e2fda6f48f4beb7f2e9a16bde35b727c4d7cd8e0d73c422d49e7378ade652268;;[{"layout":"linklist","uid":22793,"publicationDate":"03 Jul 14:23","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177329.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJPhOzJ5ypEnEWfi5PXRN5hI=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - US: Virus spread causing voluntary social distancing ","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> Our Chart of the Week plots the daily number of restaurant seated diners compared to the same day one-year ago in selected US states. It reveals that those states that are experiencing a surge in the number of new daily confirmed cases of COVID-19, notably Arizona, California, Florida, Georgia and Texas, have seen restaurant diners drop in recent weeks, with the biggest declines in those states that had reopened earlier and more aggressively.<\/li><li> The fall in seated diners came before many states announced a rollback or suspension of plans to further reopen the economy. For example, the Governor of Texas announced on 26 June that restaurant capacity would be ordered to fall from 75% to 50% effective from Monday 29 June, but restaurant seated diners had already fallen from -44% yoy on 19 June to -61% yoy on 25 June. On 1 July the Governor of California ordered the closure of dine-in restaurants in 19 counties across the state. Arizona, Florida and Georgia have not imposed new restrictions on restaurants. Therefore, and importantly, even in the absence of a government-ordered lockdown, the spread of the virus has caused a significant increase in voluntary social distancing. Indeed, restaurant seated diners is probably a reliable proxy for other social activities that are deemed at high risk of contagion, and where voluntary social distancing has likely increased.<\/li><\/ul>","hash":"e2fda6f48f4beb7f2e9a16bde35b727c4d7cd8e0d73c422d49e7378ade652268","available":"0","settings":{"layout":"linklist","size":"default","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","synopsislength":"-1","synopsisexpand":"0","nodate":"0","nolinktitle":"0","notitle":"0","dateformat":"d M G:i","noproduct":"0","noflags":"0","shownav":"0","oldestedition":"","limit":"12"}},{"layout":"linklist","uid":22736,"publicationDate":"28 Jun 11:10","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177268.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJOw0vlADQw2DZTRf95rzlso=&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177268.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJOw0vlADQw2DZTRf95rzlso=&T=1&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177268.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJOw0vlADQw2DZTRf95rzlso=&T=1&T=1"},"title":"Chief Economist\u00b4s Comment - Sunday Wrap","product":"Chief Economist's Comment","synopsis":"<ul class=\"ucrBullets\"><li> Policymakers never run out of ammunition, but there are big differences between how different governments approach ultimately the same challenge, and the result is beginning to show.<\/li><\/ul><ul class=\"ucrBullets\"><li> European reforms and integration really do happen in times of crisis. What\u2019s coming, and what\u2019s still uncertain.<\/li><\/ul><ul class=\"ucrBullets\"><li> And, if anyone was in doubt, the two key populist political leaders in the Western world, Donald Trump and Boris Johnson, are really not interested in governing in any normal sense of that word. What this means for Trump\u2019s re-election hopes and the US more broadly, and what it means for Brexit.<\/li><\/ul><ul class=\"ucrBullets\"><li> On the back of what we learned during the second quarter, this past week we fine-tuned our forecast marginally up for 2020 \u2013 while the IMF revised its numbers significantly down. We are now very close to each other for the 2020-2021 picture.<\/li><\/ul><ul class=\"ucrBullets\"><li> In times of great uncertainties, the dollar became the ultimate safe haven \u2013 but we also got some serious mis-pricing of assets. I\u2019ll argue that we are in for some potentially significant re-pricing of assets in H2.<\/li><\/ul>"},{"layout":"linklist","uid":22735,"publicationDate":"26 Jun 14:38","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177267.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJOw0vlADQw2DL50bguPnc4c=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - Houston, we have a problem","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> This week the US recorded its largest one-day rise in new confirmed cases of COVID-19 since the pandemic began, with seven states recording record rises, concentrated in the south and west of the country, including the populous states of California, Florida and Texas.<\/li><li> Our Chart of the Week shows the picture for Texas. While the rise in testing for COVID-19 explains some of the rise in the number of confirmed positive cases in Texas (the more testing, the more cases are likely to be confirmed for a given infection rate), the second wave of the virus is real, as evident by the sharp rise in hospitalizations (which are much less likely to be affected by changes in the amount of testing) due to the virus. Consequently, the number of daily deaths, which tends to correlate with hospitalizations with a lag, is likely to accelerate in the coming days and weeks.<\/li><li> Yesterday, the Governor of Texas, Greg Abbott, announced he was suspending plans to ease lockdown restrictions further. The state had eased the lockdown earlier and more aggressively than most other US states, including for the hospitality sector, with restaurants and bars allowed to open at 50% capacity. It seems likely that a mere halt to further re-opening will not be enough to stop the spread of the virus.<\/li><li> In our latest Economics Chartbook, published yesterday, we revised our US GDP growth forecasts. We now expect a less severe contraction in 2Q20 (-15% qoq from -24.2%, non-annualized) as the lockdown was less-stringent and shorter than we had expected, but this is more than offset by downward revisions to growth in 2H20. We expect still-rapid growth of 8% qoq (down from 13%) in 3Q20, thanks to pent-up demand and fiscal support, slowing to 4% qoq (down from 14%) in 4Q20. The downward revision mostly reflects our judgement that growing numbers of new COVID-19 cases in southern and western US states are likely to weigh on growth in the second half of the year.<\/li><\/ul>"},{"layout":"linklist","uid":22724,"publicationDate":"25 Jun 14:37","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177256.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJOw0vlADQw2DTSVHmqOvrPE=&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Economics Chartbook - The trough is behind us, but it is a long way back to normal (3Q20)","product":"The Unicredit Economics Chartbook","synopsis":"<ul class=\"ucrBullets\"><li> Dear reader, welcome to the latest issue of our Economics Chartbook where we have fine-tuned our growth forecasts. The contraction in 2Q20 seems to have been slightly less severe than we had expected, but the recovery that has just started is likely to be shallower. It will take a long time for output to climb back to pre-crisis levels. <\/li><\/ul><ul class=\"ucrBullets\"><li><strong> Global: <\/strong> An earlier end to the \u201cGreat Lockdown\u201d has led us to fine-tune our forecasts for several countries. Globally, we now see a somewhat less severe contraction of 5% this year (previously 6%) and a less pronounced recovery of 6-7% next year (previously 8-9%). The road to full recovery will likely be long. A relatively rapid \u201ctechnical\u201d rebound in 3Q20 might be followed by materially slower growth later this year as the long-term costs of the crisis become clear. Social distancing measures are likely to persist, whether state-mandated or otherwise, well into next year. We expect a significant rise in corporate defaults and long-term unemployment, and increased public and private debt to weigh on aggregate demand. Uncertainty remains extremely high, related to the path of COVID-19, the behavior of firms and households, and the timing of the withdrawal of fiscal support.