The periphery rally lost steam the past week, with short-end spreads versus Bunds failing to tighten further. This was despite some constructive news around Brexit.
Europäische Aktien könnten an Attraktivität gewinnen, da sich eine positive Auflösung vermeintlicher Risiken abzeichnet, meint der Chief Economist von Robeco, Léon Cornelissen.
The ECB struck a very dovish tone Thursday. Both growth and inflation forecasts were downgraded significantly. The ECB also extended its forward guidance on policy ratees.
Peripheral bonds traded well last week as chances of a hard Brexit are fading, constructive noise around the US-China trade talks continue and Fitch kept Italy’s rating on hold at BBB negative.
Polls point to further fragmentation in the political landscape of Spain. A rightwing alliance of Partido Popular / Ciudadanos / Vox currently seems most likely, with little risk for economic and European policies but significant risk of new tensions with Catalonia.
Spanish prime minister Sanchez called for snap elections on Friday as his minority government failed to pass the proposed 2019 budget. Elections are now scheduled for April 28th, 2019.
Market sentiment deteriorated further after the European Commission downgraded its Italian 2019 GDP growth estimate.
