Nordea: Financial forecasts, To ask or not to ask? That is the question
October 1, 2012
To ask or not to ask? That seems to be the question in Spain these days. The 2013 budget proposal looks alright but with a bank audit widely as expected (and previously investors have largely been disappointed after the stress tests) markets can’t seem to make up their minds. We believe on balance investors are looking to take on more risk going into the end of the year but it’ll not be a straight line and volatility will continue to be rather high.)
- The Euro-zone continue to draw the biggest headlines. Spain and France published fairly austere 2013 budgets while the long-waited Spanish bank audit showed very little news.
- The Greek situation continues to be fluid but everybody knows that it is a sideshow. The main event is in Spain.
- Sentiment will ebb and flow but on balance we expect to see more risk-on trades going through.
- When talking to real money accounts, one get a feeling of many having been underweight risk and thus missed out on the rally in risky assets. We still believe, Draghi’s Big Bertha and pressure from EU partners will lead Spain to seek some sort of deal in the coming weeks but it will not be with full Troika supervision.
- In the US, economic figures will be no more than decent. With the Bernanke put firmly in place and uncertanties about how to come down from the fiscal cliff, expect more range trading in both yields and EUR/USD.
- We are keeping our financial forecasts largely unchanged; that implies mostly range-trading short-term for both bond yields, fx and commodities.
Find full report in research section of EU.Cbonds.