<\/li><\/ul><ul class=\"ucrBullets\"><li><strong> US: <\/strong> The lockdown of the US economy was less-stringent and shorter than its peers and our expectations and, consequently, the hit to GDP in 2Q20 is likely to be smaller than expected. However, we now forecast a significantly weaker recovery amid growing numbers of new COVID-19 cases in southern and western states. We also have concerns that the fiscal response might not be well targeted and could be withdrawn prematurely. In yearly average terms, we see GDP contracting by 7.4% this year (previously 10.5%) and expanding by 6.3% in 2021 (previously 11.4%). By 4Q21 we expect GDP to be about 1.5% below its pre-crisis level, approximately one percentage point lower than we initially estimated. The Fed is likely to keep rates on hold through 2022. We expect it to formally adopt flexible average-inflation targeting, and yield-curve control up to 2-3 years maturity, later this year.<\/li><\/ul><ul class=\"ucrBullets\"><li><strong> Eurozone: <\/strong> The timing of the lifting of restrictions affects our short-term growth forecasts, but not our medium-term assessment. We have fine-tuned our GDP projections by raising the yearly average for 2020 to -11% from -13%, and reducing it for 2021 to +8% from +10%. This would still leave GDP some 3-4% below its pre-crisis level at the end of 2021, very much in line with our previous projections. The ECB is stepping up its action to preserve favorable financial conditions and safeguard the transmission of monetary policy as issuance of government debt intensifies. The European Commission\u2019s proposed recovery fund \u2013 named \u201cNext Generation EU\u201d \u2013 is a landmark initiative. It is the signaling effect, rather than its size, that makes this fund a potential game changer.<\/li><\/ul><ul class=\"ucrBullets\"><li><strong> CEE: <\/strong> Activity is gradually rebounding, helped by support packages ranging from 3.5% of GDP in Russia to 23.5% of GDP in Czechia. These packages also differ in scope, efficiency and speed of implementation. In EU-CEE, GDP is likely to fall by 8.3% in 2020 and to grow by 7.3% in 2021. Western Balkan economies could evolve similarly. Russia\u2019s economy may contract by 5.4% in 2020 and rebound by 3.8% next year. In Turkey, GDP could fall by 5.6% this year and grow by 6.6% in 2021. We expect additional rate cuts in Czechia, Romania, Russia, Serbia and Turkey. Only Czechia and Poland might consider raising rates in 2021.<\/li><\/ul><ul class=\"ucrBullets\"><li><strong> UK: <\/strong> The economy contracted by 20% in April after a drop of 5% in March, but with the economy reopening earlier than we had expected, 2Q20 might not be as bad as feared. GDP is likely to shrink 9% this year and rise 6.6% next year, the latter revised down in part due to the (premature) planned withdrawal of the Job Retention Scheme. A trade deal with the EU still seems likely, but the economic costs of not extending the transition period will be amplified by COVID-19. The BoE will likely keep rates on hold through 2021, while further increases in its stock of asset purchases hang in the balance.<\/li><\/ul><ul class=\"ucrBullets\"><li><strong> China: <\/strong> We expect GDP to stagnate in 2020, and to expand by 11.5% in 2021. Although the lockdown was removed in mid-March and mobility has picked up, consumers are still reluctant to spend and retail sales are struggling to recover. Factory activity, on the other hand, has improved strongly, with industrial value-added back to its pre-crisis level. Beijing has adopted a fiscal package equivalent to about 4% of GDP that we do not expect to be expanded, unless a second wave of contagion takes place at the national level. The PBoC stands ready to boost its lending facilities to support bank loans to micro and small firms.<\/li><\/ul>"},{"layout":"linklist","uid":22722,"publicationDate":"25 Jun 12:39","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/emergingmarkets_docs_2020_177254.ashx?EXT=pdf&KEY=l6KjPzSYBBGzROuioxedUNdVqq1wFeRoriQuRq7XQDlwdnZSkPUJAw==&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"CEE Quarterly - CEE: Strong rebound, fragile recovery (3Q20)","product":"CEE Quarterly","synopsis":"<ul class=\"ucrBullets\"><li> Activity is rebounding in CEE as restrictions are being removed, but it remains well below the levels registered before the COVID-19 crisis. Moreover, the subsequent recovery is facing many risks.<\/li><\/ul><ul class=\"ucrBullets\"><li> Governments and central banks have implemented sizeable support programs that range from 3.5% of GDP in Russia to 23.5% of GDP in Czechia. <\/li><\/ul><ul class=\"ucrBullets\"><li> Support programs differ in size, scope, efficiency and speed of implementation. These characteristics will shape the recovery in 2H20 and 2021.<\/li><li> The biggest risk for CEE economies is a second wave of the pandemic, even if restrictions are not as tight as in March-May 2020.<\/li><\/ul><ul class=\"ucrBullets\"><li> In EU-CEE1), we expect GDP to fall by 8.3% in 2020 and grow by 7.3% in 2021. Western Balkan economies could evolve similarly.<\/li><\/ul><ul class=\"ucrBullets\"><li> Russia\u2019s economy could contract by around 5.4%in 2020, with a 3.8% rebound next year.<\/li><\/ul><ul class=\"ucrBullets\"><li> In Turkey, GDP could fall by approximately 5.6% this year and grow by 6.6% in 2021.<\/li><\/ul><ul class=\"ucrBullets\"><li> We expect additional rate cuts in Czechia, Romania, Russia, Serbia and Turkey. Only Czechia and Poland might consider raising rates in 2021.<\/li><\/ul><ul class=\"ucrBullets\"><li> Inflation targets could be met in 2020-21 but may be threatened thereafter if domestic demand rebounds.<\/li><\/ul><ul class=\"ucrBullets\"><li> According to our models, the CZK, the HUF and the PLN are undervalued, but poor trade data and volatile risk appetite may cut potential rallies short; the RUB, RON and RSD are overvalued.<\/li><\/ul><ul class=\"ucrBullets\"><li> ROMGBs and ROMANI EUR remain our top picks in the region, as the rating downgrade risk previously priced in to the bonds could continue to diminish.<\/li><\/ul><ul class=\"ucrBullets\"><li> OFZs, POLGBs and long-end CZGBs offer attractive valuations but face FX risks. <\/li><\/ul><ul class=\"ucrBullets\"><li> The EU\u2019s Recovery and Resilience Facility is a game changer for EU-CEE but not in the next twelve months.<\/li><\/ul><p class=\"ucrIndent\">1) EU-CEE comprises Bulgaria, Croatia, Czechia, Hungary, Poland, Romania, Slovakia and Slovenia \u2013 all CEE countries that are members of the EU.<\/p>"},{"layout":"linklist","uid":22711,"publicationDate":"24 Jun 13:49","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177239.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJOw0vlADQw2DInldPK6H4WU=&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177252.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJOw0vlADQw2Dy2hlkv2EVgc=&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177251.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJOw0vlADQw2DLi8P9CZupOA=&T=1"},"title":"Oil Update - Is peak demand coming?","product":"Oil Update","synopsis":"<ul class=\"ucrBullets\"><li> Oil market fundamentals are improving both on the demand and supply side. But, at the moment, the greatest source of uncertainty for oil producers and investors is structural in nature, and not cyclical.<\/li><\/ul><ul class=\"ucrBullets\"><li> Many in the industry wonder whether COVID-19 is about to accelerate trends that until February seemed to be one decade away, leading to peak demand. <\/li><\/ul><ul class=\"ucrBullets\"><li> Although nobody has an answer yet, this uncertainty is forcing energy companies to adopt a wait-and-see mode when it comes to commit to new investment projects. This cautiousness is likely to generate upward price pressures in a couple of years. <\/li><\/ul><ul class=\"ucrBullets\"><li> In the longer term, the price implications of a peak demand scenario would be opposite. Prices will likely come down and the degree of competition within the oil industry would intensify. <\/li><\/ul>"},{"layout":"linklist","uid":22675,"publicationDate":"21 Jun 10:53","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177201.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJOw0vlADQw2DIFoDsk_Vbjg=&T=1&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177201.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJOw0vlADQw2DIFoDsk_Vbjg=&T=1&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177201.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJOw0vlADQw2DIFoDsk_Vbjg=&T=1&T=1"},"title":"Chief Economist\u00b4s Comment - Sunday Wrap","product":"Chief Economist's Comment","synopsis":"<p><ul class=\"ucrBullets\"><li><strong> The negotiation of the European mega package: <\/strong> Short-term objectives, the longer-term vision and its pitfalls.