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Currency market

Tension in Turkey.

The abortive coup in Turkey monopolised our attention during the weekend and left open many questions both inside and outside the country's borders. Sectors of the Turkish armed forces attempted to wrest control of the country from the government of President Erdogan, who appeared before the media hours later to announce that the coup had been put down and warning that those involved would pay a high price. However, instability continues in the streets of Turkey's main cities and the currency, as is to be expected, is also suffering the consequences of the military uprising, falling up to 5% against the US dollar. Whereas the session opened last Friday at 2.8760 USD-TRY it reached its maximum at 3.0476 USD-TRY. We will have to wait and see how all this evolves; the official version has little credibility, rumours abound and different versions continue to come out.

Before these events occurred, generalised purchases of the dollar had led the greenback to reach around 1.1020 EUR-USD, a movement also supported by the good US retail sales figures published on Friday. They rose more than expected in June, increasing hopes that consumer spending will boost economic growth at the end of the second quarter. All this also feeds future expectations of possible interest rate increases by the Federal Reserve, specifically increasing the probabilities assigned by the market for the next meeting in December.

Relative calm seems to be reigning In England. We do not know how long this will last, but the rapid formation of a government by Theresa May, as well as reassuring messages from Mark Carney, the governor of the Bank of England, which is keeping the official price of money at 0.5%, have contributed to relaxing the atmosphere and calming the waters. We believe much (everything in fact) remains to be defined, but what can be said is that the pound has recovered a certain stability and stands without much fluctuation at around 0.8350 EURGBP

Early this morning China published its new home prices that, although they have risen with respect to the previous month, reflect a certain cooling off in the level of prices. The yuan registers its lowest rate against the dollar since 2010, approaching 6.70 USDCNY.

Indicative ranges for today:




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Short term rates Public debt Stock markets Exchange rates

Short term:
The 12-month EURIBOR could stabilise or even recover slightly while the improvement in economic sentiment continues, although it will be a passing phase

Short term:
The 10-year TIRs could still go up, but no more than 10-15 rp in both the German and the American bonds.
Short term:
The S&P 500 could continue following the European indexes, although its margin is running out due to the proximity of significant resistances. The Ibex will have difficult to exceed the 8700-8800.
Short term:
The truce? the pound is enjoying will allow it to reach levels of 1.36 against the dollar, but with a high risk of a subsequent downward turn.

In the medium term:
The market can persist, and even to expand, its perspectives for ECB rate reductions, causing an additional fall in the 12-month EURIBOR to levels of around -0.08%.

In the medium term:
The demand for haven assets will persist, which means that core bonds will remain at negative levels and even fall to new lows. See the tir to 10 German years to reach the-0.30%.
In the medium term:
The stock exchanges may be in for a bumpy ride this summer, especially if the decisions taken by the central banks disappoint. A relapse to the minimum ones annual in Europe is probable.
In the medium term:
The euro could move towards 1.05-1.00 eur/usd.

Bankia hands four gift vouchers of 600 euros to bookseller customers who participated in the Madrid Book Fair

15 July 2016

Bankia has given four 600-euro gift vouchers to the winners of the prize draw held among its bookseller customers who took part in the 75th edition of the Madrid Book Fair held in Jardines del Buen Retiro between 27 May and 12 June.

Financial and Economic Bulletin

15 July 2016

The most important contents of this edition are: (i) The improvement in the job market calms fears over the US economy; (ii) The Chinese economy once again performed somewhat better than expected; (ii) The Bank of England takes time until the end of August and gives a breather to the pound; and (iv) The improvement in sentiment could still lead to a bullish trend in bond returns.

Macro comment

15 July 2016

The response of the markets to the US employment figures reflects that the key piece in the current economic puzzle continues to be the performance of the activity and the North American financial markets.

Indicators of the Spanish economy. 18 July 2016
Turnovers of the sectors in Spain. May 2016
Chinese GDP. 2nd Quarter 2016
Inflation in Spain. June 2016
Bank of England meeting. July 2016
Negotiations for the bailout of the banking sector in Italy


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Bankia does not guarantee the total accuracy of the information contained in this newsletter and does not necessarily share the opinions expressed in it, which are exclusively those of the members of its analysis team.