Dec. 3, 2016 (Commerzbank AG) – ECB Council meeting: Dr Draghi to extend the therapy
At next week’s meeting, the ECB Council will likely decide to extend the bond purchasing programme (QE), probably by six months. This would make it necessary to lift the issuer limit (33%), but this is difficult for legal reasons. We outline a possible solution.
Outlook for the week of 28 November to 2 December 2016
- Economic data: It is likely that German industry got off to a good start in Q4 and we look for solid October figures for orders and production.
- Bond market: We expect 10y Bund yields to remain within their recent trading range, despite the Italian referendum and upcoming ECB decision.
- FX market:If the Italian electorate says ‘No’ in Sunday’s referendum, there will be downside risks for the euro, especially given the danger of renewed political instability.
- Equity market: Thanks to the powerful tailwind from monetary indicators we expect the DAX to rise to 11,700 by the end of 2017.
- Commodity market:Oil prices should settle above $50 a barrel in the wake of the OPEC agreement to cut output.