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li> The challenge to the entire European project by the German Constitutional Court. First hurdle about to be cleared ' but the next one has already been teed up.<\/p><\/li><\/ul>"},{"layout":"linklist","uid":22655,"publicationDate":"17 Jun 11:21","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177181.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJGootK43tRB_IgRvSwp7PmQ=&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - Fiscal and monetary stimulus to curb rising defaults","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> In the wake of the economic slump, corporate defaults across the globe are increasing. With 25 corporate issuers defaulting in May (slightly down from 26 in April), the trailing 12-month global speculative-grade (SG) default rate crept higher to 4.7%, doubling from 2.3% in May 2019, according to Moody\u2019s data. The global SG default rate stood at 4.1% at the end of April. European corporates have been unable to escape the trend, but we note that the overall default level has been lower than in the US. In Europe, the trailing 12-month SG default rate rose slightly to 2.3% in May (up from 2% in April), which compares to 1% one year ago. The most recent peak in European default rates occurred in February 2018, at 4.2% (see chart above). <\/li><\/ul><ul class=\"ucrBullets\"><li> Most striking is the corporate default level in the US so far this year. By the end of May, the US SG default rate had risen to 6.4% from 5.4% in April. Notwithstanding the latest monthly uptick in US defaults, the default rate was rising well before the COVID-19 crisis. US defaults bottomed out at 2.6% in January 2019 and have increased steadily since then, comparable to levels last seen in the aftermath of the oil-price collapse of 2014-15. Defaults increased in 2019, mainly on the back of defaults in the Oil & Gas sector, while also defaults in the Services and Retail & Apparel sectors played their part, due to continued financial stress in retail as a result of changing consumer behavior and the rise of e-commerce. <\/li><\/ul><ul class=\"ucrBullets\"><li> Europe has performed better in terms of defaults than the US so far this year. This is mainly due to the fact that European defaults entered the COVID-19 crisis at a lower level than the US. Moreover, European corporates should benefit, to a large extent, from massive fiscal and monetary stimulus, in our view. The same will apply to US corporates given the comprehensive coronavirus stimulus package implemented in the US. Furthermore, in various European countries, a vast amount of measures were implemented concerning temporary suspensions of insolvency proceedings. This will likely result in lower defaults going forward as the suspension will shield companies impacted by the COVID-19-crisis. In particular, this will buy the affected companies time until they can benefit from the expected economic rebound. <\/li><\/ul><ul class=\"ucrBullets\"><li> In our view, it might be too early to call the European default development a success. Overall, the outlook for default rates in the future depends on the balance between the impact of the deterioration of fundamentals and the continued support offered by the governments. <\/li><\/ul><p class=\"ucrIndent\">During the period of the Global Financial Crisis in 2008\/09 with a much less deep economic contraction, European defaults had reached a level of 13%. This led us to initially assume that default rates will likely soar to about 12% by the end of next year. When considering the unprecedented support from fiscal and monetary actions, including the halt of insolvency proceedings, we think now default rates in Europe could increase to about 9% at the end of 2021, but not below that level given the potential severity of the disruption to economic activity the outbreak has likely caused.<\/p>"},{"layout":"linklist","uid":22619,"publicationDate":"14 Jun 11:14","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177143.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJGootK43tRB_4a2ygLAnulo=&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177143.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJGootK43tRB_4a2ygLAnulo=&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177143.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJGootK43tRB_4a2ygLAnulo=&T=1"},"title":"Chief Economist\u00b4s Comment - Sunday Wrap","product":"Chief Economist's Comment","synopsis":"<p class=\"ucrIndent\"><p>Happy Sunday,<\/p><\/p><p class=\"ucrIndent\"><p>this is Marco Valli from Milan, the UniCredit Chief European Economist. Volatility is back in financial markets as investors wake up to the risk of a second wave of infections in the US (but has the first wave ever ended there') and start pricing in a more realistic probability of a protracted recovery fraught with downside risk. In the US, the epidemic curve has never flattened to an extent comparable to that of most European countries, where lockdowns were generally orchestrated in a more timely and consistent fashion. There is no easy shortcut when it comes to fighting this pandemic.<\/p><\/p><p class=\"ucrIndent\"><p>Erik is off this weekend, so I take the opportunity to elaborate on the outlook for growth and monetary policy in the euro area. This is my agenda for today:<\/p><\/p><p><ul class=\"ucrBullets\"><li> Growth trajectories in France, Italy and Spain have shown remarkable similarities since the beginning of the pandemic and these three countries stand out as the most severely hit. The virus has produced less economic damage in most of the rest of the euro area.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li> My back-of-the-envelope calculations indicate that the ECB might need to buy EUR 4tn of assets (the equivalent of about three years of purchases at the current pace) if it were to be left alone in trying to push inflation back to its pre-crisis path. Luckily, fiscal policy will continue to lend them a helping hand and the central bank will probably not need to go this far.<\/p><\/li><\/ul><p class=\"ucrIndent\"><strong><p>France, Italy and Spain: <\/strong> the \u201cheavily hit cluster\u201d<\/p><\/p><p class=\"ucrIndent\"><p>This past week brought the confirmation of a big drop in eurozone GDP in the first quarter of the year (-3.6% qoq), as the beginning of lockdown measures took a heavy toll especially on private consumption (down almost 5%) and capex (down more than 10%). A significant deterioration in the second quarter is certain and the real question is how much further activity has collapsed due to the intensification of restrictions to personal mobility and forced business closures. Hard data are starting to shed some light on this.<\/p><\/p><p class=\"ucrIndent\"><p>The publication of industrial production data for the month of April this week complements data for retail sales and (still-partial) information on construction output for the same month, allowing one to draw some inferences in regard to the depth of the trough in activity across a number of countries. I take for granted that the trough happened in April, when measures to contain the spreading of the virus peaked. One should consider two important caveats when analyzing these data. First, they only cover a limited share of the overall economy, about 30%. In normal times, this 30% of the economy and the remaining 70% (mostly represented by services) move in a fairly synchronized fashion, but in this crisis the output of some services activities has collapsed to virtually zero (think of hotels, restaurants, some transportation business, etc,). Second, there is a higher probability than usual that these numbers will be revised at a later stage, even substantially; therefore, the picture might change when the various statistical offices will have more complete information.<\/p><\/p><p class=\"ucrIndent\"><p>With these caveats in mind, it emerges that France, Italy and Spain (which account for about 45% of eurozone GDP) have shown remarkable similarities in their growth trajectories since the beginning of the pandemic. They also stand out as the countries where the economic damage appears to have been most severe.