FX & Markets Weekly. Week 46/2018. Mag. Ahmet Hüsrev BILGIN Chief Economist Vienna, Austria

Transcription

1 FX & Markets Weekly Week 46/2018 Mag. Ahmet Hüsrev BILGIN Chief Economist Vienna, Austria

2 Italy sovereign bond yields jump This week, Italy s government rejected European Commission demands and stuck to its big-spending plan to jump start the economy. As an initial response financial markets sold Italy sovereign debt, leading to rising yields (2Y 1,29%, 5Y 2,56%, 10Y 3,48%). Those yields are the cost for Italy s government to refinance itself. Among all euro area countries, 2-year sovereign yields are the highest in Italy because Greece doesn t issue 2 year notes yet. For 5 years maturity only Greece pays more than Italy. Same is true for 10 years. The yields are the market s perception of the risk associated with holding that debt security. From a macroeconomic perspective the high yields that Italy has to pay are looking justified, as Italy has a government debt to GDP ratio of 133,1% as per 2Q18, and ranks 2 nd after Greece. The euro area average is 86,3%, and the convergence criteria for sustainable public finances is 60% in the treaty of Maastricht. It is looking highly likely that the European Commission will start an excessive debt procedure for Italy that could result in 0,5% of GDP as a penalty. GBP tumbles on Brexit uncertainty The British Pound suffered another heavy blow Thursday when political turmoil in the Brexit process reached another high. A Brexit treaty was finalised but Theresa May had difficulties selling it to her cabinet. Some cabinet members resigned that lead to speculation about a no-confidence vote as well as, about a new referendum. Whether this provides enough down-momentum to extend this year s GBP downtrend remains to be seen. Cable (GBP/USD) would have to break below preceding lows at 1,2696 and 1,2662, which would give room to challenge 1,2593. Otherwise the broad range between 1,27 and 1,31 would remain intact. U.S. Treasury yield curve bull-steepens Fed Vice Chairman Richard Clarida sounded dovish in an interview about the global growth outlook. As a response, 2Y Treasury yields fell to lowest since October, and a Dollar Spot index fell 0,5%. Policy makers have raised rates 3 times this year, and markets are pricing in about a 70% chance of a quarter-point hike next month. The dollar has benefited from expectations for higher U.S. rates, gaining about 4% this year against the euro.

