reports
- Padhraic Garvey
- CFA
EUR/USD Cross Currency Swap/The positive carry play is at its best in ...
- Paying EUR and receiving USD nets the highest spread seen in recent years - For liabilities, that brings a rate cost reduction. For assets, a yield enhancement - We like structures with maturities of at least 5yrs, and ideally out to 10yrs.
- Chris Turner
- James Knightley
- Padhraic Garvey
- CFA
Fed likely to hold rates steady and warn of the risk of delay to cuts
Elevated inflation and strong activity and jobs numbers have pushed market expectations for the timing of the first interest rate cut to December. We still see an opportunity for a September rate cut. Nonetheless, the Federal Reserve will remain wary and signal that if inflation stays high, so will interest rates
- James Knightley
US inflation not as bad as feared, but still too hot
Quarterly inflation data surprised to the upside and led the market to brace for a very unpleasant MoM print today. Thankfully it was due to upward revisions, primarily to January, with the March figure coming in line with initial expectations. Nonetheless, inflation remains too hot and September remains the earliest opportunity for an interest rate cut
- Egor Fedorov
- James Wilson
EM Credit Spark/EM credit weekly
Macro data continues to point to a repricing in the potential Fed rate cut path, but EM sovereigns have remained resilient against the shift higher in UST yields. We continue to see limited scope for overall spread tightening, and would prefer to seek out more niche stories of fundamental improvement against the backdrop of macro uncertainty.
- Roelof-Jan van den Akker
Technical Analysis/US 10-year Treasury Note
Be prepared for lower prices: The weekly chart closed lower last week, at 107 58/64, and made a new short-term low at 107 27/64 within this year's decline. This is weak, but could still be considered as a pull-back towards the previous falling trend line in making a higher bottom followed by the next solid rise. This suggests that we should see a higher close this week and likely above last week's high at 108 45/64 to confirm that prices have bottomed, suggesting further upside. A weekly close ...
- Marine Leleux
- Maureen Schuller
- Suvi Platerink Kosonen
- Adam Antoniak
- James Knightley
- Muhammet Mercan
- Peter Virovacz
Key events in developed markets and EMEA next week
The highlight in markets next week will be the US jobs report. We expect a cooling to 210,00 jobs in April. Over in Poland, all eyes will be on CPI inflation where we expect a bounce back to 2.4%. Following a stagnant fourth quarter, we expect GDP growth to be positive in Hungary during the first quarter, while inflation in Turkey is forecast to rise to 69.3%
- Marine Leleux
- Maureen Schuller
- Suvi Platerink Kosonen
- David Szonyi
- Peter Virovacz
Deterioration in Hungarian labour market stalls
The downtick in Hungary's unemployment rate shows signs of improvement, but it would be too early to declare a trend reversal. We still expect further slow erosion in the coming months, followed by a sustained improvement during the second half of 2024
- Chris Turner
- Min Joo Kang
Markets disappointed with Bank of Japan as yen hits new lows
The Bank of Japan left its key interest rates unchanged today. Markets are clearly disappointed with the colourless policy guidance, but we believe the latest outlook report and Governor Ueda's comments support our view that the BoJ will deliver a 15bp hike in July, followed by a 25bp hike in October
- Chris Turner
- Min Joo Kang
Markets disappointed with Bank of Japan as yen hits new lows
The Bank of Japan left its key interest rates unchanged today. Markets are clearly disappointed with the colourless policy guidance, but we believe the latest outlook report and Governor Ueda's comments support our view that the BoJ will deliver a 15bp hike in July, followed by a 25bp hike in October
- Bert Colijn
Eurozone bank lending continues to cautiously recover
The European Central Bank is on the verge of starting rate cuts and monetary developments are proving no hurdle to doing so. March data shows a subdued recovery in bank lending and money growth. With inflation expectations falling further, today's data is in line with a start to cautious rate cuts
- David Havrlant
CNB preview: 50bp rate cut likely while neutral real rate increases
The Czech National Bank will likely cut the key interest rate by 50bp to 5.25% as inflation has fallen towards the 2% target. Elevated price growth in services persists, limiting the likelihood of more easing. We expect a discussion on the neutral real interest rate, contributing to a higher rates outlook towards year-end
- Roelof-Jan van den Akker
Technical Analysis/Bund future
No signs of a bottom in the weekly chart with a lower high and low last week. Prices closed 146bp lower at 131.04 in combination with a new low within this year's corrective phase at 130.83. Nevertheless, we are still not bearish here and recommend our view to Buy on weakness in expecting the development of a higher bottom. The downside potential is limited from here with solid support coming in between the horizontal line around 130.70 and the former upper end of the falling trend channel aroun...
- Jan Frederik Slijkerman
- Jeroen van den Broek
- Jesse Norcross
- Nadège Tillier
- Timothy Rahill
- ING Helpdesk
Benelux Morning Notes
Basic-Fit: 1Q24 update in line, FY24 outlook in line with consensus at mid-point. bpost: Agreement on Flemish newspaper delivery; risk of provisions largely removed. Cofinimmo: Q1 results in line. Corbion: Tail wags the dog. IMCD: The last hurdle was a harsh clip. Proximus: Strong start to the year, guidance unchanged ahead of Digi arrival. Recticel: Kingspan 1Q24 trading update. Signify: 1Q24 results; revenue decline accelerates. Umicore: Confirms FY 2024 EBITDA guidance range. ...
- Chris Turner
- Francesco Pesole
- Frantisek Taborsky
FX Daily: The dollar should be stronger
The divergence of FX markets from rates and equities generally doesn't last long, and we expect a delayed USD strengthening after yesterday's upside surprise in 1Q US PCE data. We cannot rule out a consensus 0.3% MoM March core PCE print today, but 0.4% now looks much likelier. In Japan, FX intervention risk is even higher after a dovish hold by the BoJ
- Benjamin Schroeder
- Michiel Tukker
- Padhraic Garvey
- CFA
Rates Spark: Bonds braced for another inflation pop
A higher-than-expected US inflation print yesterday is likely to be followed by another one today. The FOMC meets next week, and had they not been intimating a cut, a hike could have been a discussion point. No change expected though. Markets remain convinced about a June ECB cut, but are now having slightly less conviction about a total of three cuts for 2024
- Marc Hesselink
- CFA
- Thymen Rundberg
Melexis/Slower growth period/HOLD
Melexis reported a comforting 1Q24 update pointing towards an end of destocking. The company is performing relatively well taking into account the weakness in automotive production. This is supported by R&D driving good levels of design wins. We leave our estimates largely unchanged but we still expect below average growth for 2024-25F on the back of limited car production growth and above-average price pressure. We reiterate our HOLD rating and maintain our DCF-based target of €85.
- Stijn Demeester
AMG/1Q24 preview and model update/BUY
We update our model ahead of AMG's 1Q24 results. While current lacklustre market conditions provide limited room for positive earnings surprises in the short term, we continue to see attractive mid-term earnings growth potential on the back of capacity expansions in Lithium Brazil and Germany. We reiterate our BUY on a lowered target price of €30 per share.
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