* Cotações com atraso superior a 15 minutos via Bats CHI-X Europe e NASDAQ Basic

PATRIS Fixed Income Weekly Commentary - 26 October 2018

26 Oct 2018



1.The ECB made no changes to its policy or forward guidance, as widely expected. It still sees monthly net asset purchases ending this year, and repeated that interest rates should remain at current level through the summer of 2019. Moreover, the ECB expressed little concern about recent weaker economic data. The next monetary policy meeting is scheduled to take place on 13 December. Focus should be on the details of the reinvestment programme, but also on a possible revision to the economic outlook, as the ECB releases the update to its macroeconomic projections, as well as the confirmation of the end of net asset purchases at the end of December.

2.Credit ratings agency Standard & Poor's should release today its assessment of Italy (BBB/Stable). Last Friday, Moody's downgraded Italy to BBB-/Stable, concluding the review initiated on 25 May, reflecting a material weakening in Italy’s fiscal strength (as the public debt ratio will probably stabilise close to the current 130% of GDP in the coming years, rather than start trending down as previously expected by the rating agency) and the negative implications for medium-term growth of the stalling of plans for structural economic and fiscal reforms. The one-notch downgrade was largely expected. However, the Stable outlook was not a given and therefore was a positive.

3.The European Commission has rejected the Italian 2019 budget. The decision was widely expected. The country should now submit a revised budget within three weeks, given that the current draft has a serious non-compliance with the recommendation issued previously by the EU Council.

4.The Markit flash composite PMI was down by 1.4 points in October to 52.7, the lowest since mid-2016 and well below expectations, suggesting a further slowdown in the pace of real GDP expansion in the region in 4Q18. According to Markit, an export-led slowdown continued to broaden-out to the service sector. Moreover, companies’ expectations of future growth slipped to the lowest for nearly four years, with a near six-year low in manufacturing. 

5.In its latest monthly report, the Bundesbank said that the economic expansion remains intact, but may have come to a temporary halt in the summer quarter due to the car industry, given the transition to new emissions tests.

6.Fitch said that Portugal's 2019 budget draft maintains the commitment to fiscal consolidation, supporting the view that the public debt ratio is on a firm downward trend. The draft budget targets a 2019 fiscal deficit of 0.2% of GDP, down from 0.7% projected for 2018. The primary surplus is seen rising from 2.7% of GDP in 2018 to 3.1% in 2019. The next scheduled Fitch sovereign rating review on Portugal is due on 30 November.


For further information, or to receive the PDF file, please contact +351 912 897 835 or


The information and opinion contained in this report was prepared by PATRIS - SOCIEDADE CORRETORA, SA ("Patris"), which is part of the group of companies whose holding is PATRIS INVESTIMENTOS, SGPS, SA (Patris Group), listed in Alternext, which holds 100% of the share capital and voting rights of REAL VIDA SEGUROS SA which, in turn, holds 100% of the share capital and voting rights of Patris.

The information contained herein is based on publicly available data obtained from sources believed to be reliable and has not been subject to independent verification. To the extent permitted by applicable law, Patris does not expressly or impliedly guarantee the accuracy, completeness and / or correctness of such data, or any omission. This document, or part thereof, may not be (i) modified, (ii) transmitted or distributed or (iii) copied or duplicated by any means or means, without the prior written consent of Patris.

The analysts involved in the preparation of this report did not receive, receive and will not receive any compensation, direct or indirect, based on the information contained in this report.

PATRIS - SOCIEDADE CORRETORA, SA or another company of the Patris Group or its respective shareholders, management, and / or employees may carry out personal transactions on the securities referred to in this report, at any time and without prior notice.

Any opinion contained in this report may be outdated as a result of changes in market conditions, applicable laws and other factors. It should also be considered that the analyst may make changes to the estimates, assumptions and evaluation methodology used.

This report has been prepared for information purposes only, not taking into account the specific investment goals, financial situation and particular needs of any specific person who may receive the report. This report therefore has no specific recipient.

Patris is subject to high internal standards of behavior associated with the capital market, prepared on the basis of the applicable legislation of the Portuguese State and the European Union, which include rules to prevent and avoid conflicts of interest and barriers to the disclosure of information.

Investors should bear in mind that the rate of return on the securities identified in this report - if any reference is made to those returns - may vary and the price of such securities may rise or fall. Investors should thus be aware that they may receive less than initially invested. While this report may refer to the historical performance of securities, past performance is no guarantee of future performance. In addition, market conditions, applicable laws and other factors that have an effect on performance are all likely to change, with the consequent change in the information contained in this report. Patris or any other company of the Patris Group does not accept, to the extent permitted by applicable law, any liability, whether direct or indirect, resulting from losses that may arise due to the use of the information contained in this report.

Patris's activity is overseen by the Bank of Portugal and the Securities Market Commission.