DISCLAIMER This document has been issued by Eurobank Ergasias SA (Eurobank) and may not be reproduced in any manner. The information provided has been obtained from sources believed to be reliable, but has not been verified by Eurobank, and the opinions expressed are exclusively of their author. This information does not constitute an investment advice or any other advice, or an offer to buy or sell, or a solicitation of an offer to buy or sell, or an offer or a solicitation to execute transactions on the financial instruments mentioned. The investments discussed may be unsuitable for investors, depending on their specific investment objectives, their needs, their investment experience and financial position. No representation or warranty (expressed or implied) is made as to the accuracy, completeness, correctness, timeliness or fairness of the information or opinions, all of which are subject to change without notice. No responsibility or liability, whatsoever or howsoever arising, is accepted in relation to the contents thereof by Eurobank or any of its directors, officers and employees. Wednesday 12 June 2019 1 HIGHLIGHTS WORLD ECONOMIC & MARKET DEVELOPMENTS GLOBAL MARKETS: Investors adopted a cautious stance against risk assets early today amid renewed trade woes with European bourses opening in the red, following modest losses in the majority of Asian equity markets. Fueling worries over a protracted US/China trade war, US President Donald Trump tweeted yesterday that he is “holding up” a trade deal with China and has no interest in moving ahead unless China agrees again on four or five “major points” that he did not however specify. Favored by renewed trade war jitters, USTs gained and German Bunds followed suit with the 2/10-yr yield curve undertaking anew some bull flattening. In FX markets, the EUR/USD was standing close to 1.1335/40 at the time of writing, just short of last week’s three- month high of 1.1347 favored by growing speculation of a Fed rate cut in the not too distant future. In terms of data releases, today’s highlight is US CPI for May, while in the euro area, we expect a lot of ECB speeches, most notably from ECB President Draghi who will deliver the welcome address at the 8th ECB conference on Central, Eastern and South-eastern Europe in Frankfurt (10:15 CET). GREECE: The Bank of Greece Governor Yiannis Stournaras argued in a speech that the reduction of the primary surplus target from the current 3.5% of GDP by 2022, does not imply a higher public debt ratio but a possibly lower one on the grounds that the increased fiscal space may allow tax and social security contributions reductions which, if coupled with reforms and privatisations, may in turn lead to higher GDP growth. Meanwhile, the Greek 10-year benchmark yield ended yesterday’s session at a new all-time low of 2.787%. On the economic data front, according to the Bank of Greece, in Q1 2019 nominal apartment prices are estimated to have increased on average by 4.0%YoY. SOUTH EASTERN EUROPE CESEE MACRO & MARKET DEVELOPMENTS: While most emerging markets assets concluded yesterday’s session on positive ground, at the time of writing their performance is mixed as investors are assessing US President Donald Trump’s comments that he is holding up a deal with China and he will not back down unless China agrees to make concessions that were already accepted at prior stages of negotiations. Particularly, Asian emerging markets are currently under some additional pressure as Chinese inflation data for May released earlier today revealed substantial inflationary pressures that have resulted in prices increase from 1.5% YoY in February to a 15-month high of 2.7% YoY in May. KEY UPCOMING DATA & EVENTS THIS WEEK US • June 11: o NFIB Small Business Optimism (May) o PPI Final Demand (May) • June 12: o CPI (May) o Monthly Budget Statement (May) • June 13: o Initial Jobless Claims (08/06) o Continuing Claims (01/06) o Retails Sales Advance (May) • June 14: o Industrial Production (May) o Capacity Utilisation (May) o U. of Michigan Sentiment (June) EUROZONE • June 11: Sentix Investor Confidence (June) • June 12: o Unemployment Rate (Apr) o CPI (May) • June 13: Industrial Production (April) GREECE • June 10: o CPI (May) o Industrial Production (Apr) • June 13: Unemployment Rate (Q1) SEE BULGARIA: • Jun 11: Trade Balance (Apr) • Jun 14: CPI (May) CYPRUS: • Jun 14: CPI Harmonised (May) ROMANIA: • Jun 10: Trade Balance (Apr) • Jun 12: CPI (May) • Jun 13: Current Account (Apr) SERBIA • June 12:CPI (May) Source: Reuters, Bloomberg, Eurobank Research
Transcript
DISCLAIMER This document has been issued by Eurobank Ergasias SA (Eurobank) and may not be reproduced in any manner. The information provided has been obtained from sources believed to be reliable, but
has not been verified by Eurobank, and the opinions expressed are exclusively of their author. This information does not constitute an investment advice or any other advice, or an offer to buy or sell,
or a solicitation of an offer to buy or sell, or an offer or a solicitation to execute transactions on the financial instruments mentioned. The investments discussed may be unsuitable for investors,
depending on their specific investment objectives, their needs, their investment experience and financial position. No representation or warranty (expressed or implied) is made as to the accuracy,
completeness, correctness, timeliness or fairness of the information or opinions, all of which are subject to change without notice. No responsibility or liability, whatsoever or howsoever arising, is
accepted in relation to the contents thereof by Eurobank or any of its directors, officers and employees.
Wednesday 12 June 2019
1
HIGHLIGHTS WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Investors adopted a cautious stance against risk assets early today amid
renewed trade woes with European bourses opening in the red, following modest losses in the
majority of Asian equity markets. Fueling worries over a protracted US/China trade war, US
President Donald Trump tweeted yesterday that he is “holding up” a trade deal with China and has
no interest in moving ahead unless China agrees again on four or five “major points” that he did not
however specify. Favored by renewed trade war jitters, USTs gained and German Bunds followed
suit with the 2/10-yr yield curve undertaking anew some bull flattening. In FX markets, the
EUR/USD was standing close to 1.1335/40 at the time of writing, just short of last week’s three-
month high of 1.1347 favored by growing speculation of a Fed rate cut in the not too distant future.
