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f739c20f2081a66a676cce161593bd0da5fd95f82a2abe792f6023717552c8ee;;[{"layout":"detailed","uid":28810,"publicationDate":"03 Jan 23","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2023_184430.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVLJh74bJTrykZUfK-sgs6ixw-UM4WW-zog==&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Rates Perspectives - Italy\u00b4s funding in 2023: maturity lengthening is the name of the game","titleDe":"","titleIt":"","product":"Rates Perspectives","synopsis":"<ul class=\"ucrBullets\"><li> Italy has EUR 260bn of redemptions in 2023, around EUR\u00a030bn more than in 2022. Borrowing needs will be EUR 90bn, also up from 2022.<\/li><li> The Treasury expects to issue EUR 310-320bn of M\/L term bonds, EUR 30-40bn more than in 2022. Italy will receive around EUR 25bn of loans from the EU, roughly in line with 2022. We expect other funding sources, including the sale of international bonds, to amount to EUR 15bn.<\/li><li> This year, net supply of M\/L term bonds should amount to EUR 45-55bn, mostly concentrated in the first half of the year. Furthermore, private investors will have to buy around EUR 25bn of BTP redemptions that will not be reinvested by the ECB.<\/li><li> The issuance strategy for 2023 aims to contain the refinancing risk in the coming years and to lengthen the average life of the debt. Issuance is expected to be light at the short end and more robust in the 10Y area and at the extra-long end. For this reason, we like steepener trades on the BTP curve.<\/li><li> In 2023, the Treasury will sell a new 6M BOT every other month, tapping it in the following month. The Treasury will continue to actively manage its liquidity buffer via repo operations. Any ECB decision to resume remunerating government deposits at 0% after May 2023 will increase pressure in this respect.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","analysts":[{"first":"Luca","last":"Cazzulani","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=39&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=44e3fa0de8cdd1ffaea59e3843112f22"},{"first":"Francesco Maria","last":"Di Bella","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=131&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=28af0fd2e8ef8c37a4854c55e529c47a"}],"countries":[{"name":"Italy","ticker":"IT","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=country&tx_research_piedition%5Bcountry%5D=5&tx_research_piedition%5Baction%5D=country&tx_research_piedition%5Bcontroller%5D=Edition&cHash=39d7224c0452f3251d42f8f8656acb2b"}],"hash":"f739c20f2081a66a676cce161593bd0da5fd95f82a2abe792f6023717552c8ee","available":"0","settings":{"layout":"detailed","size":"default","showanalysts":"2","showcompanies":"2","showcountries":"2","showcurrencies":"2","nodate":"0","notitle":"0","noproduct":"0","noflags":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"300","synopsisexpand":"1","shownav":"0","oldestedition":"","limit":"5"}},{"layout":"detailed","uid":28692,"publicationDate":"17 Nov 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_184258.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJMFJK6gFt5Ic8ChzcuRXBYo=&T=1&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_184376.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJPMscoAUz340J3iJ4yvVSQI=&T=1&T=1","protectedFileLinkIt":""},"title":"Macro & Markets 2023-24 Outlook: Go for carry as central banks approach peak rates","titleDe":"Macro & Markets 2023-24 Outlook - Nutzen Sie die Carry-Ertr\u00e4ge, w\u00e4hrend sich die Zentralbanken ihrem maximalen Leitzins n\u00e4hern","titleIt":"","product":"Macro & Markets","synopsis":"<p><ul class=\"ucrBullets\"><li><strong>Macro: <\/strong> We forecast a mild technical recession in both the US and the eurozone, followed by a below-trend recovery. Inflation is set to decelerate meaningfully in 2023. The Fed and the ECB are likely to finish their tightening cycle by early next year and to start cutting rates in 2024.<\/li><li><strong>FI: <\/strong> Long-dated yields are likely to be close to their peaks. Convincing signals that inflation is easing will give central banks a green light to rein in some of the recent tightening, leading to a bull market revival and curve steepening.