6th Floor, Candlewick House 120 Cannon Street London EC4N 6AS International Bond Research Tuesday 21st October 2014 Netherlands Data out from the Netherlands this morning, with house prices falling 0.2% from last month and consumer spending up 1.5% (YoY), a sharp rise from +0.5% growth seen in September. Year on year, house prices have risen 1.7%, climbing from -9.8% growth in June 2013 but ratings agency, Fitch, say they see stabilisation in the housing and mortgage markets ahead despite only just recovering from a five year slump. Dutch figures remain mixed; with unemployment having fallen from the year’s high of 8.8%, settling at 8% for the past two months and inflation falling below 1% to 0.9%, following the Eurozone trend. This comes despite heavy investment in technology and tourism in the country in aid to boost the economy. However, a recent report by a European think tank indicates that Swiss and Dutch labour force participation rates remain the best within the OECD. The housing market pick up appears to be at a moderate and sustainable pace, with the rapid rise in the housing market in the early part of 2000 leading to the country’s recession. Despite Dutch homebuyers assuming debt, the country’s debt to GDP ratio remains at the lower end amongst Eurozone countries, at 73.5% following public spending cuts. Whilst the economy has a long way to go in regards to economic growth, measures that have been taken so far have been effective and these recent figures indicate the economy remains on a positive path. Dutch bond yields converge with German bunds at the long and short end of the curve, but Dutch yields remain higher between the 5 to 15 years area. With higher yields than Germany and France, there appears to be further downsidein yield on Dutch debt. We recommended buying Dutch debt in September, since which yields have fallen 10bp in the 10 years and 15 points in the 20 years, benefitting from the current economy stability. There appears to be further to go especially at curre nt yield levels and safety provided. German and Dutch yield spread source: Bloomberg Anasakti Thaker D: 0207 398 3114 www.KingandShaxson.com Page 1 of 3 INTERNATIONAL DESK E: [email protected] 6th Floor, Candlewick House 120 Cannon Street London EC4N 6AS International Bond Research Tuesday 21st October 2014 INTERNATIONAL BOND COMPARISONS yield (s/a) yield change yield change return MTD UK US Australia Canada Japan Germany France Netherlands Austria Switzerland Sweden Denmark Spain Italy New Zealand Anasakti Thaker D: 0207 398 3114 2 yr 5 yr 10 yr 30 yr 2 yr 3yr 5 yr 10 yr 30 yr 2 yr 5 yr 10 yr 2 yr 5 yr 10 yr 30 yr 2 yr 5 yr 10 yr 30 yr 2 yr 5 yr 10 yr 30 yr 2yr 5yr 10yr 30yr 1 yr 5 yr 10 yr 30 yr 2 yr 5 yr 10 yr 25 yr 2 yr 5 yr 10 yr 20yr 2 yr 5 yr 10 yr 26 yr 2 yr 5 yr 10 yr 26 yr 2 yr 5 yr 10 yr 28 yr 2 yr 5 yr 10 yr 30 yr 2 yr 5 yr 10 yr UKT 4 