In terms of data releases, today’s highlight is US CPI for May, while in the euro area, we expect a lot
of ECB speeches, most notably from ECB President Draghi who will deliver the welcome address at
the 8th ECB conference on Central, Eastern and South-eastern Europe in Frankfurt (10:15 CET).
GREECE: The Bank of Greece Governor Yiannis Stournaras argued in a speech that the reduction
of the primary surplus target from the current 3.5% of GDP by 2022, does not imply a higher public
debt ratio but a possibly lower one on the grounds that the increased fiscal space may allow tax and
social security contributions reductions which, if coupled with reforms and privatisations, may in
turn lead to higher GDP growth. Meanwhile, the Greek 10-year benchmark yield ended yesterday’s
session at a new all-time low of 2.787%. On the economic data front, according to the Bank of
Greece, in Q1 2019 nominal apartment prices are estimated to have increased on average by
4.0%YoY.
SOUTH EASTERN EUROPE
CESEE MACRO & MARKET DEVELOPMENTS: While most emerging markets assets
concluded yesterday’s session on positive ground, at the time of writing their performance is mixed
as investors are assessing US President Donald Trump’s comments that he is holding up a deal with
China and he will not back down unless China agrees to make concessions that were already
accepted at prior stages of negotiations. Particularly, Asian emerging markets are currently under
some additional pressure as Chinese inflation data for May released earlier today revealed
substantial inflationary pressures that have resulted in prices increase from 1.5% YoY in February to
a 15-month high of 2.7% YoY in May.
KEY UPCOMING DATA
& EVENTS THIS WEEK US
• June 11:
o NFIB Small Business
Optimism (May)
o PPI Final Demand (May)
• June 12:
o CPI (May)
o Monthly Budget Statement
(May)
• June 13:
o Initial Jobless Claims (08/06)
o Continuing Claims (01/06)
o Retails Sales Advance (May)
• June 14:
o Industrial Production (May)
o Capacity Utilisation (May)
o U. of Michigan Sentiment
(June)
EUROZONE
• June 11:
Sentix Investor Confidence
(June)
• June 12:
o Unemployment Rate (Apr)
o CPI (May)
• June 13:
Industrial Production (April)
GREECE
• June 10:
o CPI (May)
o Industrial Production (Apr)
• June 13: Unemployment Rate
(Q1)
SEE
BULGARIA:
• Jun 11: Trade Balance (Apr)
• Jun 14: CPI (May)
CYPRUS:
• Jun 14: CPI Harmonised (May)
ROMANIA:
• Jun 10: Trade Balance (Apr)
• Jun 12: CPI (May)
• Jun 13: Current Account (Apr)
SERBIA
• June 12:CPI (May)
Source: Reuters, Bloomberg,
Eurobank Research
2
November 14, 2013 Wednesday 12 June 2019
Source: Reuters, Bloomberg, Eurobank
Research
Latest world economic & market
developments GLOBAL MARKETS
Investors adopted a cautious stance against risk assets early today amid renewed trade
woes with European bourses opening in the red, following modest losses in the majority of
Asian equity markets. Fueling worries over a protracted US/China trade war, US President
Donald Trump tweeted yesterday that he is “holding up” a trade deal with China and has no
interest in moving ahead, unless China agrees again on four or five “major points” that he
did not however specify. The above remarks followed his comments earlier this week that
he is ready to impose another round of tariffs on Chinese imports if he does not reach a
trade deal with China’s President Xi Jinping at the G20 meeting in Japan due for 28/29 June.
On its part, China’s Ministry of Foreign Affairs said on Monday that the country is open to
more trade talks with the US, but did not officially confirm whether the Chinese President
intends to hold a meeting with the US President on the sidelines of the upcoming G20
meeting. Favored by renewed trade war jitters, USTs recovered part of recent modest
losses with the 10-yr yield hovering around 2.125% in early European trade at the time of
writing, more than 1bp lower on the day, approaching a 1½-year low of 2.05% marked late
last week in reaction to weaker than expected US non-farm payrolls. German Bunds
followed suit, with long-dated paper outperforming and the 2/10-yr yield curve undertaking
anew some bull flattening. In FX markets, the EUR/USD was standing close to 1.1335/40 at
the time of writing, just short of last week’s three-month high of 1.1347 favored by growing
speculation of a Fed rate cut in the not too distant future. Fed fund futures are currently
assigning a probability of near 80% for a 25bps rate cut at the July FOMC policy meeting
against c. 20% priced-in a month earlier, before the latest escalation in the US/China trade
dispute. In terms of data releases, today’s highlight is US CPI for May, which is expected to
rise by 0.2%MoM after expanding by 0.3%YoY in the prior month, with the annual rate
likely to ease to 1.9%YoY from 2.1%YoY because of base effects. Core CPI is seen rising
0.2%MoM after three straight 0.1%MoM monthly increases, with the annual rate remaining
unchanged at 2.1%. In the euro area, we expect a lot of ECB speeches, most notably from
ECB President Draghi who will deliver the welcome address at the 8th ECB conference on
Central, Eastern and South-eastern Europe in Frankfurt (10:15 CET).