3 Exchange Commodities Rates Energy Futures EUR/USD 1,1395 0,52-1,62 0,27 WTI crude 57,71-4,00-19,48-10,31 EUR/TRY 6,0977-1,53-7,85-8,57 BRENT crude 67,96-3,12-16,10-5,48 EUR/CHF 1,1422 0,23-0,37 0,86 GAS oil 639,00-2,51-10,05 0,43 EUR/GBP 0, ,54 1,01-0,80 Heating oil 209,33-3,48-10,45-0,47 EUR/JPY 128,62-0,29-1,01 2,04 Natural gas 4,28 14,95 29,51 40,35 EUR/RUB 75,0555-2,57-0,95-1,24 Gold Spot 1 221,25 0,96-0,58 3,69 EUR/CNY 7,9101 0,21-1,26 0,86 Silver Spot 14,37 1,53-2,23-2,33 USD/TRY 5,3478-2,04-6,32-8,75 Platinum Spot 845,82-0,82 0,36 8,21 USD/JPY 112,87-0,84 0,62 1,76 Palladium Spot 1 176,39 5,37 8,74 31,63 USD/RUB 65,8705-3,08 0,68-1,52 Copper 277,15 3,24-0,29 5,18 USD/CNY 6,938-0,27 0,38 0,77 Stock Price as of Change% Change % Change % Sovereign Price as of Change % Change % Ask Indices Bonds 10Y 11/16/ days 1 Month YTM ATX ,92-4,20-3,88 Austria 102,67 0,13 0,73 0,40 BIST ,84-4,93 7,43 Belgium 103,63 0,15 0,51 0,51 CAC ,43-2,69-5,89 China 94,83 0,63 1,44 3,36 DAX ,33-3,41-7,04 EFSF 111,90-0,05-0,17-0,21 Dow Jones ,33-1,61-0,68 ESM 110,22 0,07 0,19 0,06 Euro Stoxx ,28-2,12-5,61 France 98,23 0,25 0,76 0,47 FTSE ,10-0,45-7,00 Germany 99,07 0,35 1,08 0,12 HANG SENG ,27 2,83-3,38 Greece 95,70-0,83-1,25 4,53 IBEX ,98-0,32-4,05 Japan 100,86 0,17 0,50-0,01 MOEX ,35-0,91 5,93 Portugal 108,84-0,26-0,26 1,63 NASDAQ ,36-5,54-6,79 Spain 99,84-0,26 0,18 1,32 NIKKEI ,56-3,85-2,31 Russia 98,17 1,62-0,49 8,64 S&P ,69-2,70-3,75 Switzerland 111,06 0,28 0,64-0,24 Interest Rate Price as of Change% Change % Change % Turkey 82,60 2,47 8,07 15,89 Futures UK 102,18 0,58 1,42 1,20 Bobl 131,69 0,24 0,63-0,08 US 92,63 0,80 0,83 3,05 Bund 160,64 0,39 1,22-0,20 Turkey Risk related Sentiment TRY Basket 5,7192-2,64-7,15-8,65 Baltic Dry Index ,07-35,36-40,70 WAC of CBRT (T-1) 24,00 0,00 0,00 32,30 VIX 19,63 17,82 11,80 46,47 Gold TRY / gram 209,88-1,09-6,87-5,38 Turkey 5Y CDS (T-1) 367,732-0,07-5,28-23,13 TR Gov. B. 2Y yield 20,19-7,00-23,98-27,24 MSCI EM Index (T-1) 980,85 0,48-0,39-3,99 Euribor/Eonia USD Libor Eonia (T-1) -0,368-1,38 0,27-1,66 USD Libor O/N 2,175 0,02-0,05 13,30 Euribor 1 Month -0,369 0,00 0,00 0,00 USD Libor 1M 2,301-0,58 0,60 10,76 Euribor 3 Month -0,316 0,00 0,63 0,94 USD Libor 3M 2,645 1,01 8,18 13,88 Euribor 6 Month -0,257 0,00 3,02 3,38 USD Libor 6M 2,863 0,16 7,72 13,89 Euribor 12 Month -0,147 0,68 5,77 11,45 USD Libor 12M 3,124-0,65 5,27 10,90 EUR Libor TRY Libor EUR Libor O/N -0,467-1,87-2,51-5,69 TRY Libor O/N 24,123-2,20-4,16 26,95 EUR Libor 1M -0,417-1,60-4,22-5,76 TRY Libor 1M 25,086-0,51-9,48 15,89 EUR Libor 3M -0,369-2,91-5,86-2,05 TRY Libor 3M 25,296-0,04-13,38 9,51 EUR Libor 6M -0,334-1,17-2,91-8,20 TRY Libor 6M 26,086-0,05-11,56 4,65 EUR Libor 12M -0,219 0,97-1,86 2,54 TRY Libor 12M 26,202-0,35-14,22 1,05

