Amundi Research & Investment Insights Unit
the articles & research center news
As 2020 approaches, the uncertainty in the market has receded but there are still risks ahead involving macroeconomic, political and technical factors. Under such a scenario and with central banks being accommodative, we do not envisage a major increase in European core bond yields from their current levels given the limited growth potential and the scarcity of tools left in the ECB’s toolkit to stimulate the economy. Should the economic situation deteriorate, there could be room for yields to fall, but probably not to the lows reached in late August/early September.
Hervé BOIRAL, Sergio BERTONCINI, Francesca PANELLI, Isabelle VIC-PHILIPPE, Eric BRARD, Gilles DAUPHINE'
Head of Rates & FX Research
Sébastien Maillard, Director of the Jacques Delors Institute, and Amundi's experts, shared their insights on the new European leaders taking office and their agenda, and addressed possible asset allocation impacts.
Jean-Jacques BARBERIS, Sébastien MAILLARD, Didier BOROWSKI, Luc MOUZON
In their September meetings, both the ECB and Fed confirmed their easing mode. The ECB delivered a full monetary policy package (pre-announced in previous months), combining conventional and unconventional tools, together with the introduction of new measures aimed at reducing the sideeffects of negative rates. The FOMC delivered its second rate cut and kept the easing bias while refraining from giving clues on forward guidance, on the back of the still supportive domestic economic picture and the mixed views emerging from the dots. For the first time, therefore, the Fed hinted at resuming the organic growth of its balance sheet: the objective will be to consistently calibrate reserves to the new level of rates, in order to keep optimal abundant liquidity levels, so as not to provide a further stimulus to the economy. In this piece, we focus on these very latest developments and on the monetary policy outlook.
Sergio BERTONCINI, Valentine AINOUZ
The new two-tier deposit-reserving scheme: With this measure the European banking sector could save up to c. €4 billion in annual interest costs (based on avoiding the -50bps deposit rate). However, while a large number in absolute terms, this only accounts for c. 2% of earnings on average for the main banks in the sector and therefore has little impact on overall Returns on Equity and profitability metrics.
Kasper ELMGREEN, Ciaran CALLAGHAN
The minutes from the latest ECB meeting suggest that the ECB is likely to proceed with a full set of measures in September, confirming not only the indications from President Draghi following the meeting but also the very latest statements by Olly Rehn, calling for the need for an “impactful and significant” package.
Sergio BERTONCINI, Annalisa USARDI
Fixed Income and Credit Strategist