Scary Movie Reloaded

- FI Strategizer: "Next week, the US data calendar will likely reinforce evidence of a softening economy. As the bad news should already be priced in, scope for another sizeable rally looks limited. If anything, after the strong rally, investors may look to take profits. With the economic outlook still weak, we would regard profit-taking as a buy opportunity."
- ECB: "The GDP projection will likely be upped significantly this year but left largely unchanged in 2011, and the picture of tame inflation is likely to be confirmed. On the liquidity front, we expect the ECB to announce more 3M LTROs and leave the full allotment in place at least until 1Q11."
- EU Portfolio Strategy: "Given the bond-friendly newsflow and the attractive carry and roll impulse within the EGB curve, we keep our active duration at +0.5 years. Cross-country, we reduce France and Germany in favor of Belgium and we cut Ireland to zero after the S&P downgrade."
- MM: "Moderate demand at recent ECB auctions suggests that tensions are limited to few players and countries. OIS forwards and Euribor futures rates have dropped dramatically in the last weeks but we do not see strong reasons for a retracement in the near term."
- Supply Corner: "Next week, there are no redemptions in the EMU. EUR 16/20bn of supply from Italy, France and Spain will be scattered along the curve. Italy will sell EUR 4/5bn of the new BTP 3.75 Mar21."
- Inflation: "We see August inflation slowing from 1.7% to 1.6%, with risks tilted to the downside. The move should be fully energy-driven."
- FX Strategizer: "Risk aversion is the name of the game again on FX majors: this should keep demand high for safe-haven units like the JPY, the CHF and, to a lesser extent, the USD."
- FX Special: "Direct actions by central banks in the currency markets are a key theme again in the wake of the sharp JPY and CHF rise. We examine rationales behind FX intervention in a dedicated focus."
- TICS: "Net long-term inflows into the US amounted to a still subdued USD 44bn in June, following USD 35bn in inflows in May. An in-depth analysis of US portfolio flows can be found in our monthly Monitor."
- EUR: "The EUR-USD picture has worsened in recent weeks, but for now this pair may only crumble like a cookie and not drop like a stone. An early test of our 3Q10 target of 1.24 thus seems unlikely next week."
- JPY & CHF: "The near-term outlook for both USD-JPY and EUR-CHF will strongly depend on the response of the BoJ and the SNB, which may prevent a rapid test of new lows towards 80 and 1.27, respectively."
- GBP: "The outlook for sterling has become less bright as well: cable may re-test 1.50 in the near future, while EUR-GBP should further struggle trendless between 0.81-0.83, favoring short strangle there."
- Pacific Rim & CAD: "Both the AUD and the NZD should struggle further between 0.87-0.91 and 0.68-0.72. The CAD may get some help from another USD fall or on signals that the BoC will hike rates again."
- Nordics: "A new 25bp rate hike to 0.75% by the Riksbank next Thursday should not be taken as a given, as markets consensus suggests: a no move, as we expect, may thus frustrate NOK-SEK bears much further."

Unicredit Curves & Crosses 20100827

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