09/2016 UKT 1.75 07/2019 UKT 2.75 09/2024 UKT 3.25 01/44 912828F47 912828F54 912828F39 912828D56 912810RH3 EC575249 Corp EK3821791 EJ2445694 EK4387479 EK1739599 EJ7362241 EI7057215 EK5229738 EK4879822 EK4690054 EK4826393 EK4355757 EK4585510 EK4694379 EK0809500 EK1774786 EK3340909 EK3074136 EJ6098374 EJ4989046 EK4197019 EK1418137 EK0414632 EF3754068 EJ2583262 EK3001824 EG1036748 EC394599 Corp ED4438336 EJ1752710 SWISS 2.5 3/36 EF0868820 EH0398089 EK0417692 EH7669102 EI5589029 EH6950768 EK2541788 EH6131138 EI7927748 EH8448167 EK3289700 ED7737726 EJ6263705 EK3526614 EK0933524 EJ6794667 EC935138 EJ6281665 EI7035203 0.66 1.45 2.15 2.89 0.35 0.77 1.41 2.19 2.97 2.55 2.86 3.31 0.96 1.40 1.94 2.52 0.02 0.13 0.48 1.63 -0.07 0.14 0.85 1.77 0.01 0.40 1.31 2.39 -0.03 0.31 1.03 1.82 -0.02 0.24 1.10 1.76 -0.07 0.07 0.43 0.95 0.02 0.33 1.21 1.21 -0.03 0.21 1.10 1.73 0.54 1.07 2.26 3.32 0.66 1.30 2.59 3.86 3.52 3.94 4.04 www.KingandShaxson.com Page 2 of 3 on day % -0.02 -0.03 -0.04 -0.02 -0.02 -0.02 -0.01 -0.00 -0.00 0.03 0.05 0.08 -0.01 -0.02 -0.01 0.00 0.01 -0.00 0.01 0.01 -0.01 -0.02 -0.01 -0.00 -0.01 -0.00 0.01 0.03 -0.00 -0.01 -0.00 0.00 -0.02 -0.02 -0.00 0.00 -0.00 -0.01 -0.02 -0.01 -0.01 -0.03 -0.02 -0.02 -0.01 -0.02 -0.01 -0.00 0.07 0.07 0.09 0.06 0.06 0.07 0.10 0.02 0.01 0.06 0.07 MTD % -0.16 -0.32 -0.28 -0.17 -0.22 N/A -0.35 -0.30 -0.23 -0.09 -0.14 -0.17 -0.17 -0.22 -0.21 -0.15 -0.06 -0.04 -0.04 0.03 0.02 -0.00 -0.10 -0.10 0.03 0.07 0.03 0.04 0.01 0.00 -0.05 -0.09 0.01 0.02 -0.05 -0.10 0.01 0.01 -0.04 -0.09 -0.13 -0.23 -0.27 -0.27 0.01 -0.02 -0.10 -0.12 0.22 0.18 0.12 0.11 0.31 0.28 0.26 0.22 -0.02 -0.12 -0.09 (local CCY) 3.17 2.86 4.55 5.75 0.83 N/A 3.08 4.57 7.12 4.52 2.92 3.82 1.17 2.44 3.72 5.39 0.19 0.36 0.81 0.83 -0.04 0.21 1.72 4.11 0.13 0.03 1.08 1.44 -0.02 0.18 1.91 3.80 2.78 1.28 1.67 3.87 1.43 1.93 1.25 3.21 2.37 3.71 4.39 4.39 1.76 2.64 2.35 4.34 2.54 2.00 1.00 1.28 1.19 -0.10 0.50 -0.99 4.66 3.18 4.64 Duration 1.81 4.53 8.63 19.00 1.93 2.95 4.75 8.78 19.65 2.17 4.70 8.39 2.01 4.66 8.54 15.00 1.97 4.88 9.48 20.29 1.90 4.94 9.38 22.81 2.08 5.02 9.22 20.54 1.48 5.20 8.93 22.53 1.86 4.47 9.32 16.05 1.95 4.29 9.12 14.55 1.69 4.03 9.39 17.68 1.99 4.58 10.03 17.04 1.91 4.49 8.85 15.00 1.53 4.61 8.39 15.70 0.48 5.08 6.97 INTERNATIONAL DESK E: [email protected] Tuesday 21st October 2014 sell buy 10yr GLOBAL UK US Japan Euro 10yr DOLLAR US Australia Canada NZ UK -31 -64 -73 sell US 112 -26 317 EUROPE Belgium Denmark France Switzerland Austria Italy Netherlands Spain Sweden Spread to Germany 2 yr 2 4 7 -1 4 73 4 61 9 US -4 Japan 167 171 Euro 130 134 -2 Canada 26 -137 NZ -185 -74 -211 -33 -42 Australia -112 -137 97 256 10 yr -6 25 46 -41 25 175 19 141 36 The information used here is obtained from sources that we consider to be reliable but its accuracy and completeness cannot be guaranteed. 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