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Sunday Wrap

36cd808ffd4ac0fb215fd2fbfb85d96051762188e0c84c134173be698275653c;;[{"layout":"detailed","uid":27870,"publicationDate":"08 May 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_183219.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJJAYtfRRuP-QLrAjz7h-qeI=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Sunday Wrap","titleDe":"","titleIt":"","product":"Sunday Wrap","synopsis":"<ul class=\"ucrBullets\"><li> I\u00b4ll suggest that while a rate hike in July is the most likely outcome, it\u00b4s not a given; and if they don\u00b4t lift-off in July, their entire 'normalisation' plan could be put on hold for some time. I\u00b4ll argue that the rationale for the ECB\u00b4s planned normalisation of policies is not being communicated persuasively.<\/li><li> The ECB\u00b4s desire to plough ahead will shift the burden of supporting the increasingly weak and nervous economy to fiscal policy. That is not a bad thing in itself ' so long as our elected officials act sufficiently forcefully. It\u00b4s still early days, but we have had some good news recently on that front: On the fiscal rules, a new ESM proposal for a fiscal stabilisation fund, and more talk of European federalism, if still all all vague.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","hash":"36cd808ffd4ac0fb215fd2fbfb85d96051762188e0c84c134173be698275653c","available":"0","settings":{"layout":"detailed","size":"small","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"300","synopsisexpand":"1","noproduct":"1","noflags":"1","shownav":"0","oldestedition":"","limit":"1"}}]

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Economics Chartbook / Macro & Markets Outlook

88833585496baa5d9e148f1a4f64d8a9c6fc1c1d28c961549c12778eebbd14d4;;[{"layout":"detailed","uid":27588,"publicationDate":"30 Mar 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_182906.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJJW4PBk9_ILJawJy3UT8KTA=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Economics Chartbook - Central banks walk a thin line (2Q22) ","titleDe":"","titleIt":"","product":"The Unicredit Economics Chartbook","synopsis":"<ul class=\"ucrBullets\"><li><strong> Global: <\/strong> The economic outlook has worsened. We see global GDP growth of 3.3% this year (from 4.2%) and 3.4% next year (from 3.7%). The Russia-Ukraine crisis has caused a sharp rise in commodities prices and inflationary pressure, further global supply-chain disruption, a tightening of financial conditions, heightened uncertainty and a sharp drop in consumer confidence. Rising COVID-19 cases, notably in China, pose additional risks. Global central banks will walk a thin line as the growth-inflation trade-off deteriorates.<\/li><li><strong> US: <\/strong> We expect GDP growth of 3.0% this year and 2.2% next year, which includes a cumulative 0.3pp reduction in growth due to the Russia-Ukraine crisis. US trade and financial linkages with Russia and Ukraine are relatively small and the US economy entered the crisis in a good place, with strong household balance sheets and a very tight labor market. After likely peaking at about 8.5% yoy in the coming months, we see headline CPI inflation declining to moderately above 2% in 2023 due to base effects, lower energy prices, demand moderation and some improvement in supply bottlenecks. We now expect the Fed to hike by 125bp in the remainder of this year, up from 100bp previously, but still see the peak for the federal funds rate at 2-2.25% next year.<\/li><li><strong> Eurozone: <\/strong> Assuming that Russia continues to export oil and gas to Europe, we forecast GDP in the eurozone to expand by 3.1% this year and 2.5% in 2023. This growth trajectory is about 1pp lower than before the Russia-Ukraine conflict started. An easing of pandemic restrictions, still large amounts of excess savings for households and targeted fiscal stimulus are important mitigating factors. Our inflation forecast for 2022 has surged to close to 7%, followed by a decline to an average rate of about 2% in 2023. Facing a worsened trade-off between lower growth and higher inflation, the ECB confirmed its hawkish pivot and announced a plan to speed up the reduction of net asset purchases in 2Q22, aiming to end QE in 3Q22. We still expect two 25bp hikes in 1H23, although risks have shifted toward a first move taking place already before year-end.<\/li><li><strong> CEE: <\/strong> We expect the Russian economy to shrink by around 12% this year (peak-to-trough of around 20%), with a muted rebound in 2023 akin to stagnation. In EU-CEE and in the Western Balkans, GDP is expected to grow by around 2.3% in 2022 and by 3.6% in 2023. For this group, we estimate the direct impact of the conflict on GDP growth at 1.5-3pp in 2022 and up to 1.5pp in 2023. Turkey could grow by around 4% this year and 3.8% in 2023. If the EU stops importing oil and gas from Russia, the Russian economy could shrink by around 20% this year and fail to rebound in 2023. In such a scenario, EU-CEE and the Western Balkans would probably fall into recession. Inflation could reach 30-year highs due to rapidly rising commodity prices and supply-chain bottlenecks, prompting additional rate hikes and FX interventions.<\/li><li><strong> UK: <\/strong> We forecast GDP growth of 3.4% this year and 1.8% next year, after revising down growth by a cumulative 0.6pp due to the Russia-Ukraine crisis. The UK imports little from Russia but, as a net importer of commodities, it faces a substantial terms-of-trade shock. Inflation will likely peak at about 8.5% yoy in April and stay high through 3Q23 before falling below 2% in 4Q23. The MPC will likely raise the bank rate to 1.25% by August and then stop.<\/li><li><strong> China: <\/strong> We expect GDP to grow 4.7% in both 2022 and 2023. New outbreaks of COVID-19 that are forcing millions of Chinese into new lockdowns will likely weigh on economic performance in 1H22, adding to headwinds from the Russia-Ukraine conflict, rising commodity prices and real estate vulnerabilities. However, the government has signaled it will deploy further policy support to ensure stable economic performance and mitigate domestic and external growth headwinds. An easing in fiscal and monetary policy is likely.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","hash":"88833585496baa5d9e148f1a4f64d8a9c6fc1c1d28c961549c12778eebbd14d4","available":"0","settings":{"layout":"detailed","size":"small","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"300","synopsisexpand":"1","noproduct":"1","noflags":"0","shownav":"0","oldestedition":"","limit":"1"}}]

