Halister News

Economic Release Details: {POREANN Index ECOD} --WOJCIECH MOSKWA

(Bloomberg) -- Global corporate bond spreads are set to tighten further, driven by ECB asset purchases, BlackRock’s global chief investment strategist Richard Turnill writes in note.

• Sees further spread compression, based on BlackRock’s expectations for the ECB to extend its asset purchases
• Sees an extension of the March end-point for ECB’s QE program as more likely than an increase in the size of monthly purchases or a lowering of interest rates below the current -0.40% deposit rate
• Sees opportunities in euro-zone peripheral government bonds, also likes selected European corporate bonds such as those of technology and pharmaceutical firms
• RELATED:
  • Earlier: Case for ECB QE Extension Builds After German IP Data: Scotia
  • Sept. 5: ECB PREVIEW: Draghi Disappointing Easing Hopes May Rattle Rates

(Bloomberg) -- A range breakout yday on the bund future contract offers a measured objective of 166.77, Bloomberg technical analyst Sejul Gokal writes.

• See chart here
• Generic contract found good support from 55-DMA and ichimoku cloud (today at 164.42-23) during August consolidation period
  • That support band must be broken to shift sentiment to bearish and revert attention to higher yield environment
• Interim resistance from Brexit roll-adjusted day high at 166.18
• Global yields tumbled yday following weaker-than-expected U.S. ISM non-manufacturing data, which further dimmed prospects for a Fed rate hike this month
• Scope for ECB stimulative action, such as removal of deposit floor for QE purchases and extension of QE beyond March 2017, could catalyze further upside in bunds; see ECB preview here
• NOTE: Generic contract is roll-adjusted by difference on GFUT

• NOTE: Sejul Gokal is an technical strategist who writes for Bloomberg. The observations he makes are his own and are not intended as investment advice.

(Bloomberg) -- German GDP growth is likely to moderate over the coming quarter, with growth to slow to 0.3% q/q in 3Q, Olga Tschekassin of Barclays writes in client note.

• Despite healthy state of Germany domestic economy, today’s negative IP reading is in line with poor factory orders over 2Q
• Growth momentum momentum will weaken in the coming months as uncertainty stemming from Brexit will weigh on the demand for German industrial goods

(Bloomberg) -- U.K. July industrial production m/m est. -0.2% vs prev 0.1%.

• U.K. July industrial production y/y est 1.9% vs prev 1.6%
• U.K. July manufacturing production m/m est. -0.3% vs prev -0.3%
• U.K. July manufacturing production y/y est. 1.7% vs prev 0.9%

Economic Release Details: {CNGFOREX Index ECOD} --JING JIN

(Bloomberg) -- ECB is in a difficult spot; in event of no action, there could be a selloff in bonds unless Draghi signals a clear intention to act in December, Old Mutual Global Investors portfolio manager Nicholas Wall says in interview.

• If Draghi announces a QE extension beyond March 2017, as some expect, the scarcity problem would come into spotlight with investors betting on how ECB may address it without flattening the yield curve
• There is no great need for ECB to act immediately; Draghi would probably prefer to wait for more data, and for Fed and BOJ monetary policy decisions
• Old Mutual favors emerging markets bonds with preference for Indonesia, Brazil, Mexico and has long positions on EUR, GBP vs USD
• Runs a long U.S. duration vs short duration in Europe and Japan; overall risk in the portfolio low

• NOTE: Old Mutual Global Investors has AUM of GBP25b
  • See ECB preview for this week here

(Bloomberg) -- Thailand’s govt bonds advance in wake of overnight gains in Treasuries as weaker-than-expected U.S. ISM non-manufacturing index dimmed prospects of Sept. Fed rate increase, according to Bank of Ayudhya.

• UST yield curve has shifted downward, affecting Thailand’s yield curve as well, says Pote Siripoonsap, Bangkok-based market analyst at Bank of Ayudhya
• Likelihood of a Fed rate hike in Sept. “is not totally gone, but there seems to be less possibility,” he says
• Govt bond yields in many Asian countries decline today, with Thailand’s 10-year yield down 5 bps at 2.22%, Singapore’s 10-year yield down 6 bps at 1.66% and South Korea’s 10-year yield down 5 bps at 1.46%
• UST 10-year yield little changed at 1.54% after slipping 7 bps yday