Julius Baer: Trump y el dólar, bonos gubernamentales alemanes, Banco Central de Brasil y oro

Redacción - Jueves, 12 de Enero

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ECONOMIES Trump taper US dollar optimism Donald Trump’s highly expected press conference failed to deliver details on its intended economic policy, in particular detail on the planned tax reform. Additional fiscal boost, which will allow the Fed to pursue a more aggressive rate normalisation than currently discounted by money markets, is the main reason for our bullish US dollar stance. We still expect tax cuts to be put into place in the first year of presidency but have to acknowledge waiting a bit longer for more details.

Trump’s press conference disappointed regarding detail to economic policy failing to give the US dollar a boost.

 

David Kohl, Chief Currency Strategist and Head Economist Germany, Julius Baer

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FIXED INCOME

 

German government bonds: Rising yield despite obvious scarcity of bonds?

 

Later today, the German budget figures will be released. With near certainty, Germany will report a surplus in the magnitude of 0.6% of GDP for 2016. In other words, Germany is paying back its public debt. At the same time, the European Central Bank is buying government bonds – the German Bundesbank alone has bought as much as EUR 188 billion German bonds last year and is still buying a double-digit amount each and every month. If supply is negative and demand is strong, one would expect prices to go through the roof. Actually, the yields on German long-dated bonds are rising slightly, evidence of the growing optimism in the market that inflation will stabilise in the eurozone and that the ECB will stop distorting the market at a later stage. We basically share this view and regard the massive dislocations of bond yields at the short end as temporary phenomenon. 

 

Markus Allenspach, Head Fixed Income Research, Julius Baer

 

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Brazilian Central Bank surprises with a 75bp rate cut, accelerating the easing cycle

 

Macro conditions in Brazil have changed considerably over the last year. In January 2016, annual inflation stood at 10.7%, the Brazilian real-US dollar (USDBRL) rate was at 4 and the economy was in a deep recession. Fast-forward to today and growth is still in negative territory (though recovering), but inflation has receded substantially (6.3% as of December 2016) and the BRL has gained back most of the lost ground (USDBRL currently at 3.20). Thus, the central bank seems to feel comfortable accelerating the easing cycle and has decided to cut interest rates for the third time in a row, but this time by a surprising 75 basis points, which leaves the benchmark interest rate at 13%. The decision seems logic, as the lower rates should accelerate the economic recovery –currently the most urgent need of the country. We expect the country to see one of the biggest changes in gross domestic product within emerging markets, though we still expect growth to be flat-to-slightly positive in 2017 (a notable improvement, considering that the economy has contracted by more than 7% in the last two years). In that context, we still consider Brazilian hard-currency corporate bonds as attractive, as we think they balance sheets can capture the improvements in domestic activity and the global economy, as well as the higher commodity prices.

 

Alejandro Hardziej, Fixed Income Analyst, Julius Baer

 

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COMMODITIES

 

Commodities: Gold and oil remain in focus

 

The US dollar dropped to a monthly low after yesterday’s press conference by president-elect Donald Trump and in turn provided support to commodity prices. Gold gained almost 2% from its lows and is now moving back to USD 1,200 per ounce. The market lacked sup-port from physical buying however, which we believe is a precondition for a lasting recovery. Given our expectation of improving growth, returning dollar strength and rising interest rates, we continue to see more downside than upside for prices going forward and maintain a cautious view. Meanwhile, oil prices rose more than 2.5% yesterday on news that Saudi Arabia had cut exports to some countries in Asia. While Saudi Arabia and other core members of the Organisation of Petroleum Exporting Countries (OPEC) remain most committed to the cut supplies, this appears to be less the case for other countries such as Iraq. We remain sceptical about the supply deal’s fundamental impact because compliance will likely be poor and the deal partially undoes the past months’ overproduction. Taking further into consideration the extremely bullish positioning in the futures market, we see more downside than upside also for oil, justifying an unchanged cautious view.

Despite moving back to USD 1,200 per ounce, we see no lasting recovery for gold. Given our expectation of improving growth, returning dollar strength and rising interest rates, we maintain a cautious view. For oil, we remain sceptical that the supply deal will swiftly erase surplus supplies and see no lasting support to prices.

 

Carsten Menke, Commodities Research Analyst, Julius Baer

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