Fondsinfos

11.09.2017 | 07:52

Robeco: ECB decisions on QE falling in autumn

The bond market took the ECB message as dovish in terms of the policy rate outlook, as Draghi emphasized more strongly than usually that the policy rate will be low “well past” any QE end date and as he seemed in no rush to wind down the QE program.

Main market events
Italian spreads tightened a bit, while Spanish spreads rose somewhat this week. After the ECB meeting all peripheral spreads tightened. The bond market took the ECB message as dovish in terms of the policy rate outlook, as Draghi emphasized more strongly than usually that the policy rate will be low “well past” any QE end date and as he seemed in no rush to wind down the QE program. He also suggested that an announcement on both the length and the size of QE would be made at the next ECB meeting in October. Italian bonds have returned 0.82% this year, Spanish bonds 1.39%, Portuguese bonds 8.82% and Irish bonds 0.67%.

Italy
A key factor for the upcoming national election in spring 208 is whether or not a united right-wing party list will be formed. The three parties individually pool at 30-35%, slightly above the Democratic Party (PD) and Five Star Movement (M5S) (both pooling just below 30%). Northern League leader Matteo Salvini has rejected the idea of a single party list with centre-right Forza Italia and right-wing party Fratelli d’Italia. That said, Salvini did not rule out a post-election coalition with Berlusconi. A victory in Sicily (5 November) for the right-wing may provide further support for a united list at the national level.

Spain
The Catalan parliament passed the bill, officially calling for an independence referendum, to be held on October 1st. The referendum intends to ask Catalans whether they would like “Catalonia to be an independent state in the form of a republic”. The Spanish government immediately appealed this law in the Constitutional Court, which suspended it. The Court has the power to fine and suspend Catalan officials if they don’t comply with its ruling. Tensions could intensify as the vote approaches.

Portugal
Moody’s raises outlook from stable to positive on Portugal’s sovereign rating, as a result of the resilient economic recovery driven by investment upswing and improving fiscal position . Next week, S&P will proceed to its next rating review. Robeco Euro Government Bonds
We have maintained the underweight position in Italian and Spanish government bonds. Spreads are close to the post-crisis lows, especially for Spain, while the market has to adjust to the gradual phasing out of the ECB’s bond buying program. Italian spreads are somewhat higher, but here fundamentals remain weaker and political risk is rising. Currently the fund is 25% invested in peripheral bonds compared to 40% in the index. Year-to-date the fund’s absolute return is 0.46%*.

* Robeco Euro Government Bonds, gross of fees, based on Net Asset Value, YTD September 7, 2017. The value of your investments may fluctuate. Past results are no guarantee of future performance.


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