Bank of America Merrill Lynch - "our 2015 top 10 trades:
1. We are still bearish AUD/USD (still targeting 0.78)
2. We still like paying US 5y rates against receiving China 5y rates
3. We are still bullish Eonia 1y1y forward and think German 5y yields will reach 0% next year
4. We still think USD/JPY has limited upside in the short-term, even though we look for it to reach 123 at end-2015
5. We still like our recommendation of long 1y USD/CAD digital call as…Continue
Added by Francesc Riverola on December 11, 2014 at 9:18am — No Comments
Bank of America Merrill Lynch - "€/$: We are bearish and short. The impulsive, intra-day decline from the Jul-01 high at 1.3701 says the medium, potentially long term, bear trend is resuming after a 2 month hiatus. Initial targets are seen to 1.3212 (swing target) ahead of 1.3104 and then the 1.2777/1.2685 zone and eventually below. Our bearish view would prove incorrect on a move above the 1.3701, Jul-01 high."
Added by Francesc Riverola on July 9, 2014 at 9:30am — No Comments
Bank of America Merrill Lynch - "We believe the ECB will strive to demonstrate that it can do more than cut rates but will stop short of QE, as there is no consensus over the tools to fight low inflation:
1. We believe the ECB will cut the refi and the deposit rate to +10bp and -10bp max, respectively, with a view to capping the exchange rate appreciation. We expect the ECB to announce a plan to support credit, a term funding scheme that would differ from the previous LTROs in four…Continue
Added by Francesc Riverola on June 3, 2014 at 8:42am — No Comments
BofAML - "£/$ is rolling over and on the verge of completing a medium, potentially long term bullish turn in trend. 1.6748/1.6709 (Apr'11 pivot and 6m channel base) is KEY SUPPORT. A close below here confirms the turn in trend exposing the Oct'13 pivot at 1.6262 and potentially below. With $/¥ still setup for a test and break of the 200d at 101.15 (we target 99.37 and potentially below), watch £/¥. It is on the verge of breaking 1.5yr channel support at 170.43. Below here would see…Continue
Added by Francesc Riverola on May 15, 2014 at 9:38am — No Comments
Bank of America Merrill Lynch - "Although March euro area inflation was on the low side of economic forecasts (at 0.5% yoy versus market expectations of 0.6%), we do not believe this will be enough to trigger ECB action yet as (1) most of the drag is coming from energy and (2) the ECB, like us, expects a rebound in April inflation on the back of disappearing energy drag and a boost from the Easter timing (late April this year, in contrast to March last year, affecting the services…Continue
Added by Francesc Riverola on April 1, 2014 at 8:58am — No Comments
Bank of America Merrill Lynch - "We have recently revised our EUR projections to reflect USD weakness following the last FOMC. Although we expect EUR/USD to weaken over the longer term, we expect it to remain supported as long as the Fed does not taper and the ECB remains on hold. However, we do not expect the EUR to strengthen much from current levels, as long as eurozone inflation and inflation expectations remain well bellow the 2% ceiling.
In this context, we expect the EUR risks…
Added by Francesc Riverola on September 27, 2013 at 8:59am — No Comments
Bank of America Merrill Lynch - "Will stronger US data lead to a higher USD too? The answer to this question is less obvious than it might seem – the correlation between the USD and US data has varied greatly over the past 20 years. In fact, during 2002-04 and 2008-2010, the USD exhibited a strong negative correlation with US data.
In our view, the USD is in an unusually good position to benefit from stronger US growth at this time:
1. With the ECB and the BoE having just adopted…
Added by Francesc Riverola on July 9, 2013 at 9:35am — No Comments
Bank of America Merrill Lynch - "The Fed’s more-hawkish-than-expected stance will likely continue to put upside pressure on the USD in the near term. In addition to those countries with low real policy rates, countries that also have large current account deficits will be at greater risk. Moreover, liquid currencies that investors can easily sell in order to hedge the now illiquid local debt positions will also likely sustain unwarranted pressure. We position for further weakness in EMFX in…Continue
Added by Francesc Riverola on July 1, 2013 at 5:45pm — No Comments
Bank of America Merrill Lynch - "Expectations of changes in central bank policies are the largest driver of financial markets this year. Across G10 currencies, RBA rate cuts have weighed on AUD, BoJ QE announcement has driven JPY lower, conjecture of Mark Carney’s actions at BoE has affected GBP, ECB press conferences have created EUR volatility and RBNZ currency overvaluation concerns alongside market intervention have changed opinions on NZD. Now, markets are focused on the Federal Reserve…Continue
Bank of America Merrill Lynch - "Commodities: . Commodity demand should be modestly supported by global economic growth of 3% this year, but we remain concerned by the lack of growth momentum in EMs.