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CEE Quarterly

e2b67f80bbfba19f7126e612f02b8e74334ea0dc829748900eb4cd73ce1c876f;;[{"layout":"detailed","uid":27589,"publicationDate":"30 Mar 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/emergingmarkets_docs_2022_182907.ashx?EXT=pdf&KEY=l6KjPzSYBBGzROuioxedUNdVqq1wFeRooLgAZTPWCLUSnFz7GhBRew==&T=1&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/emergingmarkets_docs_2022_183204.ashx?EXT=pdf&KEY=l6KjPzSYBBGzROuioxedUNdVqq1wFeRowzPsxhSxJZfjfaWjJHQarQ==&T=1&T=1","protectedFileLinkIt":""},"title":"CEE Quarterly - Turmoil in Europe: The impact of the Russia-Ukraine conflict on CEE (2Q22)","titleDe":"CEE Quarterly - Unruhen in Europa: Die Auswirkungen des Russland-Ukraine-Konflikts auf die CEE-Region","titleIt":"","product":"CEE Quarterly","synopsis":"<p><ul class=\"ucrBullets\"><li> Russia\u00b4s invasion of Ukraine could be a watershed moment for Europe\u00b4s political and economic landscape.<\/li><li> Comprehensive sanctions could affect CEE\u00b4s trade with Russia and also domestic sectors in which Russian investment is important, such as energy and metals. Sanctions are already leading to higher commodity prices and lower commodity imports from Russia<\/li><li> Russian countersanctions and other measures are likely to impact CEE through the ban on food exports (with Turkey hardest hit), RUB payments for Russian gas (with the Balkans the most at risk), potential spillovers on risk appetite from Russia\u00b4s capital controls.<\/li><li> If Russia continues to export oil and gas to Europe, we expect its economy to shrink by around 12% this year (peak-to-trough of around 20%), with a muted rebound in 2023 akin to stagnation. In EU-CEE1) and in the Western Balkans, GDP is expected to grow by around 2.3% in 2022 and by 3.6% in 2023. The direct impact of the conflict on GDP growth is estimated at 1.5-3pp in 2022 and up to 1.5pp in 2023. Turkey could grow by around 4% this year and 3.8% in 2023.<\/li><li>We expect CEE to gradually reduce its dependency on Russian hydrocarbons with help from NextGenerationEU (NGEU). CEE governments might help households and companies weather higher commodity prices by incurring larger budget deficits. However, a new common EU fund might be needed to fight rapid price increases.<\/li><li>If the EU stops importing oil and gas from Russia, the Russian economy could shrink by around 20% this year and fail to rebound in 2023. In such a scenario, EU-CEE and the Western Balkans would probably fall into recession.<\/li><li>Inflation could reach 30-year highs due to rapidly rising commodity and food prices, and supply-chain bottlenecks. We expect inflation to end this year at or above 10% in Central Europe, at around 35% in Russia and at close to 60% in Turkey. Inflation targets could be missed again in 2023 amid persistent supply shocks.<\/li><li>We expect rates to be hiked to 6% in Hungary and Poland, 4.75% in Czechia, 4% in Romania and 2% in Serbia. Central banks are likely to intervene in FX markets to avoid depreciation above EUR-HUF 380, EUR-PLN 4.80 and EUR-RON 5.00 (with the NBR probably relaxing this stance if the conflict in Ukraine ends). <\/li><li>Liquidity management and FX interventions could keep interbank interest rates above 5% and push forward implied interest rates into double digits in times of stress. Thus, we see little scope for positioning against CEE currencies, especially in Romania and Serbia. <\/li><li>In our view, the main political consequences of the conflict in Ukraine are the following: 1. Russia is likely to drift further away from the West, both economically and politically; 2. Relations between Turkey and NATO are likely to improve; 3. Poland could become more engaged in European affairs and regional politics, moving closer to the EU. NGEU money could be unblocked for both Poland and Hungary; 4. Hungary could become more isolated in the EU and in the Visegrad group; 5. Serbia might be forced to choose between the EU and Russia; 6. The EU could increase its involvement in the political crisis affecting Bosnia-Herzegovina; 7. Economic shocks might fuel political instability in Slovenia and Romania; 8. Despite support from EU-CEE, Ukraine is unlikely to become an EU member any time soon.1) EU-CEE refers to CEE countries that are members of the EU: Bulgaria, Croatia, Czechia, Hungary, Poland, Romania, Slovakia and Slovenia.<\/p><\/li><\/ul>","synopsisDe":"<p class=\"ucrIndent\"><p>\u00dcbersetzung der englischen Originalversion vom 30. M\u00e4rz 2022<\/p><\/p><p><ul class=\"ucrBullets\"><li> Der Einmarsch Russlands in die Ukraine k\u00f6nnte einen Wendepunkt in der politischen und wirtschaftlichen Landschaft Europas darstellen.