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

PATRIS The Week Ahead - 26 November 2018

26 Nov 2018


Key themes for the coming week:

1.At Sunday’s European Council meeting, the EU27 leaders endorsed the draft Withdrawal Agreement and the draft Future Framework at the political level. Focus should now be on the vote in the UK Parliament, scheduled to take place by mid-December.

2.Italy and the European Commission are expected to work in the coming days to bring closer their positions on Italy’s 2019 draft budget, after EC President Juncker met Italy’s PM Conte over the weekend.

3.Germany’s Ifo business sentiment survey and China’s Caixin and official manufacturing PMIs are the highlights of this week’s data calendar.

4.The minutes to the Fed’s November meeting will be disclosed on Thursday.

5.Fed Chairman Jerome Powell will speak before the Economic Club of New York on Wednesday.

6.Focus should be on the tone of the trade negotiations between the US and China, ahead of the expected meeting between Presidents Trump and Xi at the G20 summit. Investors will look for signs of a possible truce before US tariff rates are increased at the beginning of 2019 (the 10% rate imposed on $200bn is scheduled to rise to 25%). On Saturday, President Xi Jinping and President Donald Trump meet in Buenos Aires.

7.ECB President Mario Draghi will speak twice on Monday at the ECON hearing of the European Parliament in Brussels.

8.Fitch may update its view on Portugal next Friday.

9.In Portugal, INE releases 3Q18 Quarterly National Accounts on Friday.

10.In Mexico, the central bank releases on Wednesday its 4Q18 Quarterly Inflation Report.

11.Update to the Risk Events Calendar for the following months.

Germany’s Ifo business sentiment survey and China’s Caixin and official manufacturing PMIs are the highlights of this week’s data calendar.

Eurozone: The November European Commission’s sentiment indicator (ESI) will be released on Thursday and is likely to add the evidence that the economy is continuing to slow. The ESI has declined every month this year. The consumer confidence component (already released) fell sharply in November. The German Ifo business climate indicator and the Italian ISTAT confidence indices will also be released during week, which will provide further insight into activity growth in the final quarter of the year.

November’s Markit composite PMI, published last week, was consistent with quarterly real GDP growth of 0.2%q/q, the same as in 3Q18 (see chart). The account of October’s MPC meeting showed that the ECB Governing Council recognised that downside risks to the economy had increased.

October’s euro area unemployment rate will be released on Friday. Consensus expects a decline to 8.0%, which would be its lowest level in a decade. Employment intentions remain strong, even though they have declined from the expansion’s highs (see chart). This should keep the unemployment rate falling.

The Eurostat will release on Friday the November flash reading for Eurozone’s HICP inflation. Lower oil prices are likely to push headline inflation lower. In October, headline inflation rose to 2.2%y/y, its highest in nearly six years.

In Italy, the October unemployment rate should be disclosed on Friday. On Wednesday, we will get from the ECB October’s euro area money and credit data. Next week will also see the publication of the ECB’s survey of access to finance for enterprises.

US  The October personal income & spending report will be released on Thursday. Consensus expect solid gain in both, which would signal decent momentum by consumption growth at the start of 4Q18, even if at a slower rate when compared to the previous quarter.

China: October’s industrial profits will be released on Tuesday. Both the official and the Caixin/Markit manufacturing PMIs will be disclosed on Friday. The two indices have pointed to a weakening in activity momentum over recent months.

Data published by RWI/ISL and the CPB Netherlands Bureau for September showed that world trade remained downbeat. Forward-looking business surveys such as the new export orders component of the manufacturing PMIs do not suggest a significant recovery over coming months. 

UK: The Lloyds business barometer and the GFK consumer confidence will both be released during the week.

Portugal: INE will release November’s business and consumer surveys, October’s monthly employment and unemployment estimates (both on Thursday), November’s final CPI/HICP inflation data, 3Q18 quarterly national accounts, October’s industrial production and retail sales (Friday). Bank of Portugal discloses data on loans to households and non-financial corporations for October on Wednesday.

The minutes to the Fed’s November meeting are scheduled to be released on Thursday. Fed officials are likely to recognise a weaker evolution for business investment, as well to support the expected 25bps rate hike in the December meeting.

ECB communication this week will come from ECB Executive Board members Peter Praet, Benoît Coeuré and Sabine Lautenschlager, as well as from President Mario Draghi and Vice-President Luis de Guindos. In the US, we will get speeches from Raphael Bostic, Esther George, Charles Evans, Jerome PowellRichard Clarida, Loretta Mester and John Williams.

In Mexico, the central bank will publish on Thursday the minutes from the 15 November MPC meeting. At that meeting, the MPC decided to increase the policy rate by 25bps to 8%. One Banxico official dissented for a 50bps rate hike, while the forward guidance stressed upside risks to inflation. On Wednesday, the central bank will release the 4Q18 Quarterly Inflation Report, with updated forecasts for real GDP growth, inflation and eventually to the policy rate forward guidance.

We should have MPC meetings this week in South Korea and in Colombia (Friday).

Standard & Poor’s may review Ireland on Friday. On the same day, Fitch may update its view on Belgium and Portugal.

Last Friday, DBRS upgraded Cyprus to BBB (low) with a Stable Trend, reflecting the material reduction in banks’ non-performing loans and the solid economic performance. Real GDP growth is projected to be close to 4% in 2018 (after 4.2% in 2017), driven by investment, consumption and exports of services.

Fitch affirmed Portugal at BBB/Stable on 1 June 2018. Fitch recognised that the declining trend of gross general government debt has continued as a percentage of GDP. Fitch forecasted a gradual slowdown in GDP growth in 2018 and 2019, while tight fiscal policy is expected to prevail over the medium-term, guided by the European fiscal rules. Financing conditions are seen as remaining favourable by historical standards.

EGB supply this week is scheduled from Italy (CTZ November 2020 on Tuesday, BTPs and CCTeu both on Thursday) and Germany (€2bn of Bund 0.25% August 2028 on Wednesday). The supply will be more than offset by €21bn of coupons and redemptions.

Meanwhile, the US Treasury will issue $129bn during the week across the 2-year ($39bn on Monday, new issue), 5-year ($40bn on Tuesday, new issue) and 7-year ($32bn on Wednesday, new issue) sectors, as well as 2-year FRNs (€18bn on Wednesday, re-opening). There will be around $76bn of redemptions and coupons eligible for reinvestments.



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.