December 11 2016

Dec. 11, 2016 (Commerzbank AG) – Trump-o-meter – what will Trump deliver?

A Fed rate hike next week appears to be a done deal. It is however less obvious how Donald Trump’s policies will impact the US economy. We have developed a “Trump-o-meter” designed to demonstrate how far US economic prospects may improve or deteriorate as a result of the proposed policy measures, and will update it on a regular basis.

Further topics:

ECB: The beginning of the end of QE?

The ECB is extending its bond purchases by nine months, but reducing the monthly purchase volume from €80bn to €60bn. This is the start of the enforced exit from bond purchases. However, the ECB will no doubt maintain a lax policy stance via other means. The underlying causes of the government debt crisis have not after all been resolved, and the euro zone outlook remains uncertain.

Outlook for the week of 12 to 16 December 2016

  • Economic data: The euro zone economy seems to be growing somewhat more quickly in the final quarter of 2016 compared to the summer half-year, profiting from stronger global demand in particular.
  • Bond market: Trading patterns in Bunds and peripheral spreads should become increasingly erratic as the low liquidity season kicks in and with the final tier-one risk event still pending in the shape of the FOMC decision.
  • FX market: The movement of CNY exchange rates in the recent past is often interpreted as reflecting the renminbi’s weakness. This is the wrong way of looking at it. However, this does not mean that unsecured CNY positions are without risk.
  • Equity market: The German equity market should show higher volatility again at times in 2017. Investors should remain focused on themes such as restructuring and M&A, interest sensitivity, continued weakness of the euro and dividend policy.
  • Commodity market:Oil prices should settle above $50 a barrel in the wake of the OPEC agreement to cut output.