<\/p><\/li><\/ul><p> <ul class=\"ucrBullets\"><li> Umfassende Sanktionen d\u00fcrften sich auf den Handel der CEE-L\u00e4nder mit Russland und auch auf inl\u00e4ndische Sektoren auswirken, in denen russische Investitionen wichtig sind, wie etwa Energie und Metalle. Die Sanktionen f\u00fchren bereits zu h\u00f6heren Rohstoffpreisen und geringeren Rohstoffimporten aus Russland.<\/p><\/li><\/ul><p> <ul class=\"ucrBullets\"><li> Russische Gegensanktionen und andere Ma\u00dfnahmen werden sich m\u00f6glicherweise auch auf die CEE-L\u00e4nder auswirken, und zwar durch das Verbot von Lebensmittelexporten (wobei die T\u00fcrkei am st\u00e4rksten betroffen ist), durch RUB-Zahlungen f\u00fcr russisches Gas (wobei die Balkanl\u00e4nder am st\u00e4rksten gef\u00e4hrdet sind) und durch potenzielle Auswirkungen auf die Risikobereitschaft aufgrund der russischen Kapitalverkehrskontrollen.<\/p><\/li><\/ul><p> <ul class=\"ucrBullets\"><li> Wenn Russland weiterhin Erd\u00f6l und Gas nach Europa exportiert, erwarten wir, dass die russische Wirtschaft in diesem Jahr um etwa 12% zur\u00fcckgehen wird (vom H\u00f6chst- zum Tiefststand um etwa 20%), mit einem ged\u00e4mpften Aufschwung im Jahr 2023, der einer Stagnation gleichkommt. In der EU-CEE-Region1) und in den westlichen Balkanl\u00e4ndern d\u00fcrfte das BIP im Jahr 2022 um etwa 2,3% und im Jahr 2023 um 3,6% wachsen. Die direkten Auswirkungen des Konflikts auf das BIP-Wachstum werden auf 1,5 bis 3 Prozentpunkte im Jahr 2022 und bis zu 1,5 Prozentpunkte im Jahr 2023 gesch\u00e4tzt. Die T\u00fcrkei k\u00f6nnte in diesem Jahr um rund 4% und 2023 um 3,8% wachsen.<\/p><\/li><\/ul><p> <ul class=\"ucrBullets\"><li> Wir erwarten, dass die CEE-L\u00e4nder ihre Abh\u00e4ngigkeit von russischen fossilen Energierohstoffen mit Hilfe des Next Generation EU-Programms (NGEU) schrittweise verringern werden. Die Regierungen der CEE-L\u00e4nder helfen m\u00f6glicherweise den Haushalten und Unternehmen, h\u00f6here Rohstoffpreise zu verkraften, indem sie gr\u00f6\u00dfere Haushaltsdefizite einfahren. Allerdings k\u00f6nnte ein neuer gemeinsamer EU-Fonds erforderlich sein, um den raschen Preisanstieg zu bek\u00e4mpfen.<\/p><\/li><\/ul><p> <ul class=\"ucrBullets\"><li> Wenn die EU ihre Erd\u00f6l- und Gasimporte aus Russland einstellt, k\u00f6nnte die russische Wirtschaft in diesem Jahr um rund 20% zur\u00fcckgehen und sich bis 2023 nicht erholen. In einem solchen Szenario w\u00fcrden die EU, die CEE-Staaten und der westliche Balkan voraussichtlich in eine Rezession fallen.<\/p><\/li><\/ul><p> <ul class=\"ucrBullets\"><li> Die Inflation erreicht vermutlich aufgrund rasch steigender Rohstoff- und Lebensmittelpreise sowie Engp\u00e4ssen in der Versorgungskette den h\u00f6chsten Stand seit 30 Jahren. Wir erwarten, dass die Inflation in diesem Jahr in Mitteleuropa bei oder \u00fcber 10%, in Russland bei etwa 35% und in der T\u00fcrkei bei fast 60% liegen wird. Aufgrund anhaltender Angebotsschocks k\u00f6nnten die Inflationsziele im Jahr 2023 erneut verfehlt werden.<\/p><\/li><\/ul><p> <ul class=\"ucrBullets\"><li> Wir gehen davon aus, dass die Zinss\u00e4tze in Ungarn und Polen auf 6%, in der Tschechischen Republik auf 4,75%, in Rum\u00e4nien auf 4% und in Serbien auf 2% angehoben werden. Die Zentralbanken werden wahrscheinlich an den Devisenm\u00e4rkten intervenieren, um eine Abwertung \u00fcber EUR-HUF 380, EUR-PLN 4,80 und EUR-RON 5,00 zu vermeiden (wobei die NBR diese Haltung eventuell lockert, wenn der Konflikt in der Ukraine endet). <\/p><\/li><\/ul><p> <ul class=\"ucrBullets\"><li> Ma\u00dfnahmen zum Liquidit\u00e4tsmanagement und Devisenmarktinterventionen k\u00f6nnten die Interbankenzinsen \u00fcber 5% halten und die impliziten Forward-Zinsen in Stresssituationen in den zweistelligen Bereich treiben. Daher sehen wir wenig Spielraum f\u00fcr eine Positionierung gegen\u00fcber den CEE-W\u00e4hrungen, insbesondere in Rum\u00e4nien und Serbien.<\/p><\/li><\/ul><p class=\"ucrIndent\"><p>1) EU-CEE bezieht sich auf die CEE-L\u00e4nder, die Mitglied der EU sind: Bulgarien, Kroatien, Polen, Rum\u00e4nien, die Slowakei, Slowenien, Tschechien und Ungarn.<\/p><\/p>","synopsisIt":"","hash":"e2b67f80bbfba19f7126e612f02b8e74334ea0dc829748900eb4cd73ce1c876f","available":"0","settings":{"layout":"detailed","size":"small","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"300","synopsisexpand":"1","noproduct":"1","noflags":"0","shownav":"0","oldestedition":"","limit":"1"}}]

