Ing Groep N.v. · EURONEXT:INGA
Ing Groep — ING — Investor Presentation (October 2017)
21 slides from Ing Groep's investor presentation, Oct 10, 2017
Slide 1: Will politics stop the Fed in its tracks?
Will politics stop the Fed in its tracks? Our answers to this month’s big questions THINK Economic and Financial Analysis Follow us ing.com/THINK 10 October 2017 @ING_Economics
Slide 2: Our top six themes this month
#1 Will politics stop the Fed in its tracks? Who’s hired? The runners and #2 riders for next Fed chair Why one hike from the Bank of Our top six #3 England in November might be it themes this Is populism on the return? Latest on month #4 elections in Austria, Germany and Italy Global Economics “No b
Slide 3: We're looking for another Fed hike in December…
We’re looking for another Fed hike in December… Growth Wages Confidence remains buoyant, Political risks The tight labour market and increasing despite fiscal policy Debt ceiling deadline clash job-to-job flows should continue to disappointments and recent with December meeting push up wage growth,
Slide 4: Debt ceiling deadline to come at a tricky time for the Fed
Debt ceiling deadline to come at a tricky time for the Fed As little as two days between Fed meeting and debt ceiling deadline 13 December 15 December December Debt ceiling Fed Deadline Meeting (Current estimate) The US debt ceiling was raised in the aftermath of the hurricanes and the new deadline
Slide 5: Who's hired? The runners and riders for the next Fed Chair
Who’s hired? The runners and riders for the next Fed Chair Kevin Warsh Jerome Powell A former Fed Governor, he supports A current Fed Governor, he is the Trump’s tax plans, but also has a history of continuity candidate should Trump being more hawkish and he has offered decide against re-appointing
Slide 6: Achieving "sufficient" Brexit progress
Achieving “sufficient” Brexit progress What’s currently preventing Brexit talks from moving onto the next stage. Sufficient “Divorce” bill Irish Border Citizen rights Progress This is the major sticking The UK proposes a continuation The UK has said that EU citizens who point. Germany and of common
Slide 7: The "divorce bill": The key areas of disagreement
The “divorce bill”: The key areas of disagreement Although the UK is willing to honour its budget commitments, this is contingent on the UK retaining single market access in the transition. This latter point is reportedly more contentious in Europe. Total EU estimate of UK’s gross financial liabilit
Slide 8: Exit costs are also contentious in the UK…
Exit costs are also contentious in the UK… Idea of an exit bill will be a tricky political issue to navigate in the UK Would the following amounts be acceptable or not as a one-off exit fee, as the UK’s contribution to spending commitments made by the EU when the UK was a member? Accept Not acceptab
Slide 9: Household debt a key reason to tread carefully on rates
Household debt a key reason to tread carefully on rates Around 40% of variable mortgage holders would need to raise extra cash if rates went up by 1% 80% Cumulative percentage of 2016 Survey Consumer spending has been on mortgage holders who a rollercoaster ride since Brexit. would need to take some
Slide 10: So will the Bank of England hike rates?
So will the Bank of England hike rates? We only currently expect one or two rate hikes from the Bank The Bank of England's increasingly hawkish tone means that a rate hike increasingly looks like a question of "when" and "how much", rather than "if". The choice of the phrase "next few months" to des
Slide 11: Better Italian growth outlook ahead of key 2018 election
Better Italian growth outlook ahead of key 2018 election 4.00 1.5% 2.00 Economic growth in the second quarter 0.00 The economy is looking in better shape, albeit -2.00 still lagging the rest of the Eurozone. -4.00 Domestic demand is a key driver, but exports -6.00 have been better too. -8.00 Investm
Slide 12: The ECB's options for tapering
The ECB’s options for tapering ‘Lower for longer’ scenario likely to be announced at the October meeting Fed Style 1 Gradual tapering with linear scaling-back of asset purchases on a monthly or quarterly basis – the latter being more flexible. Staircase 2 Reduce QE purchases by €20bn in January, kee
Slide 13: Austrian elections could bring double precedent
Austrian elections could bring double precedent In less than a week, Austria will hold an early parliamentary election 35% Who will win the race? • Most likely candidate is Foreign 30% 30.09.2017 Minister Sebastian Kurz’ ÖVP. 25% 2013 • No party has committed itself to a coalition partner. With the
Slide 14: Complicated Jamaica
Complicated Jamaica Merkel wins a fourth term, but there’s uncertainty over who she will form a coalition with Distribution of seats in the 19th German Bundestag Merkel’s fourth term starts with complicated coalition negotiations… 9.4% • Merkel’s position has weakened - losses to her party, the curr
Slide 15: The debate has begun on the future of the Eurozone
The debate has begun on the future of the Eurozone Return to ‘no-bail-out’ union Towards fiscal and political union Characteristics • Sovereign debt restructuring mechanism • Limited fiscal sharing (project bonds) • Strict no-bail-out clause • Cyclical fiscal stabilization (rainy day fund, • Fully-f
Slide 16: Who's next in line to tighten monetary policy?
Who’s next in line to tighten monetary policy? QE/balance Rate hike Q ING policy rate forecasts sheet change 2017 2018 ECB Q Q Q Oct 17 Jan 18 End of QE extension Tapering announced Tapering begins under dovish tapering Fed Q Sept 17 Dec 17 June 18 Dec 18 Balance sheet unwind starts BoE No
Slide 17: FX: US rates drive USD correction, Korea risk starts to fade
FX: US rates drive USD correction, Korea risk starts to fade EUR/USD versus 2 and 10 year spreads USD/JPY 10 delta one year butterfly option (%) 1.40 0 3.50 1.35 -50 3.00 1.30 1.25 2.50 -100 1.20 -150 2.00 1.15 1.10 -200 1.50 EUR/USD 1.05 2 year EUR:USD swap spread (RHS bp) 10 year EUR:USD swap spre
Slide 18: Our global forecasts
Our global forecasts All data sourced from Bloomberg/ING forecasts EUR/USD EUR/GBP ING 0.95 1.40 ING Consensus 0.9 Forwards Forwards Consensus 1.30 EUR/USD 0.85 EUR/GBP 0.8 1.20 0.75 1.10 0.7 1.00 0.65 14 15 16 17 18 14 15 16 17 18 1M: 1.20 3M: 1.20 6M: 1.23 12M: 1.27 1M: 0.90 3M: 0.88 6M: 0.88 12M:
Slide 19: Our global forecasts
Our global forecasts 2017F 2018F Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY United States GDP (% QoQ, ann) 1.2 3.1 2.7 2.5 2.2 2.3 2.1 2.5 2.7 2.5 CPI headline (% YoY) 2.5 1.9 1.9 2.3 2.2 2.1 2.2 2.5 2.3 2.3 Federal funds (%, eop, lower bound) 0.75 1.00 1.00 1.25 1.25 1.50 1.50 1.75 3-month interest rate (%, eop
Slide 20: Get all our latest thoughts on ing.com/THINK
“USD: Making everyone (else) great “When caution’s not again!” enough for the euro” “Brexit battle continues as “What we really talks enter round two” think of the Bank of England’s rate “Confused by decision” Yellen’s direction? You’re not alone” “Normalisation will be a long, uncomfortable “G10 FX
Slide 21: Disclaimer
Disclaimer This publication has been prepared by ING (being the Wholesale Banking business of ING Bank N.V. and certain subsidiary companies) solely for information purposes. It is not an investment recommendation and it is not investment, legal or tax advice or an offer or solicitation to purchase