<\/li><li><strong>FX: <\/strong> The USD is set to further loosen its grip, but its strength is unlikely to be fully reversed. By the end of our forecast horizon, we expect EUR-USD to climb to 1.10-1.12 and we see GBP-USD back above 1.20, USD-JPY below 135 and USD-CNY down to 6.90. We remain bearish on the CEE3 currencies, the TRY and the RUB.<\/li><li><strong>Equities: <\/strong> Following a volatile sideways movement early in the year, equities have potential to rise by about 10% in 2023, primarily supported by valuation expansion. Earnings growth should be flat and is unlikely to accelerate before 2024. Our 2023 year-end index targets are Euro STOXX 50 4200, DAX 15500 and S&amp;P 500 4300 index points.<\/li><li><strong>Credit: <\/strong> We expect a solid year in European credit - both in financials and non-financials - though spread tightening is likely to take place only in 2H23. Lower tiers of the capital structure and high yield are likely to outperform, mainly thanks to high carry. We prefer HY NFI and Bank AT1s over IG seniors.<\/li><li><strong>ESG: <\/strong> Greeniums are set to move sideways or richen moderately as strong demand for ESG assets outpaces new issuance. Policy initiatives and the transforming energy landscape will support interest in the asset class.<\/p><\/li><\/ul><p class=\"ucrIndent\"><p> <\/p><\/p><p class=\"ucrIndent\"><p> <\/p><\/p>","synopsisDe":"<p><ul class=\"ucrBullets\"><li><strong> Macro: <\/strong> Wir prognostizieren eine leichte technische Rezession sowohl in den USA als auch in der Eurozone, gefolgt von einer Erholung unterhalb des Trends. Die Inflation d\u00fcrfte sich 2023 deutlich verlangsamen. Die Fed und die EZB werden ihren Straffungszyklus wahrscheinlich Anfang n\u00e4chsten Jahres beenden und 2024 mit Zinssenkungen beginnen.<\/li><li><strong> FI: <\/strong> Die Renditen langfristiger Anleihen befinden sich vermutlich bereits in der N\u00e4he ihres H\u00f6chststands. \u00dcberzeugende Signale, dass die Inflation nachl\u00e4sst, werden den Zentralbanken gr\u00fcnes Licht geben, einen Teil der j\u00fcngsten Straffung zur\u00fcckzunehmen, was zu einer Wiederbelebung des Bullenmarktes und einer Versteilerung der Zinsstrukturkurve f\u00fchren k\u00f6nnte.<\/li><li><strong> FX: <\/strong> Der USD d\u00fcrfte sich weiter abschw\u00e4chen, aber seine St\u00e4rke wird sich wahrscheinlich nicht vollst\u00e4ndig umkehren. Bis zum Ende unseres Prognosehorizonts rechnen wir mit einem Anstieg des EUR-USD auf 1,10-1,12 und erwarten GBP-USD wieder \u00fcber 1,20, den USD-JPY unter 135 und eine Abw\u00e4rtsbewegung bei USD-CNY bis auf 6,90. F\u00fcr die CEE3-W\u00e4hrungen, die TRY und den RUB bleiben wir bearish.<\/li><li><strong> Equities: <\/strong> Nach einer volatilen Seitw\u00e4rtsbewegung zu Beginn des Jahres haben Aktien im Jahr 2023 ein Aufw\u00e4rtspotenzial von rund 10%, was in erster Linie auf eine Ausweitung der Bewertungen zur\u00fcckzuf\u00fchren sein d\u00fcrfte. Das Gewinnwachstum bleibt voraussichtlich sehr niedrig und wird sich vor 2024 kaum beschleunigen. Unsere Indexziele zum Jahresende 2023 liegen f\u00fcr den Euro STOXX 50 bei 4200, f\u00fcr den DAX bei 15500 und f\u00fcr den S&amp;P 500 bei 4300 Indexpunkten.<\/li><li><strong> Credit: <\/strong> Wir erwarten ein solides Jahr f\u00fcr europ\u00e4ische Unternehmensanleihen - sowohl im Finanz- als auch im Nicht-Finanzsektor -, auch wenn die Spread-Einengung wahrscheinlich erst in 2H23 stattfinden wird. Die unteren Ebenen der Kapitalstruktur und High-Yield Anleihen k\u00f6nnten eine Outperformance zeigen, vor allem dank der hohen Carry-Ertr\u00e4ge. Wir bevorzugen High-Yield NFI- und Bank AT1-Anleihen gegen\u00fcber IG Seniors.<\/li><li><strong> ESG: <\/strong> Die Pr\u00e4mien f\u00fcr ESG-Anleihen d\u00fcrften sich seitw\u00e4rts bewegen oder moderat zulegen, da die starke Nachfrage nach ESG-Anlagen die Neuemissionen \u00fcbersteigt. Politische Initiativen und die sich wandelnde Energielandschaft werden das Interesse an der Anlageklasse f\u00f6rdern.