Analisi Intermarket ....quelli che.... Investire&tradare - Cap. 2
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Dogtown
Forever Ultras Ghetto
Euro-zone bond investors have learned a valuable lesson from the financial crisis: Betting on countries seen as too big to fail is a sound strategy.
The common currency's biggest, most systemically important countries have been big winners for sovereign-debt investors. That streak is likely to continue.
Bonds of countries such as Spain and even Italy—notwithstanding its current political crisis—have delivered solid returns relative to their peers: For instance, in the third quarter through the close of trading Friday, the Italian iShares government bond ETF gained 1.35% while the Spanish equivalent picked up 3.09%, compared with a 0.03% decline on the German government bond ETF.
There has been a rush by investors back into European government bonds. Mutual funds, for example, sold €12 billion ($16.2 billion) of them in 2010 and another €25.5 billion in 2011, according to Lipper, a mutual-fund research firm. Last year, funds started dipping their toes back in the market, increasing their holdings by €50 million. That trickle became a rush in the first seven months of 2013, with investors picking up another €2 billion.
The starting gun was European Central Bank President Mario Draghi's promise in July 2012 to do whatever it took to ensure the currency's survival.
Simon Penn, a multiasset sales analyst at UBS, said Mr. Draghi's speech encouraged clients to turn more optimistic on Europe's prospects. But they also said, "I own [German] bunds already, I own them because it's Germany." Seeing little further upside on core euro-zone sovereign debt, they then started to buy what they didn't already own. "And what they hadn't owned for the entire crisis is peripheral Europe," Mr. Penn said.
Since late July 2012, the premium that 10-year Greek and Portuguese government bonds yielded over equivalent German bonds—also known as their spread over bunds—dropped 16 and five percentage points, respectively, to 7.8 and 5.2 percentage points. Falling yields mean rising prices.
The same happened, albeit less drastically, among the euro zone's biggest weak economies. The spreads on 10-year Italian and Spanish government debt over 10-year bunds dropped from 5.3 and 6.3 percentage points, respectively, in late July 2012 to 2.84 and 2.56 percentage points now.
The good times may continue for Spain and Italy, as spreads on those countries' debt have continued to decline. However, spreads have started to widen again on Portuguese and Greek debt, especially during the third quarter.
While Spanish fell 0.31 percentage points and Italian spreads remained flat since the end of June, the spreads on Portuguese debt expanded by 0.36 percentage points in the same period. Even Rome's latest political crisis caused Italian government bonds to underperform their German counterparts only modestly during recent trading sessions.
In effect, investors have started to put euro-zone bonds into two separate baskets: those issued by countries that they view as too big to fail, and those issued by the rest.
"The ECB has been careful not to say that [the central bank] will stand behind every country under every circumstances," said Toby Nangle, head of multiasset allocation at Threadneedle Asset Management Ltd., which manages £84 billion ($134 billion) in assets.
"'Whatever it takes' is focused on systemic risks, not on small countries with fundamentally unsustainable debts," said Myles Bradshaw, London-based portfolio manager for the Allianz SE unit Pacific Investment Management Co., the world's biggest bond-fund management firm by assets. "Portugal is not systemic. Italy and Spain are."
And Portugal's fundamentals are poor enough to make investors think twice about the prospects of getting their money back.
"Portugal has the worst of Italy and Spain" in terms of economics, Mr. Bradshaw said.
Investors in euro-zone sovereign debt face three country-specific risks, said David Watts, an analyst at CreditSights, an independent research firm.
The first, Mr. Watts said, is a refinancing crisis. It depends on how much the ECB allows governments to finance their deficits by selling Treasury bills to their domestic banks, which then use these bills as collateral against ECB refinancing operations.
The second is restructuring risk, where other euro-zone governments force a debt restructuring on countries that have too high a debt burden.
The third is redenomination risk, where countries decide to leave the euro.
Portugal faces all three risks, but there is little prospect that the ECB or other member states would trigger a wider euro-zone crisis by limiting Spain's deficits or forcing Italy to restructure its debt burden, Mr. Watts said.
Both Italy and Spain offer substantial interest-rate premiums over France. French government 10-year bond spreads are little more than half a percentage point above Germany's.
"I think France is still benefiting from its association with Germany and status as a core economy, so markets tend to give it the benefit of the doubt," according to Jonathan Loynes of Capital Economics, London-based research firm.
"France represents asymmetric risk," Pimco's Mr. Bradshaw said. "The upside is much more limited with respect to spreads than downsides.…France is the euro zone bellwether."
That suggests that investors who get more convinced about the too-big-to-fail strategy—or "moral hazard" trade, as Mr. Watts at CreditSights calls it—face a greater prospect that the yield differential shrinks between France on one side and Spain and Italy on the other.
