HALISTER1: Old Mutual Sees Risk of ECB Disappointing on QE Front This Week

Old Mutual Sees Risk of ECB Disappointing on QE Front This Week

(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
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

Tickers
2539Z GR (European Central Bank)

People
Nicholas Wall (Old Mutual PLC)

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