<\/p><\/li><\/ul>","synopsisIt":""},{"layout":"detailed","uid":28297,"publicationDate":"15 Jul 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_183744.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJEk1ou_cmVhVOGUTMJtcYR4=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - Eurozone manufacturing faces challenging times","titleDe":"","titleIt":"","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> Ahead of next week\u00b4s flash PMI release for July, our Chart of the Week suggests that the eurozone manufacturing sector is facing challenging times. The new orders-to-inventory ratio, which tends to lead developments in the headline manufacturing PMI, has declined steeply suggesting that the decline in the headline manufacturing PMI should accelerate in the coming months. Since the start of the series in 1997, current levels of the new orders-to-inventory ratio have always seen the headline PMI drop to below 50.<\/li><li> Several headwinds are weighing on the outlook for manufacturing. On top of high input prices (particularly for energy) and supply-chain bottlenecks, it is likely that household expenditure-switching away from goods towards services and slower global growth will continue in the coming months. High economic uncertainty is also weighing on durable goods consumption.<\/li><li> The manufacturing sector entering recession would leave services activity as the main driver of growth. This increases downside risks to the outlook in 2H22 when the boost from tourism-related spending is likely to fade.<\/li><\/ul>","synopsisDe":"","synopsisIt":""},{"layout":"detailed","uid":27853,"publicationDate":"05 May 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_183202.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJJAYtfRRuP-QLTUBMUApBX0=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - Fragmentation or not? Yes, and the ECB should not dismiss it","titleDe":"","titleIt":"","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> The spread between the GDP-weighted sovereign yields and the OIS curve has been frequently used by the ECB during the pandemic to assess the degree of market fragmentation. The PEPP was launched based on this indicator and the central bank used to monitor it closely. As our chart shows, the GDP-weighted 10Y yield spread vs. OIS has moved sideways so far this year. On the surface, this suggests that everything is fine in the fragmentation camp.<\/li><li> However, such an average indicator hinders a tremendous heterogeneity at the country level. In the current risk-off environment, core EGBs have outperformed OIS, while traditional high-beta issuers (Italy for example) have widened versus OIS. This is reflected in a meaningful widening in the BTP-Bund spread, which has approached 200bp at the 10Y. Notably, BTP underperformance does not seem to be related to idiosyncratic issues (higher deficit or political uncertainty), as in past episodes, but mainly to the effect of a less supportive monetary-policy stance at a time when the Russia-Ukraine conflict is weighing on growth prospects.<\/li><li> Widening in spreads to Bunds should be a flashing signal for the ECB because it is a stark reminder that sovereigns, banks and corporates in various jurisdictions are facing increasingly different funding costs. A one-size-fits-all approach is not appropriate in the current environment, and the ECB should not dismiss the latest developments in fragmentation.<\/li><li> We are probably in for some more volatility in BTPs in the short term. First, the ECB may take some complacency from the fact that BTP widening versus OIS has been more limited than versus Bunds. Secondly, the ECB may be reluctant to abandon the gauge of fragmentation it endorsed during the pandemic. Lastly, the ECB is likely to be in a difficult position because sovereign risk repricing is not widespread, which would be a straightforward reason for intervening, but focused on a small subset of countries.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","analysts":[{"first":"Luca","last":"Cazzulani","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=39&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=44e3fa0de8cdd1ffaea59e3843112f22"}]},{"layout":"detailed","uid":27730,"publicationDate":"13 Apr 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_183037.