Danske Research Team
Danske Bank A/S
What’s on our minds
- General credit market news
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After basically shrugging off the lack of agreement at the OPEC meeting in Doha, the price of crude oil has hit new YTD highs in the past week, momentarily reaching $46/barrel.
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The ECB published details last week on the forthcoming expansion of its QE programme to corporate bonds. The guidelines indicate a broad universe of eligible bonds but with some caveats. It is also worth noting that parent companies based in the Nordics (and the US) can issue eligible bonds through subsidiaries in the eurozone. Despite an announced large absolute purchase amount, we think the ECB-driven rally in spreads will soon be over but believe the market is still likely to be well bid going forward. See ECB CSPP: The devil is in the detail, from yesterday for more exciting details!
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Reporting season has now really taken off and overall cyclical non-financials’ earnings have generally beaten expectations. Handelsbanken was the first of the large Nordic banks to report and disappointed on earnings, see Handelsbanken: Q1 16 - Top line under pressure, 20 April.
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The SEK HY market has officially ‘reopened’ with a couple of deals in recent weeks (D Carnegie & Co and Millicom) and a few more currently on screens. EUR primary markets saw another consecutive week of high activity.
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Editors’ Picks
EUR/USD consolidates weekly gains above 1.1150
EUR/USD moves up and down in a narrow channel slightly above 1.1150 on Friday. In the absence of high-tier macroeconomic data releases, comments from central bank officials and the risk mood could drive the pair's action heading into the weekend.
GBP/USD stabilizes near 1.3300, looks to post strong weekly gains
GBP/USD trades modestly higher on the day near 1.3300, supported by the upbeat UK Retail Sales data for August. The pair remains on track to end the week, which featured Fed and BoE policy decisions, with strong gains.
Gold extends rally to new record-high above $2,610
Gold (XAU/USD) preserves its bullish momentum and trades at a new all-time high above $2,610 on Friday. Heightened expectations that global central banks will follow the Fed in easing policy and slashing rates lift XAU/USD.
Week ahead – SNB to cut again, RBA to stand pat, PCE inflation also on tap
SNB is expected to ease for third time; might cut by 50bps. RBA to hold rates but could turn less hawkish as CPI falls. After inaugural Fed cut, attention turns to PCE inflation.
Bank of Japan set to keep rates on hold after July’s hike shocked markets
The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session.
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