<\/p><\/p><p class=\"ucrIndent\"><p>After experiencing a contraction of about 5% in 1Q20, activity in France, Italy and Spain might have bottomed out at approximately the same level at the beginning of the second quarter. In April, compared to the average for the first quarter, all three countries recorded a 30-35% drop in industrial production (excluding construction) and a 25-30% contraction in retail sales. Only in construction activity might there have been some meaningful divergence. France recorded a collapse of about 50% from the first quarter, Italy probably followed suit (here the April data are not yet available, but the 35-40% mom drop in March closely tracks the trajectory seen in France), while Spain showed more resilience, judging from the lack of clear deterioration in March (also here the April data are still missing). However, it is certainly possible that Spain\u2019s outperformance in construction might have been offset by the country\u2019s higher reliance on tourism-related businesses. Considering that the timing and pace of the lifting of restrictions in the three countries has not been too dissimilar \u2013 at least judging from a range of daily mobility indicators \u2013 it seems likely that GDP in France, Italy and Spain might have continued to move along broadly the same path also in the second quarter, after the strikingly similar contraction of the first quarter.<\/p><\/p><p class=\"ucrIndent\"><p>If this assumption is correct, the (very helpful) GDP-tracking activity the French INSEE performs for its domestic economy almost in real time might provide a fairly reliable growth signal also for Italy and Spain. As my colleague Tullia Bucco has shown, the steep decline in the INSEE\u2019s GDP proxy in April (by 35% compared to \u201cnormal\u201d conditions) and the subsequent recovery to -25% in May make it difficult for the French economy to avoid a contraction of about 20% qoq in the second quarter. If, as we expect, GDP numbers for Italy and Spain are broadly similar to those for France, this heavily hit cluster of countries alone might drag eurozone GDP down by about 10% in 2Q20.<\/p><\/p><p class=\"ucrIndent\"><p>Evidence for the remaining eurozone countries is more mixed, but generally points to a less brutal recession in countries with less acute health emergency, less severe restrictions and lower exposure to the most impacted sectors. In Germany, where GDP contracted by just above 2% qoq in 1Q20, the drop in industrial production in April (compared to the average of the first quarter) is broadly in line with that of the \u201cheavily hit cluster\u201d, while retail sales and especially construction activity have been much more resilient. In the Netherlands, the COVID-19 shock seems to have caused comparatively limited damage. Following a 1.7% GDP contraction in the first quarter, both industrial production and retail sales bottomed out with a single-digit decline, while construction output was basically unaffected until March (the latest available data). In Finland (where GDP was down only 0.9% qoq in 1Q20), hard data do not even show any meaningful deterioration in March and April.<\/p><\/p><p class=\"ucrIndent\"><strong><p>To make a long story short: <\/strong> as new data become available, the recession story for the second quarter seems to feature high heterogeneity across eurozone countries. France, Italy and Spain appear to be on track for a contraction of about 20% qoq, broadly in line with our forecasts. In Germany, we forecast a drop in the 15-20% range, but it could turn out to be milder; the truck-toll-mileage index is on a rising trajectory and is only about 3% below its pre-crisis level. In addition, some of the smaller economies north of the Alps could suffer less than we had originally thought. All in all, risks to our forecast for a contraction of eurozone GDP of about 20% qoq are tilted to the upside, but a possible miss is unlikely to be particularly large and most of the estimates that are being published by private sector forecasters and official institutions (including recently by the ECB) remain too optimistic, in my view.<\/p><\/p><p class=\"ucrIndent\"><p>Looking beyond the second quarter, it seems possible that the hardest hit countries might rebound more strongly than others in 3Q20. Also in this case, the INSEE lends us a helping hand, as simple simulations of possible trajectories of their GDP proxy indicate a good probability of a double-digit rebound in French growth in the summer quarter. And if the rebound is indeed frontloaded, at least in some countries, it is plausible that this might come at the expense of the growth rate of the final quarter of the year. But these remain random thoughts for now. More in general, the Chinese experience taught us that the post-lockdown rebound might see industrial activity recovering faster than consumer spending, as households remain reluctant to go out and shop while the risk of a second wave of inflection still looms.<\/p><\/p><p class=\"ucrIndent\"><p>In all this, I advise not to overestimate the importance of yearly GDP averages (for the eurozone, we currently have -13% for this year and +10% for 2021). At a time of exceptional uncertainty and huge volatility, the key metric for gauging the performance of the economy \u2013 and the appropriate policy response \u2013 is the time that will be needed for activity to at least regain its pre-crisis level. In our numbers for the eurozone, this will not happen for a long time, given that at the end of next year we forecast that GDP will still remain some 4% below its end-2019 level. Therefore, we might have to wait until 2023 or, more probably, 2024 before we get back to where we stood before the crisis, although with much higher indebtedness.<\/p><\/p><p class=\"ucrIndent\"><strong><p>ECB purchases: <\/strong> how much is needed to push inflation back to its pre-COVID path'<\/p><\/p><p class=\"ucrIndent\"><p>Keeping the focus on levels of economic activity also helps understand why the ECB is in for a prolonged period of substantial asset purchases. The key number in the ECB\u2019s projections published at their latest meeting is -4%, which is the GDP shortfall at the end of their forecast horizon in 2022 compared to the trajectory envisaged in their March projections (i.e. the central bank\u2019s pre-crisis scenario). This might not seem a big output loss now that we face a double-digit collapse in growth in the current quarter and, maybe, a double-digit rebound in 3Q20. However, in a medium-term perspective, 4% is indeed a big hit, the equivalent of about three years of average eurozone expansion under normal conditions (and the equivalent of 3.5-4mn jobs).<\/p><\/p><p class=\"ucrIndent\"><p>In the ECB\u2019s June forecasts, this 4% shortfall in output translates into a 0.6pp shortfall in core inflation in 2022 compared to their March projections. Now that the ECB is explicitly linking the trajectory of its pandemic purchase program (the PEPP) to the goal of taking the eurozone back towards its \u201cpre-COVID inflation path\u201d, the consequences for their monetary policy are likely to be important. I venture into some rough calculations to understand the implications for asset purchases going forward.<\/p><\/p><p class=\"ucrIndent\"><p>First, barring major adverse shocks to the supply side of the economy, putting the eurozone back on its pre-crisis inflation path over the medium term would more or less require pushing the level of activity back to the trajectory forecasted before the pandemic. On the ECB numbers, this implies boosting the level of GDP by 4% compared to the central bank\u2019s current baseline scenario. On our own numbers, which are a bit more pessimistic than those of the ECB, the required boost to bring GDP in line with the central bank\u2019s March projections would be 5-6%. I take the lower end of this range, to allow for the possibility that the crisis might reduce potential GDP somewhat and, therefore, the convergence towards the pre-crisis inflation path might not require filling up the whole GDP gap.<\/p><\/p><p class=\"ucrIndent\"><p>Second, I take as reference ECB estimates indicating that its package of non-conventional measures that included the asset purchase program (APP, or more simply QE), TLTROs, negative rates and forward guidance boosted GDP by a cumulative 2.5-3% over the time span 2015-2019, and inflation by about 0.4pp a year, with the APP playing the lion\u2019s share. Given that in those years (net) asset purchases under the APP amounted to about EUR 2.5tn, each EUR 1tn of asset purchases \u2013 within the broader package of measures with mutually reinforcing effects \u2013 allowed raising the level of eurozone GDP by about 1% (and the inflation rate by 0.1-0.2pp a year) compared to a counterfactual scenario of unchanged policies.