Halister News

(Bloomberg) -- Bullish conviction in corporate bonds, European banks’ debt, peripheral bonds remains strong at Janus after the very stimulative package of measures ECB delivered yesterday, Ryan Myerberg, portfolio manager at Janus Capital International, says in interview in London.

• NOTE: Before ECB meeting, Janus saw inclusion of corporates bonds in QE as likely, saw opportunities in European banks across multiple parts of capital structure, favored peripheral bonds; see previous story here
• ECB mix of measures to support corporate credit spreads, both financial and non-financial, and in different geographical areas; investors may begin to look outside of euro area for wider spreads, better yields, says Myerberg
• ECB easing package powerful, it will probably take some time to transmit its effects to euro-zone economy
• Question mark remains on whether there will be enough demand for loans
• Draghi didn’t want to pre-commit to any further deposit-rate cut; this doesn’t necessarily mean that they won’t reduce it more in future
• After having crossed the line in the sand by including corporate bonds in QE, the next potential asset to buy could be equity; this isn’t going to happen anytime soon and would be dependent on a more bearish outlook for the European economy and inflation
• Euro price action shows that central banks and market have a different time horizon; ECB package designed to work in medium/long term and is focused on real economy
• For euro to go lower, Fed has to hike rates two or three times this year
• Fed meeting next week may set the stage for a rate increase in June, paving the way for a weaker European currency
• Long-term conviction for euro remain bearish
• Conviction in G-10 remains low; risk-on environment should favor EM currencies
• NOTE: Myerberg manages portfolios in Janus fundamental fixed-income group, which had $34.9b of assets under management as of end-2015