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJIXgDTO8o1UFj4mn7kR7n34=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - Forwards project curve inversion in the euro area: Excessive policy expectations or underpricing of duration risk?","titleDe":"","titleIt":"","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> Markets are entering the April ECB meeting with very hawkish expectations. One-month OIS forwards project the depo rate will be at 0% at end-2022 and at 1.40% at the end of 2023, significantly higher compared to its current level of -0.50%. Since the ECB meeting on 10 March, these forward levels have shifted upward significantly, mirroring a strong rise in 2Y OIS swap rates. Even considering that investors tend to be risk-averse and hence a certain amount of risk premium is embedded in forwards, a substantial amount of rate hikes seems to be priced in.<\/li><li> While OIS forwards indicate a combination of steep rate-hike expectations and risk premium at the short end, forwards for Bund yields are considerably flatter. Markets price in an inversion between the depo and the 10Y Bund yield starting from June 2023 and reaching 40bp by December 2023. Relative to the historical experience since the start of the euro, this is sizable. The 10Y Bund yield was some 10bp lower than the ECB rate in March 2001 (at the peak of the tightening cycle) and some 20-30bp lower after the hike in June 2008. The curve was not inverted at the peak of the 2011 mini cycle. <\/li><li> Markets seem to be pricing in a central bank strongly committed to fighting inflation, that hikes rates along a steep trajectory and is successful in stabilizing inflation in the long run, possibly with a negative impact on growth. In this context, 10Y Bund yields are projected to stabilize at around 1%. This outcome could materialize as long as ECB rates of over 1% are not seen as an equilibrium but as a transitory peak. Indeed, our view is that the ECB will deliver fewer hikes than what OIS forward are pricing in. In this respect, forwards suggest that markets are demanding a larger risk premium for holding ECB risk rather than for holding duration risk. Therefore, receiving 2Y swaps is attractive compared to holding long-maturity Bunds.<\/li><li> Aside from a possible brief inversion at the peak of the tightening cycle, it is unlikely that the 10Y Bund will trade lower than the depo as an equilibrium, particularly as QE is now coming to an end, thus limiting the scarcity effect going forward. As such, either money market forwards are exaggerated, or forwards are underpricing risks associated with 10Y Bunds. Indeed, the risk scenario here would be that the equilibrium level for policy rates in the euro area is above the 1% area, in which case, the long end of the Bund curve would need to adjust upward.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","analysts":[{"first":"Luca","last":"Cazzulani","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=analyst&tx_research_piedition%5Banalyst%5D=39&tx_research_piedition%5Baction%5D=analyst&tx_research_piedition%5Bcontroller%5D=Edition&cHash=44e3fa0de8cdd1ffaea59e3843112f22"}],"countries":[{"name":"Euroland","ticker":"","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=country&tx_research_piedition%5Bcountry%5D=25&tx_research_piedition%5Baction%5D=country&tx_research_piedition%5Bcontroller%5D=Edition&cHash=fd74dfc966e72d45ff2580813616e07a"},{"name":"Europe","ticker":"","link":"https:\/\/www.unicreditresearch.eu\/index.php?id=country&tx_research_piedition%5Bcountry%5D=26&tx_research_piedition%5Baction%5D=country&tx_research_piedition%5Bcontroller%5D=Edition&cHash=253d12e5521ae4b9a73e892ee04713f2"}]}]


Dr. Luca Cazzulani
Head of Strategy Research
FI Strategist
UniCredit Bank AG, Milan
Piazza Gae Aulenti, 4 - Tower C
I-20154 Milan
+39 02 8862-0640

Luca Cazzulani is UniCredit’s Head of Strategy Research and an FI strategist. He covers market dynamics with a particular focus on the EMU. Luca has an MSc in Econometrics  from the Lon...

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