<\/p><\/p><p class=\"ucrIndent\"><p>Finally, I take into account that the effect of PEPP on sovereign curves seems to be larger than that of the public sector purchase program (PSPP), which represents the backbone of the APP. Judging from the interesting charts presented by ECB\u2019s executive board member Isabel Schnabel this past week (https:\/\/www.ecb.europa.eu\/press\/key\/date\/2020\/html\/ecb.sp200610_slides.en~18f114536c.docx.pdf), one could assume that PEPP might be, over the life of the program, some 20-25% more effective than PSPP in compressing sovereign yield curves (the charts point to a stronger \u201coutperformance\u201d, but this was estimated over a very short time window right after the PEPP announcement). The PEPP\u2019s higher effectiveness mainly stems from two factors: a generally larger impact of central bank\u2019s asset purchases during market turmoil, and the flexibility of the program, which allows the ECB to (temporarily) channel more purchases towards those curves where market pressure is stronger.<\/p><\/p><p class=\"ucrIndent\"><p>All in all, accepting the high degree of simplification that comes with these rough assumptions, one reaches the conclusion that the ECB might have to buy about EUR 4tn of assets if it wants to raise the level of eurozone GDP by a cumulative 5% (and inflation by 0.6pp a year) without any other external support, namely from fiscal policy. At the current, sizeable, monthly pace of purchase of about EUR 100bn for the PEPP and EUR 20bn for the APP, such a program would have to last about three years (on top of which you need to add at least another year and a half of reinvestments, in line with the ECB\u2019s guidance).<\/p><\/p><p class=\"ucrIndent\"><p>Luckily enough, and differently from the past, in this crisis the ECB has not been the \u201conly game in town\u201d but has been supported by unprecedented fiscal activism. The ECB\u2019s June projections take into account the fiscal measures approved by governments before the cut-off date for the forecasting exercise, but they do not yet include the European Commission\u2019s recovery instrument (the so-called Next Generation EU), as well as the latest additional fiscal packages in Germany and France. Jointly, these plans might help close up to half of the estimated growth shortfall in the eurozone over the next three years or so.<\/p><\/p><p class=\"ucrIndent\"><p>This is good news, but it does not mean that the ECB will see its workload cut by half. The reason is that the central bank will have to avoid that the extra deficit created by the latest fiscal measures \u2013 and those that might follow \u2013 lead to an upward shift in the yield curves and a tightening of financial conditions. In other words, the additional fiscal stimulus will support growth, but will also raise the supply of government and supranational bonds. This would require ongoing ECB presence in the market to keep the term premium well behaved as fiscal policy plays its role. The PEPP will remain with us for a long time to come.<\/p><\/p><p class=\"ucrIndent\"><p>Best<\/p><\/p><p class=\"ucrIndent\"><p>Marco<\/p><\/p>"},{"layout":"linklist","uid":22573,"publicationDate":"08 Jun 13:57","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177094.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJCc1A_K5r6eeeSlkQ1fA5_w=&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - Truck index suggests rebound in German economic activity","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> There seems to be light at the end of the tunnel for the German economy. The truck-toll-mileage index rebounded by nearly 7% mom in May (April: -12% mom). <\/li><\/ul><ul class=\"ucrBullets\"><li> The basic idea is that the higher the renewed need for transportation services by companies, the stronger the rebound in economic activity. However, and in line with the gradual easing of restrictions in recent weeks, the average truck index level in April\/May still remained more than 10% below the level in the first quarter. <\/li><\/ul><ul class=\"ucrBullets\"><li> Furthermore, the higher demand for transportation in May could overestimate the rebound across sectors, given the extraordinary circumstances caused by the coronavirus crisis. Some services sectors such as the hospitality industry have registered activities close to zero until recently. This massive shock has probably not fully been reflected in the truck index. Typically, services companies demand less transportation by truck than the manufacturing and construction industries. Our best guess for GDP in the second quarter therefore remains a steep decline of about 18% qoq. <\/li><\/ul>"},{"layout":"linklist","uid":22556,"publicationDate":"07 Jun 12:49","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177075.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJCc1A_K5r6eeUhJIJo9HdMc=&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177075.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJCc1A_K5r6eeUhJIJo9HdMc=&T=1&T=1","protectedFileLinkIt":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177075.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJCc1A_K5r6eeUhJIJo9HdMc=&T=1&T=1"},"title":"Chief Economist's Comment - Sunday Wrap","product":"Chief Economist's Comment","synopsis":"<ul class=\"ucrBullets\"><li> The German fiscal plan for the post-pandemic era to kick-start the economy and to provide the German fiscal resources to support the bigger EU agenda under way.<\/li><\/ul><ul class=\"ucrBullets\"><li> The ECB\u2019s response. It comes as consumers\u2019 inflation expectation has begun to increase, but there is no measurable risk of inflation (unfortunately.)<\/li><\/ul><ul class=\"ucrBullets\"><li> The new eurozone policy philosophy is creating trust in Europe, as illustrated particularly by the record EUR 100bn+ bid for Italy\u2019s new 10-year deal this past week.<\/li><\/ul>"},{"layout":"linklist","uid":22555,"publicationDate":"05 Jun 15:02","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2020_177073.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJCc1A_K5r6eeqxUAvfPl2qI=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - US: Groceries (temporarily) driving inflation expectations higher","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> In the US, household expectations of inflation for the next year (black line) rose sharply in May, to 3.2%, the highest level since August 2014. Historically, inflation expectations for the year ahead have tended to move closely with actual headline CPI inflation (solid red line) with a short lag, but not this time around. Indeed, headline inflation has moved down significantly on lower energy prices and the prices of a wide range of non-essential goods as a result of social distancing measures to contain the spread of COVID-19. Our view is that the recent jump in household expectations of inflation is driven by the sharp rise in grocery prices (dashed red line), with the food-at-home index ' a proxy for grocery prices ' posting its largest monthly increase since 1974.<\/li><li> There is some evidence that, when forming price expectations, consumers rely more on the price changes of items that they purchase with high-frequency (i.e. on a daily basis), particularly groceries. This was likely exacerbated by the lockdown in April as Americans spent a larger proportion of their budgets on essential items such as groceries.<\/li><li> In our view, however, the rise in household inflation expectations is unlikely to last. The large rise for food-at-home prices in April likely reflected rising costs due to restricted movement from social distancing measures, as well as perhaps a lagged effect from household stockpiling of items in March. Most US states had partially reopened by early May and supply chains should start to improve. For example, the ISM survey for May showed a reduction in suppliers\u00b4 delivery times. We continue to expect inflation to remain weak through the rest of the year and likely beyond.Daniel Vernazza, PhD, Chief International Economist (UniCredit Bank, London)+44 207 826-7805daniel.vernazza@unicredit.eu Legal NoticesGlossaryA comprehensive glossary for many of the terms used in the report is available on our website: https:\/\/www.unicreditresearch.eu\/index.php'id=glossary DisclaimerOur recommendations are based on information obtained from or are based upon public information sources that we consider to be reliable, but for the completeness and accuracy of which we assume no liability. All information, estimates, opinions, projections and forecasts included in this report represent the independent judgment of the analysts as of the date of the issue unless stated otherwise. We reserve the right to modify the views expressed herein at any time without notice. Moreover, we reserve the right not to update this information or to discontinue it altogether without notice. 