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Rates Perspectives

de6e192ee2b0adfb860cffe94b2fd52b2075b3e6e57223cb520052066d16e4fe;;[{"layout":"detailed","uid":27695,"publicationDate":"13 Apr 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2022_183024.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVIRKs7N21TUl4ouDWG55vMJ3BVRmOvrLfQ==&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Rates Perspectives - BTPis are cheap vs. BTPeis, even amid inflation\/liquidity differences","titleDe":"","titleIt":"","product":"Rates Perspectives","synopsis":"<ul class=\"ucrBullets\"><li> BTPis have recently underperformed BTPeis, with their 5Y real yield spread widening to 90bp. In the following, we investigate the key drivers of this spread and assess whether its current level offers a good entry point to go long BTPis vs. BTPeis.<\/li><li> Based on our model, the current pickup is appealing, even considering liquidity or inflation differences between BTPis and BTPeis.<\/li><li> Moreover, going long BTPis vs. BTPeis has worked as a defensive trade in past episodes of BTP-Bund spread widening. BTPis also represent a cheaper alternative to other European inflation-linked bonds for investors concerned that inflationary pressure will increase further.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","hash":"de6e192ee2b0adfb860cffe94b2fd52b2075b3e6e57223cb520052066d16e4fe","available":"0","settings":{"layout":"detailed","size":"small","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"300","synopsisexpand":"1","noproduct":"1","noflags":"0","shownav":"0","oldestedition":"","limit":"1"}}]