The common currency's biggest, most systemically important countries have been big winners for sovereign-debt investors. That streak is likely to continue.
Bonds of countries such as Spain and even Italy—notwithstanding its current political crisis—have delivered solid returns relative to their peers: For instance, in the third quarter through the close of trading Friday, the Italian iShares government bond ETF gained 1.35% while the Spanish equivalent picked up 3.09%, compared with a 0.03% decline on the German government bond ETF.
There has been a rush by investors back into European government bonds. Mutual funds, for example, sold €12 billion ($16.2 billion) of them in 2010 and another €25.5 billion in 2011, according to Lipper, a mutual-fund research firm. Last year, funds started dipping their toes back in the market, increasing their holdings by €50 million. That trickle became a rush in the first seven months of 2013, with investors picking up another €2 billion.
The starting gun was European Central Bank President Mario Draghi's promise in July 2012 to do whatever it took to ensure the currency's survival.
Simon Penn, a multiasset sales analyst at UBS, said Mr. Draghi's speech encouraged clients to turn more optimistic on Europe's prospects. But they also said, "I own [German] bunds already, I own them because it's Germany." Seeing little further upside on core euro-zone sovereign debt, they then started to buy what they didn't already own. "And what they hadn't owned for the entire crisis is peripheral Europe," Mr. Penn said.
Since late July 2012, the premium that 10-year Greek and Portuguese government bonds yielded over equivalent German bonds—also known as their spread over bunds—dropped 16 and five percentage points, respectively, to 7.8 and 5.2 percentage points. Falling yields mean rising prices.
The same happened, albeit less drastically, among the euro zone's biggest weak economies. The spreads on 10-year Italian and Spanish government debt over 10-year bunds dropped from 5.3 and 6.3 percentage points, respectively, in late July 2012 to 2.84 and 2.56 percentage points now.
The good times may continue for Spain and Italy, as spreads on those countries' debt have continued to decline. However, spreads have started to widen again on Portuguese and Greek debt, especially during the third quarter.
While Spanish fell 0.31 percentage points and Italian spreads remained flat since the end of June, the spreads on Portuguese debt expanded by 0.36 percentage points in the same period. Even Rome's latest political crisis caused Italian government bonds to underperform their German counterparts only modestly during recent trading sessions.
In effect, investors have started to put euro-zone bonds into two separate baskets: those issued by countries that they view as too big to fail, and those issued by the rest.
"The ECB has been careful not to say that [the central bank] will stand behind every country under every circumstances," said Toby Nangle, head of multiasset allocation at Threadneedle Asset Management Ltd., which manages £84 billion ($134 billion) in assets.
"'Whatever it takes' is focused on systemic risks, not on small countries with fundamentally unsustainable debts," said Myles Bradshaw, London-based portfolio manager for the Allianz SE unit Pacific Investment Management Co., the world's biggest bond-fund management firm by assets. "Portugal is not systemic. Italy and Spain are."
And Portugal's fundamentals are poor enough to make investors think twice about the prospects of getting their money back.
"Portugal has the worst of Italy and Spain" in terms of economics, Mr. Bradshaw said.
Investors in euro-zone sovereign debt face three country-specific risks, said David Watts, an analyst at CreditSights, an independent research firm.
The first, Mr. Watts said, is a refinancing crisis. It depends on how much the ECB allows governments to finance their deficits by selling Treasury bills to their domestic banks, which then use these bills as collateral against ECB refinancing operations.
The second is restructuring risk, where other euro-zone governments force a debt restructuring on countries that have too high a debt burden.
The third is redenomination risk, where countries decide to leave the euro.
Portugal faces all three risks, but there is little prospect that the ECB or other member states would trigger a wider euro-zone crisis by limiting Spain's deficits or forcing Italy to restructure its debt burden, Mr. Watts said.
Both Italy and Spain offer substantial interest-rate premiums over France. French government 10-year bond spreads are little more than half a percentage point above Germany's.
"I think France is still benefiting from its association with Germany and status as a core economy, so markets tend to give it the benefit of the doubt," according to Jonathan Loynes of Capital Economics, London-based research firm.
"France represents asymmetric risk," Pimco's Mr. Bradshaw said. "The upside is much more limited with respect to spreads than downsides.…France is the euro zone bellwether."
That suggests that investors who get more convinced about the too-big-to-fail strategy—or "moral hazard" trade, as Mr. Watts at CreditSights calls it—face a greater prospect that the yield differential shrinks between France on one side and Spain and Italy on the other.
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collegio dei patafisici
Uno è l'ISM e l'altro è il Markit.. sono due dati diversi..
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