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Regulatory authority: 'BaFin' ' Bundesanstalt f\u00fcr Finanzdienstleistungsaufsicht, Marie-Curie-Str. 24-28, 60439 Frankfurt, Germany and New York State Department of Financial Services, One State Street, New York, NY 10004-1511 Further details regarding our regulatory status are available on request.ANALYST DECLARATIONThe analyst\u00b4s remuneration has not been, and will not be, geared to the recommendations or views expressed in this report, neither directly nor indirectly. 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E 19\/3UniCredit Research*Macro Research Erik F. NielsenGroup Chief EconomistGlobal Head of CIB Research+44 207 826-1765 erik.nielsen@unicredit.euDr. Ingo HeimigHead of Research Operations& Regulatory Controls+49 89 378-13952ingo.heimig@unicredit.deHead of Macro ResearchMarco ValliHead of Macro ResearchChief European Economist+39 02 8862-0537marco.valli@unicredit.euEuropean Economics ResearchDr. Andreas ReesChief German Economist+49 69 2717-2074andreas.rees@unicredit.deDr. Loredana FedericoChief Italian Economist +39 02 8862-0534loredanamaria.federico@unicredit.euStefan Bruckbauer Chief Austrian Economist+43 50505-41951stefan.bruckbauer@unicreditgroup.atTullia BuccoEconomist +39 02 8862-0532tullia.bucco@unicredit.euEdoardo CampanellaEconomist +39 02 8862-0522edoardo.campanella@unicredit.eu Walter PudschedlEconomist+43 50505-41957walter.pudschedl@unicreditgroup.atChiara SilvestreEconomistchiara.silvestre@unicredit.euDr. Thomas StrobelEconomist+49 89 378-13013thomas.strobel@unicredit.deInternational Economics ResearchDaniel Vernazza, Ph.D.Chief International Economist+44 207 826-7805daniel.vernazza@unicredit.euEEMEA Economics Research Dan Buc'aChief CEE Economist+44 207 826-7954dan.bucsa@unicredit.euG\u00f6k\u00e7e \u00c7elikSenior CEE Economist+44 207 826-6077gokce.celik@unicredit.euMauro Giorgio MarranoSenior CEE Economist+43 50505-82712mauro.giorgiomarrano@unicredit.deFlorin Andrei, Ph.D.Senior Economist, Romania+40 21 200-1377florin.andrei@unicredit.roArtem ArkhipovHead, Macroeconomic Analysisand Research, Russia+7 495 258-7258artem.arkhipov@unicredit.ruHrvoje Dolenec Chief Economist, Croatia +385 1 6006-678hrvoje.dolenec@unicreditgroup.zaba.hrDr. \u00c1gnes Hal\u00e1szChief Economist, Head of Economics andStrategic Analysis, Hungary+36 1 301-1907agnes.halasz@unicreditgroup.hu'ubom\u00edr Kor''\u00e1kChief Economist, Slovakia+421 2 4950 2427lubomir.korsnak@unicreditgroup.skKristofor PavlovChief Economist, Bulgaria+359 2 923-2192kristofor.pavlov@unicreditgroup.bgPavel Sob\u00ed'ekChief Economist, Czech Republic+420 955 960-716pavel.sobisek@unicreditgroup.czUniCredit Research, Corporate & Investment Banking, UniCredit Bank AG, Am Eisbach 4, D-80538 Munich, globalresearch@unicredit.deBloomberg: UCCR, Internet: www.unicreditresearch.euMR 20\/1*UniCredit Research is the joint research department of UniCredit Bank AG (UniCredit Bank, Munich or Frankfurt), UniCredit Bank AG London Branch (UniCredit Bank, London), UniCredit Bank AG Milan Branch (UniCredit Bank, Milan), UniCredit Bank AG Vienna Branch (UniCredit Bank, Vienna), UniCredit Bank Austria AG (Bank Austria), UniCredit Bulbank, Zagreba'ka banka d.d., UniCredit Bank Czech Republic and Slovakia, ZAO UniCredit Bank Russia (UniCredit Russia), UniCredit Bank Romania.<\/li><\/ul>"}]

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5a46a2c43e8e161ff27c8db9247c563174973a5631ee155242991b73f3c4a1ec;;[{"layout":"linklist","uid":20947,"publicationDate":"21 Nov 15:58","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2019_175301.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJHMnXtAfRLRLb27Bgb0Reb0=&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2019_175466.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJBCfutLg1NcopqcBL9sGGRk=&T=1&T=1","protectedFileLinkIt":""},"title":"UniCredit Macro & Markets - 2020-21 Outlook: Late-cycle blues","product":"Macro & Markets","synopsis":"<p><ul class=\"ucrBullets\"><li><strong> Macro: <\/strong> Global growth is set to weaken further to 2.7% in 2020, as the US economy is likely to enter a downturn, protectionist tensions are unlikely to fade materially and the resilience of the domestic drivers of eurozone growth starts to wane. The Fed will probably cut rates by 100bp, while the ECB is expected to stand pat and focus on its policy review. Economic growth in the CEE region will likely slow as a result of external headwinds.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> FI: <\/strong> Government bonds should remain supported throughout 2020. We expect 10Y US yields to fall to 1.50%, with the curve bull-steepening. Room for lower Bund yields is more limited as the bar for further ECB rate cuts is high and the Bund curve is quite flat. The 10Y yield will likely hit -0.50% at end-2020.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> FX: <\/strong> Narrower growth and rate differentials between the US and the eurozone offer EUR-USD some upside potential. We expect the GBP to recover but this will likely be slowed by BoE easing and the risk of a Brexit-related \u201ccliff edge\u201d in December 2020.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Equities: <\/strong> We anticipate strong corrections of up to 20% in global equities in 1H20, with some relief by year-end. 2020 will be dominated by low earnings growth in Europe and slowing earnings growth in the US. We think present consensus estimates are too high.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Credit: <\/strong> The late-stage credit cycle warrants defensive positioning in European IG and HY credit, with a preference for non-cyclical sectors. Technical factors such as the CSPP should support credit, though this will likely be balanced by a deterioration in credit fundamentals and the gap to valuations will widen further.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> CEEMEA: <\/strong> EM hard-currency credit is set to post a good, mostly carry-related performance in 2020 of more than 5%. Our preference remains BBB and BB rated credit.<\/p><\/li><\/ul>","hash":"5a46a2c43e8e161ff27c8db9247c563174973a5631ee155242991b73f3c4a1ec","available":"0","settings":{"layout":"linklist","size":"default","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","noproduct":"0","noflags":"0","dateformat":"d M G:i","nolinktitle":"0","synopsislength":"400","synopsisexpand":"0","shownav":"0","oldestedition":"","limit":"1"}}]

70b64a2fa8ca8e904ac55b5e50870240a46cc1bcd6a29dfa55543971008506d4;;[{"layout":"linklist","uid":22393,"publicationDate":"19 May 7:32","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2020_176890.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVFcI2-vTFR2nW1DHnTvta0o0CL0_mPxnUg==&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Rates Perspectives - T-LTRO III: Take-up expectation and market impact","product":"Rates Perspectives","synopsis":"<ul class=\"ucrBullets\"><li> At its last meeting, the ECB announced a sizable reduction in T-LTRO III cost. Banks will pay 0.5% below the depo rate if they meet certain lending conditions and 0.5% below the MRO rate otherwise. <\/li><\/ul><ul class=\"ucrBullets\"><li><strong> The attractive pricing should lead to a large take-up: <\/strong> EUR\u00a0900-1,400bn gross and EUR 550-1,000bn net, adding the four operations. Net demand includes EUR\u00a0325bn already drawn from the bridge LTRO.<\/li><\/ul><ul class=\"ucrBullets\"><li> As the more favorable pricing applies to the period June 2020 \u2013 June 2021, we expect strong front loading at the June operation (settlement 24 June 2020, maturity June 2023, results to be announced on 18 June). <\/li><\/ul><ul class=\"ucrBullets\"><li> We expect that use of T-LTRO III liquidity will be more pronounced in the periphery than in core countries.<\/li><\/ul><ul class=\"ucrBullets\"><li> The need to temporary park liquidity may benefit the short end of sovereign curves, in particular in the periphery, where credit premiums and liquidity parking needs are expected to be stronger. Past experience, however, suggests not to expect big moves in credit spreads.