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Chart of the Week

db4d162b30b2479dbd64126bc5f47882e11f76e378a7a66fe404b7053bdbc992;;[{"layout":"detailed","uid":27911,"publicationDate":"12 May 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/economics_docs_2022_183276.ashx?EXT=pdf&KEY=C814QI31EjqIm_1zIJDBJJAYtfRRuP-QMG6KcSzQklc=&T=1&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Chart of the Week - US consumers only slowly normalizing their spending patterns","titleDe":"","titleIt":"","product":"Chart of the Week","synopsis":"<ul class=\"ucrBullets\"><li> The expenditure-switching caused by the COVID-19 pandemic has contributed to the high inflationary pressure over the last year. Lockdowns and social distancing shifted consumer demand away from services and towards goods ' a shift in spending that was further reinforced by the increase in disposable income resulting from generous fiscal transfers. The rise in demand for goods was too abrupt for already constrained supply to adjust in time, thus pushing prices higher, while services firms facing reduced demand did not cut prices to the same extent as it would have done little to improve demand, leaving overall inflation higher. In other words, the sectoral Philips Curve was non-linear.<\/li><li> Our Chart of the Week shows that, despite the full reopening of the US economy, demand anomalies persist. The chart shows US personal consumption expenditure adjusted for inflation, using December 2019 as the baseline. Real consumer spending on both durable and non-durable goods remains around 10% and 20% higher, respectively, than before the pandemic ' with just marginal easing over the last nine months as prices rose steeply and the economy continued to reopen. Spending on services has now returned to pre-crisis levels but there are many categories that are still a long way away from their end-2019 levels. While real spending on accommodation is now back to roughly where it was two-and-a-half years ago, spending on recreational activities, travelling abroad and public transportation remains muted. <\/li><li> High goods price inflation, pent-up demand for travel-related services and a further easing of the direct effects of the pandemic will likely lead to further normalization of consumer spending patterns. But the adjustment process might be more gradual than originally thought with implications also for the re-allocation of labor across sectors, for spare capacity in the labor market and ultimately for the monetary policy stance itself. Continuing COVID-related bureaucratic burdens, such as testing for travelling or capacity constraints for public events, are weighing on demand for certain services. And in some cases, the change in consumption habits might be longer lasting. The spread of remote work, for example, is likely to continue to affect demand for public transportation and the consumption of food away from home, whereas new recreational habits might persist either for fear of contagion or because of structural changes in preferences.<\/li><li> The implication for overall inflation will depend on the balance between moderating core goods inflation on the one hand, and rising core services inflation on the other. The rebalancing of spending towards services could help ease overall inflation if the sectoral Phillips Curve continues to be non-linear. However, core goods inflation could prove stubbornly high amid ongoing supply bottlenecks for goods caused by the Russia-Ukraine conflict and COVID-19-related lockdowns in China, while rising core services inflation is likely to be reinforced by the tight labor market.<\/li><\/ul>","synopsisDe":"","synopsisIt":"","hash":"db4d162b30b2479dbd64126bc5f47882e11f76e378a7a66fe404b7053bdbc992","available":"0","settings":{"layout":"detailed","size":"small","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"300","synopsisexpand":"1","noproduct":"1","noflags":"0","shownav":"0","oldestedition":"","limit":"1"}}]