4 Date Country Economic Release Period Consensus Actual Prior 11/13/ :00 US NFIB Small Business Optimism Oct /13/ :00 US Monthly Budget Statement Oct -$100.0b -$100.5b -$63.2b 11/14/ :00 US MBA Mortgage Applications Nov % -0.7% 11/14/ :30 US CPI MoM Oct 0.3% 0.3% 0.1% 11/14/ :30 US CPI Ex Food and Energy MoM Oct 0.2% 0.2% 0.1% 11/14/ :30 US CPI YoY Oct 2.5% 2.5% 2.3% 11/14/ :30 US CPI Ex Food and Energy YoY Oct 2.2% 2.1% 2.2% 11/15/ :30 US Empire Manufacturing Nov /15/ :30 US Philadelphia Fed Business Outlook Nov /15/ :30 US Retail Sales Advance MoM Oct 0.5% 0.8% 0.1% 11/15/ :30 US Retail Sales Ex Auto MoM Oct 0.5% 0.7% -0.1% 11/15/ :30 US Retail Sales Ex Auto and Gas Oct 0.4% 0.3% 0.0% 11/15/ :30 US Import Price Index MoM Oct 0.1% 0.5% 0.5% 11/15/ :30 US Import Price Index ex Petroleum MoM Oct 0.0% 0.2% 0.0% 11/15/ :30 US Import Price Index YoY Oct 3.3% 3.5% 3.5% 11/15/ :30 US Export Price Index MoM Oct 0.1% 0.4% 0.0% 11/15/ :30 US Export Price Index YoY Oct % 2.7% 11/15/ :30 US Initial Jobless Claims Nov k 216k 214k 11/15/ :30 US Continuing Claims Nov k 1676k 1623k 11/16/ :15 US Industrial Production MoM Oct 0.2% 0.1% 0.3% 11/13/ :00 EA ZEW Survey Expectations Nov /14/ :00 EA Industrial Production SA MoM Sep -0.4% -0.3% 1.0% 11/14/ :00 EA Industrial Production WDA YoY Sep 0.3% 0.9% 0.9% 11/14/ :00 EA GDP SA QoQ 3Q P 0.2% 0.2% 0.2% 11/14/ :00 EA GDP SA YoY 3Q P 1.7% 1.7% 1.7% 11/14/ :00 EA Employment QoQ 3Q P % 0.4% 11/14/ :00 EA Employment YoY 3Q P % 1.5% 11/15/ :00 EA EU27 New Car Registrations Oct % -23.5% 11/15/ :00 EA Trade Balance SA Sep 16.3b 13.4b 16.6b 11/15/ :00 EA Trade Balance NSA Sep b 11.7b 11/16/ :00 EA CPI Core YoY Oct F 1.1% 1.1% 1.1% 11/16/ :00 EA CPI YoY Oct F 2.2% 2.2% 2.2% 11/16/ :00 EA CPI MoM Oct 0.2% 0.2% 0.5% 11/12/ :00 TR Current Account Balance Sep 1.94b 1.83b 2.59b 11/15/ :00 TR Unemployment Rate Aug 11.2% 11.1% 10.8% 11/15/ :00 TR Central Gov't Budget Balance Oct b -6.0b 11/15/ :30 TR Expected Inflation Next 12 Mth Nov % 17.03% 11/15/ :30 TR Foreigners Net Bond Invest Nov 9 -- $448m -$254m 11/15/ :30 TR Foreigners Net Stock Invest Nov 9 -- $151m -$72m 11/16/ :00 TR Industrial Production MoM Sep 0.3% -2.7% -1.1% 11/16/ :00 TR Industrial Production YoY Sep 1.5% -2.7% 1.7% 11/16/ :30 TR House Price Index YoY Sep % 9.86% 11/16/ :30 TR House Price Index MoM Sep % 0.20% 11/13/ :00 RU GDP YoY 3Q A 1.4% 1.3% 1.9% 11/13/ :30 RU Budget Balance YTD Oct b b b 11/16/ :00 RU Industrial Production YoY Oct 2.3% 3.7% 2.1%

5 Should you have any queries, please contact me as follows: Mag. Ahmet Hüsrev BILGIN, Chief Economist, DenizBank AG Tel: / Disclaimer: This publication was prepared by DenizBank AG exclusively for marketing purposes as a marketing communication pursuant to Article 36 paragraph 2 of the Commission Delegated Regulation (EU) 2017/565 of 25 April The information contained in this report is based on the knowledge of the various authors at the time the various texts were finalised for publication. DenizBank AG reserves the right to amendments or additions in this regard at any time without prior notice. The contents of this newsletter are protected by intellectual property rights especially copyright. The use of texts, parts of texts or image material or the reproduction of information or data requires the prior written consent of DenizBank AG. We have carefully checked the information in this report and have prepared it to our best knowledge and judgement. However, DenizBank AG does not assume any liability whatsoever for the accuracy, completeness or up-to-datedness of the information contained in this report and/or for the realisation of the forecasts made therein. This applies likewise for all other websites accessed via links contained within this report. The main source was the following: Bloomberg Finance LP. Every investment decision must be made in accordance with the personal circumstances of the investor. This report is intended for customers who are able to make their investment decisions independently and who do not solely rely on information provided by DenizBank AG. This report is non-binding and does not constitute an offer to purchase/sell the products named nor is it an investment research pursuant to Article 36 paragraph 1 of the Commission Delegated Regulation (EU) 2017/565 of 25 April Website credits and disclosures made in accordance with Sections 24 and 25 Media Act: Media content owner: DenizBank AG (FN t, Commercial Court of Vienna), Thomas-Klestil-Platz 1, 1030 Vienna; Registered address of the company: Vienna; DPR number: Object of the company: Banking; Members of the Management Board: Ahmet Mesut Ersoy, Mehmet Ulvi Taner, Tuncay Akdevelioglu, Cenk Izgi; Members of the Supervisory Board: Hakan Ates, Derya Kumru, Wouter van Roste, Timur Kozintsev, Ruslan Abil, Alexander Vedyakhin, Pavel Barchugov, Hayri Cansever; Shareholder structure: Member of the Sberbank Group Purpose of document: This report summarises the significant developments within the financial markets over the previous week and comments on their underlying background.