Cinco Dias / The uncertainty over markets is causing a movement of investors toward fixed income despite the negative returns of this asset. Savers prefer to pay the German Treasury 0.5% to two years to save their money rather than take greater risks.
Interest rates have crossed the barrier of zero, becoming negative. Last December, the European Central Bank (ECB) cut its deposit rate from -0.2% to -0.3%, with the objective of financial institutions, to the higher cost of depositing excess cash at the ECB, they perceived as more attractive alternative to grant credit.
When the central banks not only remunerate the amounts deposited in them but they charge, causing a chain reaction of interest rates negativos.De Indeed, in Europe there are several central banks applying negative rates at its entities leave money parked there. Deposit rates of the Swedish central bank are at -1.10%; which applies Switzerland at -0.75%, and Denmark, at -0.65%. all of them higher than those charged by the ECB to its banks.
“The market is pricing new expansionary measures of the ECB. And it’s more than likely that one of them is precisely a reduction in new deposit rate banking. We hope to be 10 basis points to 0.4%. But we also expect an increase in the purchase of assets, “said Jose Luis Martinez, strategist at Citi in Spain.
Other analysts they go further and consider that the deposit facility can reach even 0.5%. “What happens in the market is that investors are making bets that the ECB may soon lower the deposit rate to 0.5%, hence they are now trading at more negative profitability,” said Rafael Romero, director of Unicorp Heritage management (Unicaja group).
the expert believes that the environment of lower growth forecasts being reduced expectations of future inflation and investors bet on more support from central banks to markets. “It is more than likely that institutional investors prefer to have their money in German government bonds at a negative yield that invest in bank deposits. It is, say, the cost of security. It’s like the price of renting a safe. The bonds Germans are the most safe haven and investors are willing to pay for it [hence profitability is negative], “added Romero. The yield on two-year German bonds fell as the -0.502% on Wednesday and then recovered slightly. In other deadlines happens pretty much the same.
On the other hand, Jaime Díez, XTB analyst, believes that “if deposit rates, currently at 0.3%, down from -0.4 % or even 0.6%, that scenario would mean that the economy is weak. ” In fact, just a few days ago the Bank of Japan surprised the cut to negative levels the reference interest rate to boost the Japanese economy and inflation.
Juan J. Fernandez-Figares, Link Securities, remember that what is happening to German bonds and the debt of other countries like the Netherlands and France is that risk aversion has risen sharply in recent weeks and are acting as typical safe haven assets.
impact on retail customers
the big question is whether the banks, at some point, decide to pass on these negative customer deposits, which pay, although little, by deposits. Since several weeks Bankinter explained that in his opinion “negative deposit rates will not be adopted in the near future for the retail customers” he means. “However, negative deposit rates already applied in the euro zone and Switzerland imply that rates on deposits will remain at levels close to zero for an extended period and short-term fixed income presented a negative rate of return during 2016, so profitability in low-risk assets will be virtually nil “.
the risk premium obvious political uncertainty
This is no longer what it was. Long since the risk premium is no longer a headache for investors. Even after the results came out of the polls on December 20 and it is difficult to form a government in Spain, at least in the short term, have significantly disrupted the differential which measures the interest paid on Spanish bonds compared with their German to a period of ten years counterparts. From the 20D, the premium has ranged from a minimum of 114 and a maximum of 134, which closed yesterday. “Indeed, the risk premium seems to be feeling the pressure at the moment, partly because at present the government bond market is artificially operated by the ECB,” says Victoria Torre, head of product analysis and Self Bank . However, despite this helped the ECB “can not rule that moves in one direction or another depending on the government to be formed and whether this is or is not willing to continue reforms and to respect the commitments public deficit Spain has contracted with other partners in the euro area “, assesses Juan Jose Fernandez-Figares, director of analysis at Link Securities. Given that the process of formation of government is very green and it is unclear which parties will form part of it, experts believe it is difficult to know what the premium levels will move in the coming months. However, Jose Luis Martinez Campuzano, strategist at Citi in Spain, said “it is clear that the risk premium is dominated by two factors: the first is the purchase of debt by the ECB, the second good macro figures in Spain . it is unlikely that the combination of these two factors is fading into the face of political uncertainty. at the moment I think the premium will relaxed and that demand for Spanish paper will remain high. ” The expert manages a forecast of 120 basis points or less in the coming months. These days revolves around 130 points, far from the highs that came to see in July 2012
SPAIN. The bond money will be waiting for more measures ECB
Information Cinco Dias
See also www.mundinews.com | www.eldiscoduro.com | www.tipsfemeninos.com | www.economia-venezuela.com | www.politica-venezuela.com | www.enlasgradas.com | www.cualquiervaina.com | www.espiasdecocina.com | www.videojuegosmania.com
Follow us on Twitterentornoi
No comments:
Post a Comment