<\/li><\/ul>","hash":"70b64a2fa8ca8e904ac55b5e50870240a46cc1bcd6a29dfa55543971008506d4","available":"0","settings":{"layout":"linklist","size":"default","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","noproduct":"0","noflags":"0","dateformat":"d M G:i","nolinktitle":"0","synopsislength":"400","synopsisexpand":"0","shownav":"0","oldestedition":"","limit":"4"}},{"layout":"linklist","uid":22151,"publicationDate":"23 Apr 8:19","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2020_176630.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVFcI2-vTFR2nlVdqzbTp94Q4BdEhR8EC5A==&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Rates Perspectives - Eurozone funding needs in 2020 after COVID-19","product":"Rates Perspectives","synopsis":"<ul class=\"ucrBullets\"><li> The COVID emergency will lead to a massive increase in public debt and deficit in 2020. We now expect net issuance of marketable debt instruments issued by eurozone governments (bonds and bills) in 2020 to amount to around EUR 1tn, up from EUR 185bn before the COVID-19 emergency. <\/li><\/ul><ul class=\"ucrBullets\"><li> Net marketable debt issuance could be up to EUR 310bn lower, in case eurozone countries use financing measures approved so far by the Eurogroup, and could be substantially lower depending on the size and functioning of the recovery fund which will be discussed today at the European Council meeting. <\/li><\/ul><ul class=\"ucrBullets\"><li> T-bills are coming back in fashion as funding instruments. At the eurozone level, we expect 40% of net issuance to come in the form of T-bills and to see a sharp increase in net T-bill issuance, especially from core countries. The abundance of excess liquidity in the system and the ECB\u2019s pandemic emergency purchasing program (PEPP), which can also buy T-bills, should prevent pressure from building up at the short end of the curve. <\/li><\/ul><ul class=\"ucrBullets\"><li> Our estimates are accompanied by very high degrees of uncertainty, as we await more details on measures approved by the Eurogroup on 9 April and for developments at the European Council meeting today.<\/li><\/ul>"},{"layout":"linklist","uid":21711,"publicationDate":"03 Mar 8:11","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2020_176143.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVFcI2-vTFR2n46XMXAIB2V6cPOOjdj7_cg==&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Rates Perspectives - 10\/30Y BTP spread: A steepener trade looks better than a flattener","product":"Rates Perspectives","synopsis":"<ul class=\"ucrBullets\"><li> The 10\/30 BTP spread has flattened sizably since the beginning of February and currently trades at 95\/96bp (on Bloomberg fair value, 103\/104bp taking BTP Aug29 and Sep49), the lowest level since August 2019. <\/li><li> We present a fair value model for the 10\/30Y BTP spread based on the BTP 'idiosyncratic' premium (as a proxy for the BTP credit spread), the level of rates and supply pressure at the extra-long end of the curve. <\/li><li> Our model, based on Bloomberg fair value, indicates that the 10\/30Y spread should be more than 15bp steeper than where it is now.<\/li><li> Even with a larger BTP 'idiosyncratic' premium, a higher level of core rates and much lower supply pressure at the extra-long end compared to the start of this year, our model predicts virtually no flattening of the 10\/30Y spread from current levels. Given that 10\/30Y BTP flattener trades have a negative carry, we prefer to position for a steepener (with a slightly positive carry).<\/li><li> The key risk to this trade in the short-term is a prolonged risk-off market that continues to weigh on periphery and especially BTPs, or a scenario where idiosyncratic risk in Italy increases. <\/li><\/ul>"},{"layout":"linklist","uid":21536,"publicationDate":"13 Feb 14:04","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2020_175954.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVFcI2-vTFR2nPNmoWwinZoBS4spnPS0v9A==&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Rates Perspectives - Governments go green: Facts, figures and upcoming deals","product":"Rates Perspectives","synopsis":"<ul class=\"ucrBullets\"><li> Investor interest in green bonds is increasing. Healthy demand is mirrored in supply: in 2019, the issuance volume of EUR-denominated green bonds amounted to around EUR 90bn, bringing the outstanding to around EUR 255bn. <\/li><\/ul><ul class=\"ucrBullets\"><li> Euro-area sovereigns have started to issue green bonds in recent years but the market is still in its early stages, with four bonds trading and a total size of around EUR 40bn. The market is growing: Germany, Italy and Spain are due to launch inaugural transactions this year.<\/li><\/ul><ul class=\"ucrBullets\"><li> Data from syndicated deals suggest that long-term investors play a more important role in green sovereign bonds compared to non-green deals. This should be a positive factor with respect to stability of demand.<\/li><\/ul><ul class=\"ucrBullets\"><li> Green bonds issued by supras and agencies tend to trade more expensive than their non-green peers. The premium is less evident for sovereign green bonds.<\/li><\/ul>"}]

eada0c4ea76c629eb47a2c699db2ed6e715070a11680a5d9921f837e1ffd3a5f;;[{"layout":"linklist","uid":21554,"publicationDate":"14 Feb 15:36","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2020_175974.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVFcI2-vTFR2nw6n3SIBxpGTmDpAUviCpvg==&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2020_176061.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVFcI2-vTFR2nNTt7vdgznH-Jqun0zij8HQ==&T=1&T=1","protectedFileLinkIt":""},"title":"Shortened version of the Euro Credit Pilot (February 2020)","product":"Euro Credit Pilot - Strategy","synopsis":"<p class=\"ucrIndent\"><p>This is a shortened version of the Euro Credit Pilot, which we deem to be an acceptable minor non-monetary benefit under MiFID II.<\/p><\/p><p><ul class=\"ucrBullets\"><li><strong> Introduction: <\/strong> The outbreak of the coronavirus has already led to the disruption of global supply chains, with numerous producers across sectors reporting production halts at facilities in China. The related uncertainties warrant defensive positioning in European credit.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Macro Outlook: <\/strong> So far there is little data on the initial impact on the global economy, and comparisons with the SARS outbreak in 2002 are not straightforward. But 1Q growth-related data will be negative.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Micro Fundamentals: <\/strong> Sluggish earnings growth in Europe will negatively impact companies\u2019 credit fundamentals.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Credit Quality Trend: <\/strong> The global economic outlook has become clouded, and the risk of economic slowdown in China due to the coronavirus has increased. Thus, the overall credit quality of European companies will likely decrease as indicated by the potential number of fallen angels.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Market Technicals: <\/strong> With the intensification of CSPP purchases, particularly in the primary market, the ECB is providing continuous support.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Valuation &amp; Timing: <\/strong> We are keeping our end-2020 spread projections unchanged.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Sector Allocation &amp; Recommendation Overview: <\/strong> Uncertainties related to the coronavirus and its ramifications for Chinese growth and the global supply chain warrant defensive positioning. In this context, we lower our recommendation on Automobiles &amp; Parts to underweight from marketweight. We also lower our recommendation on Basic Resources to marketweight from overweight.<\/p><\/li><\/ul>","hash":"eada0c4ea76c629eb47a2c699db2ed6e715070a11680a5d9921f837e1ffd3a5f","available":"0","settings":{"layout":"linklist","size":"default","showanalysts":"-1","showcompanies":"-1","synopsislength":"-1","showcountries":"-1","showcurrencies":"-1","synopsisexpand":"0","nodate":"0","notitle":"0","dateformat":"d M G:i","nolinktitle":"0","noproduct":"0","noflags":"0","shownav":"0","oldestedition":"","limit":"2"}},{"layout":"linklist","uid":21100,"publicationDate":"10 Dec 14:54","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2019_175468.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVEGHysWJl2NsdbHS0TJ1vmUJDnt4SYQWKQ==&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2019_175539.