. Soft demand and rising supplies could lead to a small surplus in Brent crude oil markets over the next 18-24 months; we forecast an average 2H13 price of $103/bbl, $105/bbl in 2014. In NA, energy supplies are surging and we see a risk of WTI prices dropping to $50/bbl over…
Added by Francesc Riverola on June 15, 2013 at 7:25pm — No Comments
Bank of America Merrill Lynch - "The “most important payroll release in years” this Friday has followed:
The 7th worst monthly return for global government bonds since 1985, and
The largest week of bond fund redemptions since October 2008.
The High Liquidity-Low Growth regime of 2008-12 has been maximum bullish for fixed income, and in our view May reflected concerns of a regime shift in 2013.
Our economists expect a 150K increase in May non-farm payrolls, a tad below the…
Added by Francesc Riverola on June 7, 2013 at 8:57am — No Comments
Bank of America Merrill Lynch - "we continue expecting the EURUSD at 1.25 by the end of this year. Indeed, the market is now moving in this direction and our projection does not seem as out of the consensus as it seemed earlier this year. We believe that a EUR weakening beyond our projection would require a new shock from the periphery, or the ECB moving aggressively into unconventional policy territory, both of which are unlikely in the short term in our view.
(...) We prefer to…
Added by Francesc Riverola on May 21, 2013 at 10:24am — No Comments
Bank of America Merrill Lynch - "In the short term, the focus is to approve alternative fiscal measures to replace the wage and pension cuts that the Constitutional Court recently rejected, alleviate the weight of bond redemptions in 2014, and eventually restore normal market access. Beyond the very short-term, the weak economy and challenging government debt dynamics suggest that Portugal will most likely need a second program, albeit a lighter one.
(...) Overall, we do not see broader…
Added by Francesc Riverola on April 18, 2013 at 9:39am — No Comments
Banc of America Merrill Lynch - "By the end of 2012, the UK’s current account deficit (as measured over a rolling four-quarter period) had deteriorated to -3.7% of GDP. The largest part of the deterioration occurred in Q2, which was the nadir for the current account deficit in 2012. While the deficit has widened to -3.7% of GDP of late, it has been larger in the past – having approached -5% in the late 1980s.
(...) On balance, the UK’s current account remains a structural headwind for…
Added by Francesc Riverola on April 9, 2013 at 10:30am — No Comments
Bank of America Merrill Lynch - "We assess the ECB’s possible course of acti on to limit the fallout from the crisis in Cyprus and avoid financial market disruption that could derail the fragile and nascent Eurozone recovery. Although short-term damage may be limited if an agreement on Cyprus can be reached quickly, longer-term damage could be more significant reflecting the lack of strategy of the Eurozone when it comes to restructuring. In addition, the Cyprus deal shows once again the…Continue
Added by Francesc Riverola on March 19, 2013 at 11:03am — No Comments
Bank of America Merrill Lynch - "After the more dovish-than-expected 6-3 vote to leave QE on hold in February, the BoE’s decision in March could be finely balanced, in our view. The economic outlook has changed little over the last month: stronger labour market data, small upward GDP revisions and the circa 2% fall in GBP could offer a little more support ahead, but the inconclusive election in Italy clearly poses downside risks.
The BoE have noted before that they did not see QE as a…
Added by Francesc Riverola on March 5, 2013 at 5:14pm — No Comments
Bank of America Merrill Lynch - "we continue to expect the euro to weaken. The recently hawkish ECB language is not justified by the data, in our view. Statements by Eurozone authorities that the euro is too strong reflect concerns that unfair competition could affect the recovery prospects (see Why is Germany concerned about a currency war?). Markets seem complacent about the challenges in the periphery’s adjustment. And we still believe markets underestimate the negative impact on US…Continue
Added by Francesc Riverola on February 14, 2013 at 9:31am — No Comments