La Carta de la Bolsa La Carta de la Bolsa

Julius Baer: sobre Geopolítica, Japón, renta fija emergente y recursos agrícolas

Redacción - Domingo, 29 de Marzo

INVESTMENT STRATEGY: The week that was - about politics and economics

Realising the seriousness of the situation, Greek Prime Minister Tsipras met Angela Merkel again this week in order to present policy measures to unlock financial aid payments and avoid insolvency at the end of this month. However, the overall situation remains unchanged in our view: a Greek default is still possible although unlikely. The expected drop in UK inflation has materialised with February headline inflation data down to 0% year on year. The Bank of Eng-land’s rate normalisation is delayed until at least the fourth quarter of 2015. In the US, February headline inflation remained unchanged at -0.1% year on year, a further factor besides US dollar strength that allows the US Federal Reserve (Fed) to hold back with rate normalisation until late 2015. Lastly a positive surprise was delivered by the German Ifo index which should further support German equities.

This week’s news flow remains within expectations and has thus had only marginal impact on financial markets.


Christoph Riniker, Head Equity Strategy Research, Julius Baer

ECONOMICS: Japan: Domestic demand still subdued despite stronger labour market

Today’s release of Japanese macroeconomic figures for February paints a mixed picture. While the labour market continues to strengthen, private consumption remains subdued as the additional burden from last year’s tax hike remains a drag. This year’s wage negotiations were successful in the sense that wages will rise by slightly more than last year. However, the actual wage rises are still light and will likely be lower than 2%, thus barely making up for higher prices after the tax-hike shock. Therefore, we expect only a slow recovery in private consumption, while exports will continue to remain a main growth driver. Such a slow recovery will not cause inflation to rise meaningfully. Core inflation slowed to 2.0% in February and is projected to continue to trend down over the summer due to the temporary effect of lower oil prices. Excluding the effect of the tax hike, inflation is now around zero.

The aftermath of last spring’s tax hike is still being felt in Japan, particularly in private consumption and disinflation. Going forward, we expect a slow recovery since domestic demand remains subdued. With the Japanese government seemingly at ease with the current level of the yen, the Bank of Japan will likely continue to stress the temporary nature of the dip in inflation and remain on hold in the next months.

Susan Joho, Economist, Julius Baer


FIXED INCOME: Emerging market bonds, weaker US data bring some relief, stay with quality

The weaker US economic data published in the last two months has eventually brought some relief to emerging bond markets. The more the market is pushing back its expecta-tions for the Fed’s first rate hike, the lesser becomes the pressure on emerging economies’ central banks to defend their currencies. In addition, political noise in the Middle East has helped to stabilise the oil price, which is good news for the oil-exporting countries. The rouble has managed to consolidate around USD/RUB 58, down from 62 in the first half of the month and around 70 at the end of January.


We regard the recovery of local-currency debt as temporary since most emerging economies have not solved their structural problems. Therefore, we maintain our call for hard-currency emerging market corporate debt of solid issuers.

Markus Allenspach, Head Fixed Income Research, Julius Baer


COMMODITIES: Bullish wheat despite disappointing exports

Wheat prices fell sharply yesterday, down close to 4%, after disappointing weekly export numbers out of the US. Despite solid export shipments, forward export sales were well below forecasts and the lowest for the marketing year, which ends in two months. Although the drop-off has arrived a little early, sales typically ease and become a bit volatile towards the end of season and one should not focus too much on a single data point. On the whole, 2015 exports still remain on track to meet US Department of Agriculture estimates. Going forward, we expect the outlook for continued dry conditions in US and Russian wheat grow-ing regions to increasingly bring supply risks to the fore and support prices. We maintain our bullish recommendation and three-month price target of USD 5.50 per bushel.

Disappointing export sales drove wheat prices down sharply yesterday. Nonetheless, as the marketing season winds down we expect supply risks to increasingly come to the fore and support prices. We maintain our bullish recommendation.

Warren Kreyzig, Commodity Research Analyst, Julius Baer