Julius Baer: sobre bonos públicos de Europa, Grecia, petróleo y azúcar

Redacción - Viernes, 29 de Mayo

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FIXED INCOME: European government bonds - Yield convergence to resume

Today’s economic report of the EU commission could revive convergence phantasy in the euro area. The EU is set to publish a rather upbeat report on business and consumer sentiment later this morning. Figures for the Spanish economy have been particularly strong in recent reports, while Italy and France have been laggards. If the market focus shifts again from Greece-exit worries to trend growth, the spread between German Bunds and peripheral government bonds is likely to narrow. Confounding speculation on a fast convergence, the spreads between German 10-year government bonds and their equivalents of Spain and Italy have actually widened from less than 90 basis points in early March, when the European Central Bank began to purchase sovereign bonds, to 133 basis points and 128 basis points, respectively.

With the benefit of hindsight, we had abandoned our call for peripheral debt in summer 2014. Our view remains that Spanish and Italian bond yields are still too low, just less so than German Bund yields. Despite the recent increase in yields, we are still not returning to the EUR bond market and prefer the USD high grade segment.

Markus Allenspach, Head Fixed Income Research, Julius Baer

FIXED INCOME: ECB keeps ELA for Greek banks stable – Greece’s 5 June payment to IMF puts pressure

Yesterday the European Central Bank (ECB) kept the Emergency Liquidity Assistance (ELA), available to Greek banks, stable at the level of EUR80.2bn. No change was made to the haircut imposed on Greek bonds used as collateral. The news suggests that Greek banks still have a buffer of ca. EUR3bn. In addition, they still hold enough eligible collateral to access an additional ca. EUR13bn in ELA, provided that the ECB does not impose higher haircuts at a later stage. Greek sources suggest that Greek banks did not ask for an increase in the ELA due to limited deposit flight, as the ELA is the only source of funding available to them at this stage.

 

Greece is running out of money and needs external funds to cover its domestic and foreign obligations in the coming weeks, including ca. EUR1.7bn to the International Monetary Fund (IMF). The IMF allows for single instalments to be bulked into one, however, Greece so far is not exploring this option, which would pro-vide some additional two weeks’ time until the 19 June.

We expect an agreement to be reached only at the last moment and remain wary of exposure to Greek assets.

Eirini Tsekeridou, Fixed Income Research Analyst, Julius Baer



COMMODITIES: Oil drops on dollar strength and firm global production 

Signs of solid global production and the firming US dollar put pressure on oil prices more recently, causing the past months’ rally to fizzle. Saudi Arabia’s record production levels should be seen in perspective of strong domestic and global demand and are not the result of any political strategy. Iraq meanwhile continues to ramp-up output and exports as a consequence of the past years’ foreign investments but growth should slow going forward due to infrastructure bottlenecks and funding issues on the back of lower oil prices. While we believe that prices above USD 60 per barrel have recovered to reasonable levels and we maintain our neutral view, price risks are skewed to the upside in the near term.

The market seemingly still underestimates how quickly the combined effect of declining shale production and seasonally increasing refinery activity could ease record storage levels throughout summer. The temporary shutdown of substantial parts of Canadian oil sand production due to forest fires will likely add to the tightening of North Americas supply overhang. Within the energy segment we maintain our positions in oil producers, pipeline operators, oil volatility carry strategies and natural gas.

Solid global production and US dollar strength put pressure on oil prices. We maintain our neutral view but see near term price risks skewed to the upside as declining shale production and firming refinery demand likely tighten markets faster than anticipated.

Norbert Ruecker, Head Commodities Research, Julius Baer

 

COMMODITIES: Weakening Brazilian real adds to sugar woes

Sugar prices tumbled below US 12 cents per pound yesterday as Brazil, the world’s largest producer and exporter, experiences further economic and currency weakness. Brazil is enduring its first recession in six years, which coincidentally, was also the last time sugar prices were at these levels. A weakening Brazilian real increases the competiveness and profitability of Brazilian sugar exporters because prices are US dollar denominated. We expect sugar to remain depressed as surplus production and a glut of global inventories keep prices well below the costs of production. Given the negative sentiment and fundamentals, we recommend against bottom fishing and maintain a neutral outlook.

Currency weakness in Brazil continues to weigh on sugar prices, which stand at six year lows. We recommend against bottom fishing and maintain a neutral outlook.

Warren Kreyzig, Commodities Research Analyst, Julius Baer

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