Portugal’s amazing economic recovery (contrary to the general consensus two years ago that it would be the next country to fail amid the sovereign debt crisis) is now reflected in its investment grade (an investment grade rating except from Moody’s). Investors are buying both shares and bonds.
The Euro was by far the best performing G10 currency in 2017, returning 15 % over the period. ETF Securities’ analysts expect that the Euro should end Q1 2018 under the 1.20 level, broadly in line with Bloomberg consensus estimates of 1.19. However, they think “this displays the downside risk to the Euro remain elevated”.
Latest business surveys point to a strong growth momentum for the Eurozone recovery, closer to 3%. Indeed, following an estimated +2.3% GDP growth in 2017, AXA IM expects it to grow at +2.7% in 2018 .
Spain’s government bond rating has been upgraded by Fitch to A- from Baa+, Greece has also seen the rating lifted by Standard &Poor’s, and the US once again experiences a shutdown of non-essential government operations. The biggest topic for the bond market, however, will be the press conference of the European Central Bank (ECB) scheduled for Thursday.
Yesterday, the European Parliament asked for the EU’s renewable target for 2030 to be increased to 35% compared with the current 27%. The move is part of the community bloc’s efforts to meet the commitments included in the Paris Agreement.
Today we will have Eurozone CPI data, without any surprises on the horizon. The average EMU CPI rate will come in at 1.5% in 2017 compared with 0.2% in 2016. This is after a year when the annual inflation rate actually reached 2% in February when the increasing effect of energy prices was at its most aggressive.
All it took was for sovereign bond yields to recover +20 bp to dampen enthusiam in the European property sector during 2017. With the current level of European 10-year sovereign bonds, property firms can obtain all the financing they want.
Nearly a decade later, the two leading figures from Greece’s political class have been unable to lead Greece through the catharsis that is necessary. Alexis Tsipras’s strategy to gain power was to focus on a different enemy, while placing the Karamanlis era and the man himself well away from the firing line. Kyriakos Mitsotakis, meanwhile, cannot amass the courage to accept his party’s clear responsibility without qualifying it with weak excuses that seek to deflect blame.
Dividends are an important source of income and continue to help investors offset to some extent the volatility in investment returns, according to the latest report from Allianz Global Investors, one of the most important active investment fund managers in the world.
If there is something that the months of January have in common every year are the numerous sectorial reviews which every analyst consensus makes. Tradition focuses on 12 companies in the Stoxx600 with a recent buy recommendation.