Global Daily – The Clinton rally takes shape

by: Maritza Cabezas , Hyung-Ja de Zeeuw , Aline Schuiling

US Elections: Early voters favour Hillary Clinton – Only hours from the presidential elections, there appears to be more support for Hillary Clinton than for Donald Trump among early voters. Although early voters are not counted until election day, many states release party registration information and returned absentee voters. At least 37 million early votes have been cast by now, which is more than 20% of total registered voters. As for the most recent polls, three national polls released in the weekend from investor’s business daily and WSJ/NBC and Washington Post/ABC News give Hillary Clinton a lead of 1, 5 and 5 points respectively. The average of polls which is calculated by Real Clear Politics is stating a 2 point difference, but these polls are lagging the most recent developments. Indeed, the FBI clearance released on Sunday will reduce some of the uncertainty, which was haunting undecided voters, although it is unclear what the magnitude of the impact will be for both candidates. On Monday, financial markets saw some relief. The US dollar rose and the S&P 500 rebounded, while 10Y US Treasury yields increased as investors moved to riskier assets. Our base scenario is that Hillary Clinton will win, but that Congress will be divided. (Maritza Cabezas)


Global-Daily-Insight-8-November-2016.pdf (216 KB)


Euro Credit: ECB will need to buy more in the primary corporate bond market – Yesterday the ECB published an update on their corporate sector purchase programme. The update shows that the ECB held EUR 38bn of corporate bonds at the end of October. EUR 5.2bn, or 14%, was bought in the primary market and EUR 33bn, which equals 86%, was bought in the secondary market. The numbers show that the primary market is steadily growing in relevance for the CSPP. However, we think that this is not enough and the ECB will need to increase the primary purchases to reach the scale it would like. This is especially the case now that it will probably extend the asset purchase programme by 6 months to September 2017. This has repercussions for the ECB’s allocation in new eligible deals. On average, the ECB has received an allocation of 10% of all eligible deals. We think this should grow to at least 15% given our supply forecast for next year. This means other investors will be crowded out. For more please read our Euro Corporate Watch – ECB will need to buy more in primary (for professional clients, please see disclaimers in the document ). (Hyung-Ja de Zeeuw)


Euro Macro: German factory orders and eurozone retail sales decline – Both German factory orders and eurozone retail sales turned out weaker than expected in October. German orders fell by 0.6% mom, following a 0.9% rise in September, while eurozone retail sales fell by 0.2% mom, the same as in September. During Q3 as a whole, factory orders still increased (+0.5% qoq), despite the weakness in September. This seems to reflect that the global industrial sector gained traction in recent months following the sluggish first half of the year. Indeed, Germany’s foreign orders jumped higher in Q3, with orders from within the eurozone rising by 2.3% qoq and orders from outside the eurozone by 2.6%. Orders for capital goods from within the eurozone were particularly strong, rising by 4.4% in Q3, signalling that fixed investment in the eurozone will grow solidly in the second half of the year. In contrast, orders for consumer goods declined by 2.2% qoq in Q3, which seems to reflect a broader trend of slowing consumption growth in the eurozone. Indeed, the combination of higher energy price inflation and weak wage growth is limiting growth in real disposable income. The second consecutive monthly decline in retail sales seems to underline the slowdown in consumption growth. (Aline Schuiling)