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UniCredit Investor Call/Webcast

c98ff14f4aa4a084311caad318a16825a0c738e328624e261e6d93fe943aad28;;[{"layout":"detailed","uid":27097,"publicationDate":"27 Jan 22","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/credit_docs_2022_182267.ashx?EXT=pdf&KEY=n03ZZLYZf5lxr16FMWlYU56goO5q84Cz70WgKiBxjJQ=&T=1","protectedFileLinkDe":"","protectedFileLinkIt":""},"title":"Pr\u00e4sentation zum UniCredit Webcast: Der Schuldscheinmarkt - Trends, ESG Fokus and 2022 Ausblick","titleDe":"","titleIt":"","product":"Marketing Material","synopsis":"<p class=\"ucrIndent\">Kreditvergabe von europ\u00e4ischen und deutschen Banken in 2021 und Ausblick auf 2022<\/p><p class=\"ucrIndent\">Review Schuldscheinmarkt 2021 und Ausblick auf 2022<\/p><p class=\"ucrIndent\"><strong>Nachhaltige Schuldscheine: <\/strong> Trends in 2021 und Ausblick auf 2022<\/p>","synopsisDe":"","synopsisIt":"","hash":"c98ff14f4aa4a084311caad318a16825a0c738e328624e261e6d93fe943aad28","available":"0","settings":{"layout":"detailed","size":"small","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","noproduct":"1","noflags":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"300","synopsisexpand":"1","shownav":"0","oldestedition":"","limit":"1"}}]

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Euro Credit Pilot Strategy

82a7d378e8cd59658cec7814045cd01b7a44f79ccdfecaf7a6e4a659cf71bd55;;[{"layout":"detailed","uid":26901,"publicationDate":"17 Dec 21","emaObject":{"protectedFileLink":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2021_182023.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVCsY1pNwWYpS6IVUmwpko-O-UFiiTLh3Xg==&T=1&T=1","protectedFileLinkDe":"https:\/\/www.research.unicredit.eu\/DocsKey\/fxfistrategy_docs_2022_182057.ashx?EXT=pdf&KEY=KZGTuQCn4lsvclJnUgseVIRKs7N21TUlnOaJCkTYBWrajTGlzzaJhQ==&T=1&T=1","protectedFileLinkIt":""},"title":"Euro Credit Pilot: MNMB version (December 2021)","titleDe":"","titleIt":"","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.As credit enters the next leg of its prolonged late-cycle phase, the environment is becoming more challenging. Rising inflation, higher yields, supply-chain friction and a fourth wave of COVID-19 cases represent key sources of volatility. However, the impact on performance is expected to be contained by technical factors.<\/p><\/p><p><ul class=\"ucrBullets\"><li><strong> Macro Outlook: <\/strong> At 3.9%, growth in the eurozone economy is likely to be weaker than previously expected in 2022, as supply constraints and higher inflation will probably slow the recovery of activity towards its pre-crisis trend.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Credit Quality Trend: <\/strong> Ongoing loose fiscal and monetary policy should continue support a gradual decline in the European default rate to 2.5% during 2022.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Market Technicals: <\/strong> We expect less new bond supply from IG NFIs and Financials in 2022 than in 2021, while supply from high yield non-financials should be comparable to this year.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Valuation &amp; Timing: <\/strong> We expect the credit-market environment to be volatile in 2022, though spread-tightening momentum will resume later in the year. The iBoxx NFI Senior NFI Index is expected to end the year at 40bp, and the Financials Senior Index at 45bp. The iBoxx NFI Subordinated Index is expected to tighten to 150bp and high yield NFI credit risk premiums to 280bp by the end of next year.<\/p><\/li><\/ul><p><ul class=\"ucrBullets\"><li><strong> Sector Allocation &amp; Recommendation Overview: <\/strong> Within non-financials investment grade credit, we prefer hybrids over seniors, as they have a lower duration and provide a better buffer against higher interest rates. In terms of sectors, we have overweight recommendations on Automobiles &amp; Parts, Basic Resources, Oil &amp; Gas and Health Care and underweight recommendations on Travel &amp; Leisure, Retail, Utilities and Chemicals. In Financials, we prefer Bank AT1s. We also expect ESG investments become more important, leading to a moderate increase in 'greenium'.<\/p><\/li><\/ul>","synopsisDe":"","synopsisIt":"","hash":"82a7d378e8cd59658cec7814045cd01b7a44f79ccdfecaf7a6e4a659cf71bd55","available":"0","settings":{"layout":"detailed","size":"small","showanalysts":"0","showcompanies":"0","showcountries":"0","showcurrencies":"0","nodate":"0","notitle":"0","dateformat":"d M y","nolinktitle":"0","synopsislength":"300","synopsisexpand":"1","noproduct":"1","noflags":"0","shownav":"0","oldestedition":"","limit":"1"}}]

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Webcasts

Libor transition is progressing: the next steps
01 July 2021
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Teach-In: Good-bye Libor - What you need to know to be prepared
03 March 2021
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