BofAML Global Research

Redacción - Sabado, 17 de Febrero

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Europe Economic Weekly: Still grumpy after all these years •  The Euro area recovery is in full swing. The probability of a downturn is low. But so is the capacity to respond to a shock. •  Debating some form of federal backstop in exchange for a more orthodox ECB would lead to a sub-optimal outcome, in our view. •  Europe is not only about a Franco-German compromise. Italy matters. We look at the economy and find reasons for optimism.

Global Economic Weekly: Can we trust Europe's calm? (PDF Adjunto)

•   The current calm in Europe reflects both solid growth and the fact that no country is trying to follow the UK to the exit.
•   However, sustained stability requires progress on fiscal integration and structural reform, and both are likely stalled.
•   A new crisis is unlikely anytime soon, but policy constraints leave the region vulnerable to shocks.

 

Global Rates Weekly: State of flux

•   10y Treasury rate settled into our Q1 target, and we are holding onto this view.
•   In Europe, we examine the richening in 30y German swap spreads and buyback RV trades in the UK.
•   We also discuss the recent moves in FRA-OIS, Japan flow outlook, and look for real curve steepening in the US.

Global Emerging Markets Weekly: It does not feel like Carnival (PDF Adjunto)

•   The fear of a pick-up in inflation generated a market correction somewhat expected given the stretched valuations.
•   EM spreads suffered from a correction and investors may be cautious while markets are volatile over the next month or two.
•   We believe that many drivers of EM performance remain in place for the longer term.

 

Credit Investor Survey: Beware of the 1%

•   Overweights are up versus December's survey: thus the rally in corporate bond spreads may be shallow.
•   Biggest concern for high-grade investors has now become inflation...
•   ...and obvious signs of investors fretting over 10yr bund yields breaking the 1% mark

Global FX Weekly: When theory fails

•   Counterintuitive FX reaction to US data. Our bullish projections at risk, but fiscal stimulus to eventually support the USD.
•   FX volatility set to rise on short-term persistence and long-term macroeconomic divergence. Long EURJPY at risk.
•   Quant and technicals bullish JPY. New trade: buy BRL/CLP.

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