopolitical tensions, we are loath to fade the UST sell off before the meeting. The rise in oil adds to near-term inflation risks and should put flattening pressure on USD 2s10s.
The weekly continuous chart shows the development of a top, after an astonishing rally during the past 12 months. Prices rallied from around 155.50 to the recent high at 176.86. Solid support within this steep rising trend comes in between the trend line around 170.55 and the horizontal line around 168.70. A successful test of this support area should be followed by the next rally in the long-term uptrend.
This week will show whether Germany can actually do fiscal stimulus
Markets are set for a tumultuous start to the week after drone attacks on Saudi Aramco oil production facilities in Saudi Arabia resulted in the country's crude output being halved. Despite the company pledging to restore production starting from today, oil prices have surged by almost 20% in early trading. This situation has prompted an unusual scenario in the FX market, with risk-sensitive oil currencies (NOK, CAD) rising in tandem with safe heavens (JPY, CHF), with the latter two being pushed by concerns of rising geopolitical risk (US Secretary of State Pompeo blamed Iran for the attacks)....
In this publication we update the performance of our ING Benelux Favourites list as well as all valuation and ranking tables for our coverage universe. Performance on the front page is dated from our last comprehensive update published on 18 January 2018, while the rolling performance since inception is included on subsequent pages. The methodology for our favourites selection is based on a bottom-up approach with a focus on absolute performance with clear near-term triggers. It is a rolling list, ie, stocks can enter/exit whenever we think opportune.
Following 1H, contract wins, the new CEO hiring, the chairman leaving and Evertz selling its stake, we downgrade to Hold, cut our TP to €26, from €27. In the short term, we think the probability of a takeout, core to our previous Buy case, is down materially: we model 30%, from 60%. EVS also faces serious challenges in the long term, to be addressed by a new CEO who needs to be adopted internally, which is not easy at EVS. On the positive, we reckon (1) the business outlook is better, on the traction of UHD and the 2020 big events, we up our 2019/2020F EPS by 12%/4%; (2) valuation is cheap, >1...
a.s.r. made clear that it will not sit on (excess) capital. The announced review of the SII management ladder and conservative definition of organic capital generation opens the door for capital return in excess of ordinary dividends; INGF €50-100m pa. Becoming more outspoken is a consequence of the VIVAT opportunity passed (disciplined on pricing) and limited options for sizeable bolt-on M&A opportunities. a.s.r. remains an ING Benelux favourite. BUY; TP €44.0.
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