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVEGHysWJl2NsY9mVAida0HvS49pKYFDFew==&T=1&T=1","protectedFileLinkIt":""},"title":"Shortened version of the Euro Credit Pilot (December 2019)","product":"Euro Credit Pilot - Strategy","synopsis":"<p class=\"ucrIndent\"><p>This is a shortened version of the Euro Credit Pilot, which we deem to be an acceptable minor non-monetary benefit under MiFID II.<\/p><\/p><p class=\"ucrIndent\"><p>The late stage of the credit cycle will likely be prolonged by the extraordinary ECB policy measures. Performance in European credit is being pulled in one direction by cyclical headwinds (projected in our below-consensus growth forecast and a mild recession in the US), low earnings growth and upside risks in new-bond supply. It is pulled in another direction by monetary-policy easing, which fuels the hunt for yield. As a result of these forces being exerted on European credit, we expect spreads in the iBoxx Senior NFI and the iBoxx Financials Senior to be flat, on balance, reaching 60bp by the end of 2020, i.e. close to current levels. Thus, carry is expected to be the main source of return in European credit in 2020. Spreads in the iBoxx HY are expected to widen to 450bp during the same period.<\/p><\/p>"}]

cee45ec3c62a2f7c371ab5aeacebf397b3dfcda3558749efec14891ce5a1d50e;;[{"layout":"linklist","uid":22722,"publicationDate":"25 Jun 12:39","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/emergingmarkets_docs_2020_177254.ashx?EXT=pdf&KEY=l6KjPzSYBBGzROuioxedUNdVqq1wFeRoriQuRq7XQDlwdnZSkPUJAw==&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"CEE Quarterly - CEE: Strong rebound, fragile recovery (3Q20)","product":"CEE Quarterly","synopsis":"<ul class=\"ucrBullets\"><li> Activity is rebounding in CEE as restrictions are being removed, but it remains well below the levels registered before the COVID-19 crisis. Moreover, the subsequent recovery is facing many risks.<\/li><\/ul><ul class=\"ucrBullets\"><li> Governments and central banks have implemented sizeable support programs that range from 3.5% of GDP in Russia to 23.5% of GDP in Czechia. <\/li><\/ul><ul class=\"ucrBullets\"><li> Support programs differ in size, scope, efficiency and speed of implementation. These characteristics will shape the recovery in 2H20 and 2021.<\/li><li> The biggest risk for CEE economies is a second wave of the pandemic, even if restrictions are not as tight as in March-May 2020.<\/li><\/ul><ul class=\"ucrBullets\"><li> In EU-CEE1), we expect GDP to fall by 8.3% in 2020 and grow by 7.3% in 2021. Western Balkan economies could evolve similarly.<\/li><\/ul><ul class=\"ucrBullets\"><li> Russia\u2019s economy could contract by around 5.4%in 2020, with a 3.8% rebound next year.<\/li><\/ul><ul class=\"ucrBullets\"><li> In Turkey, GDP could fall by approximately 5.6% this year and grow by 6.6% in 2021.<\/li><\/ul><ul class=\"ucrBullets\"><li> We expect additional rate cuts in Czechia, Romania, Russia, Serbia and Turkey. Only Czechia and Poland might consider raising rates in 2021.<\/li><\/ul><ul class=\"ucrBullets\"><li> Inflation targets could be met in 2020-21 but may be threatened thereafter if domestic demand rebounds.<\/li><\/ul><ul class=\"ucrBullets\"><li> According to our models, the CZK, the HUF and the PLN are undervalued, but poor trade data and volatile risk appetite may cut potential rallies short; the RUB, RON and RSD are overvalued.<\/li><\/ul><ul class=\"ucrBullets\"><li> ROMGBs and ROMANI EUR remain our top picks in the region, as the rating downgrade risk previously priced in to the bonds could continue to diminish.<\/li><\/ul><ul class=\"ucrBullets\"><li> OFZs, POLGBs and long-end CZGBs offer attractive valuations but face FX risks. <\/li><\/ul><ul class=\"ucrBullets\"><li> The EU\u2019s Recovery and Resilience Facility is a game changer for EU-CEE but not in the next twelve months.<\/li><\/ul><p class=\"ucrIndent\">1) EU-CEE comprises Bulgaria, Croatia, Czechia, Hungary, Poland, Romania, Slovakia and Slovenia \u2013 all CEE countries that are members of the EU.<\/p>","hash":"cee45ec3c62a2f7c371ab5aeacebf397b3dfcda3558749efec14891ce5a1d50e","available":"0","settings":{"layout":"linklist","size":"default","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","noproduct":"0","noflags":"0","dateformat":"d M G:i","nolinktitle":"0","synopsislength":"400","synopsisexpand":"0","shownav":"0","oldestedition":"","limit":"1"}}]

117a1401a3e679f4793fbdea09e9310312bd1e866a8f8ff792c82b0dd1e732fa;;[{"layout":"linklist","uid":17097,"publicationDate":"23 Apr 8:01","emaObject":{"protectedFileLink":"\/fileadmin\/Presentations_ex_Marketingpraesi\/Praesentation_Call_ReesForUBK_20Apr20.pdf","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Presentation - Coronavirus und seine volkswirtschaftlichen Auswirkungen","product":"Presentation","synopsis":"","hash":"117a1401a3e679f4793fbdea09e9310312bd1e866a8f8ff792c82b0dd1e732fa","available":"0","settings":{"layout":"linklist","size":"default","showanalysts":"-1","showcompanies":"-1","synopsislength":"-1","showcountries":"-1","showcurrencies":"-1","synopsisexpand":"0","nodate":"0","notitle":"0","dateformat":"d M G:i","nolinktitle":"0","noproduct":"0","noflags":"0","shownav":"0","limit":"1"}}]

dd8458919e2def29e8ea8d8b7115a33882ddbeac5dc60029b411fff7da396cdb;;[{"layout":"linklist","uid":22722,"publicationDate":"25 Jun 12:39","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/emergingmarkets_docs_2020_177254.ashx?EXT=pdf&KEY=l6KjPzSYBBGzROuioxedUNdVqq1wFeRoriQuRq7XQDlwdnZSkPUJAw==&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"CEE Quarterly - CEE: Strong rebound, fragile recovery (3Q20)","product":"CEE Quarterly","synopsis":"<ul class=\"ucrBullets\"><li> Activity is rebounding in CEE as restrictions are being removed, but it remains well below the levels registered before the COVID-19 crisis. Moreover, the subsequent recovery is facing many risks.<\/li><\/ul><ul class=\"ucrBullets\"><li> Governments and central banks have implemented sizeable support programs that range from 3.5% of GDP in Russia to 23.5% of GDP in Czechia. <\/li><\/ul><ul class=\"ucrBullets\"><li> Support programs differ in size, scope, efficiency and speed of implementation. These characteristics will shape the recovery in 2H20 and 2021.<\/li><li> The biggest risk for CEE economies is a second wave of the pandemic, even if restrictions are not as tight as in March-May 2020.<\/li><\/ul><ul class=\"ucrBullets\"><li> In EU-CEE1), we expect GDP to fall by 8.3% in 2020 and grow by 7.3% in 2021. Western Balkan economies could evolve similarly.<\/li><\/ul><ul class=\"ucrBullets\"><li> Russia\u2019s economy could contract by around 5.4%in 2020, with a 3.8% rebound next year.<\/li><\/ul><ul class=\"ucrBullets\"><li> In Turkey, GDP could fall by approximately 5.6% this year and grow by 6.6% in 2021.<\/li><\/ul><ul class=\"ucrBullets\"><li> We expect additional rate cuts in Czechia, Romania, Russia, Serbia and Turkey. Only Czechia and Poland might consider raising rates in 2021.<\/li><\/ul><ul class=\"ucrBullets\"><li> Inflation targets could be met in 2020-21 but may be threatened thereafter if domestic demand rebounds.<\/li><\/ul><ul class=\"ucrBullets\"><li> According to our models, the CZK, the HUF and the PLN are undervalued, but poor trade data and volatile risk appetite may cut potential rallies short; the RUB, RON and RSD are overvalued.<\/li><\/ul><ul class=\"ucrBullets\"><li> ROMGBs and ROMANI EUR remain our top picks in the region, as the rating downgrade risk previously priced in to the bonds could continue to diminish.<\/li><\/ul><ul class=\"ucrBullets\"><li> OFZs, POLGBs and long-end CZGBs offer attractive valuations but face FX risks. <\/li><\/ul><ul class=\"ucrBullets\"><li> The EU\u2019s Recovery and Resilience Facility is a game changer for EU-CEE but not in the next twelve months.<\/li><\/ul><p class=\"ucrIndent\">1) EU-CEE comprises Bulgaria, Croatia, Czechia, Hungary, Poland, Romania, Slovakia and Slovenia \u2013 all CEE countries that are members of the EU.<\/p>","hash":"dd8458919e2def29e8ea8d8b7115a33882ddbeac5dc60029b411fff7da396cdb","available":"0","settings":{"layout":"linklist","size":"default","showanalysts":"-1","showcompanies":"-1","synopsislength":"-1","showcountries":"-1","showcurrencies":"-1","synopsisexpand":"0","nodate":"0","notitle":"0","dateformat":"d M G:i","nolinktitle":"0","noproduct":"0","noflags":"0","shownav":"0","limit":"1"}}]

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