Robeco: EZB bereit Quantitative Easing zu erhöhen

Main market events

Peripheral bonds underperformed German bonds this week, with Portugal the only exception.The resumption of supply and upcoming elections weighed on the periphery. Portuguese bondsreturned 2.9% this year, Italian bonds 1.7%, Irish bonds 0.0% and Spanish bonds -0.7%.

ECB

The ECB revised its expectations for growth and inflation downwards. ECB President Draghimentioned the ECB stands ready to act if downside risks materialize. The limit of individual bondsthe ECB can buy was increased from 25% to 33%. This means the current QE program could, ifneeded, be extended for 6 months without hitting this limit.

Spain

Spain will need less funding this year thanks to the strong economic growth. Spain sold close toEUR 6 billion of bonds, one of the highest amounts of the year in a single day. The SpanishTreasury is clearly trying to frontload issuance as much as possible before elections in Cataloniathis month and general elections in the fourth quarter.

Italy

Italian first half 2015 GDP growth was revised up and unemployment declined strongly in July.

Portugal

Portugal successfully issued a new 7-year benchmark bond with a size of EUR 3 billion. Totaldemand for the bond was over EUR 5.5 billion. Portugal is already pre-funding its 2016 fundingneeds.

Greece

Support for Tsipras’ party Syriza fell behind its main rival New Democracy for the first time.Tsipras had called for new elections in order to silence hardline leftists within his own party, butthis decision now seems to backfire on him.

Robeco Euro Government Bonds

We are cautiously optimistic on periphery. We continue to see the ECB’s QE program, thegenerally supportive stance of EU policy makers towards the periphery and the improvement ingrowth as positives for peripheral debt. We replaced some Spanish bonds with the newPortuguese bond. Portugal benefits disproportionately from QE and its bonds cheapened due tothe issuance of the new bond. The fund maintains its overweight position in 10-year Irish bonds.

Peripheral bonds make up 39% of the fund. YTD the fund’s absolute performance is -0.14%.

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