Dr. Platon Monokroussos, Chief Market Economist, Deputy General Manager, Eurobank Ergasias S.A
HIGHLIGHTS
WORLD ECONOMIC & MARKET DEVELOPMENTS
GLOBAL MARKETS: Major European equity indices retreated on Wednesday, snapping a six-day winning streak, on concerns that the ECB is moving towards a tapering of its asset purchase program. German 10yr Bund yield increased to an almost two-week high of -0.043% in Asian trade today, before retreating to around -0.055% in European trade at the time of writing. In FX markets, the US dollar strengthened yesterday against its major currency peers supported by hawkish comments by a number of Fed officials. Richmond Fed President Jeffrey Lacker argued in favor of raising interest rates in the foreseeable future so as to keep inflationary pressures under control. In this context, the DXY dollar index increased at a two-month high of 96.442 on Tuesday, before slipping slightly around 96.020 in European trade today. Moreover, the GBP/USD hit a new 31-year low of 1.2686 earlier today, on concerns about a “hard” Brexit scenario. The data calendar is relatively light today though US ADP employment report and ISM manufacturing for September will be worth watching.
GREECE: In its World Economic Outlook report, October 2016, the IMF envisages for Greece real GDP growth +0.1% for 2016 and +2.8% for 2017 (the respective figures in the draft Budget 2017 are -0.3% and +2.7%) while unemployment is forecast at 23.3% in 2016 and 21.5% in 2017. According to preliminary data from the General Secretariat of Public Revenue, ordinary budget revenues outperformed the target by €809mn in September 2016 and by €1.36bn for the period January – September 2016. With regard to the pending actions for the release of the remaining €2.8bn ESM loan sub-tranche, the bill for the legal framework of the Hellenic Civil Aviation Authority (HCAA) was submitted to Parliament late last night.
SOUTH EASTERN EUROPE
CESEE MARKETS: Emerging market assets came under pressure on Wednesday amid worries about the prospect of less ECB stimulus.
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