Weekly Intelligence Report – Oil, rating agency and negative rates

26 Feb 2016

Welcome to the inaugural edition of the Weekly Intelligence Report, a new publication in which we highlight the key macroeconomic and/or nancial developments of the week and highlight new themes relevant to global investors, drawing on contributions from our various investment teams, and from members of our Investment Strategy team. In this publication, we aim to represent a range of views and not just one single “house view”. The overall goal is to promote discussion and to challenge you to think about today’s investment market events in different ways. The views expressed are those of the respective writer and his or her investment team, and may not re ect the views implemented in individual client portfolios given BNP Paribas Investment Partners’ principle of investment centre autonomy.

Now let’s get started. The past week has been eventful; somewhat better US economic data and a tentative agreement, in principle, for four key oil producers to freeze their output at current levels contributed to a generally improved tone for risk assets overall. Three stories in particular caught our attention, and we highlight them in this edition. In the rst of our contributions, Christoph Von Scheurl of our Multi Asset Solutions team comments on the recent oil agreement at Doha, and the implications for oil prices and supply and demand, in both the short and medium term. Alaa Bushehri of our Emerging Markets Fixed Income team comments on the recent wave of sovereign rating downgrades, and posts the question whether this heralds a period of increasing rating agency activism towards oil and commodity producing nations. In the context of increasing speculation about additional unconventional monetary easing at the upcoming March ECB meeting, and renewed weakness in European banking sector bond and equity prices, Richard Barwell from our Investment Strategy team explores the sometimes complex link between negative rates and bank pro tability in the last of our pieces.

Enjoy this week’s publication. We look forward to having you back again.

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