EU REAL ESTATE: Property: Week in Review
• Warehouses de Pauw brought an inaugural deal. The company was recently upgraded to A3 and is well positioned in the logistics markets of Benelux, France, Germany and Romania. The 5.25yr deal priced flat to Segro which we felt was a little tight, but it held firm in secondary.
• Alstria Office tendered for 26 & 27 bonds financed with a new €500m 4yr. Most recent property deals have priced tight and maybe even caused a further rally in secondary paper. Not so here. The deal came 25bps wide to our fair value and AOXGR 5.5% 31 (issued in March) widened 20bps, albeit following a very strong move tighter.
• New Immo CEETRU also saw profit-taking with the curve 38bps wider though still 30bps tighter month-on-month. It is a High Yield name of course but may have some implications for sentiment.
• Altarea’s outlook was moved to Stable from Negative by S&P at BBB-.
• Sirius Real Estate reported +5.2% like-for-like rental increase.
• New issues from CTP NV, Public Property Invest and Hammerson all fared well.
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FOREX: AUDNZD Bullish Conditions Intact, BofA Forecast Move to 1.1500
- Following on from our AUD post above, it is worth noting that Bank of America have reiterated their bearish view on NZD, especially vs AUD, which has been a persistent feature of G10 FX forecasts for most of the past 18 months.
- BofA forecasts imply further AUDNZD appreciation, and they have a current 2026 year-end forecast of 1.15.
- However, the bank notes that history does not favour AUDNZD longs, referencing that since the cross closed below 1.12 in the last week of November 2013, the cross has only closed at or above 1.12 in 18 (out of 614) weeks. BofA say they are “acutely aware of this risk given AUDNZD longs also appear to be crowded.”
- From a technical perspective, bullish conditions remain firmly intact for AUDNZD, with moving average indicators underpinning this theme. Short-term dips below 1.11 appear to be meeting solid demand, bolstering the case for a test of double top medium-term resistance at 1.1188. Initial support is seen at 1.1073, the 20-day EMA.
- In New Zealand, the calendar focus is on Q2 GDP and August trade figures, scheduled across September 18/19.
OAT: Commerz Still Recommend Lightening OAT Exposure During Any Outperformance
We have already noted that OAT/Bunds trades wider today, with the spread trading above 80bp since the benchmark OAT roll.
- Commerzbank write “with Macron already deciding on a new centrist prime minister, the political gridlock is not solved, but short-term uncertainty looks set to fade further, and we expect Fitch to maintain its AA-/negative rating on Friday. We therefore continue to see value in tactical OAT longs for now and target 70bp in the old/ 77bp in the new benchmark spread vs. Bunds and continue to suggest using periods of strength to reduce structural OAT exposure”.
FOREX: Aussie Outperforming, EURAUD Approaches Bear Trigger
- Broad stability for risk sentiment despite the Poland/Russia developments has allowed the likes of AUD and NZD to outperform on Wednesday, consolidating their solid recoveries from last week’s lows. For AUDUSD in particular, spot is consolidating above the 0.66 handle, continuing to threaten a move above the cycle highs at 0.6625, and a key resistance for the pair.
- Softer-than-expected inflation data in the US could provide the next impetus for the next leg higher in AUDUSD, strengthening the underlying bullish trend. The next targets for the move would be 0.6688 (Nov 07 high) and 0.6700, the 76.4% retracement of the Oct-Apr selloff.
- In contrast, lingering French political risks and geopolitical developments have relatively weighed on the Euro, allowing EURAUD to extend lower this morning. Despite being a slow burner, EURAUD has respected a prior breach of trendline support (drawn from the year’s lows, potentially bolstering short-term bearish conditions.
- The cross is approaching the July 31 lows and bear trigger at 1.7674, of which a break would place spot at near 3-month lows. Targets on the downside would include 1.7462 (Jun 10 low) and 1.7248 (May 14 low). ECB presents the nearest event risk for the cross, while September consumer inflation expectation data is due in Australia on Thursday.
Source: Bloomberg Finance L.P. / MNI
