JPMorgan reaffirmed its confidence in the Greek economy, as it recommended a long position in Greek bonds over Italian bonds in its latest analysis, anticipating the Greek government would issue a 10-year bond shortly.
It should be recalled that the American investment bank had initially recommended a long position in Greek 10-year bonds in December (18/12).
The analysis justified the long position on Greek 10-year bonds, compared to those of Italy, in light of the ongoing passive investment flows into indices in January and the expectation of a reversal of recent pressure once the joint Greek bond issuance is announced. The bank expects Greece to issue a new 10-year bond through a consortium in the coming weeks, mainly during the next week.
Regarding the European regions, JPMorgan favors Spanish bonds over Italian securities remaining neutral on the latter. The bank maintains a short position on 9-year Portuguese bonds against Spanish ones.
For Europe as a whole, the bank recommends a long position in 10-year French bonds against German ones and a long position in 10-year Belgian bonds against French securities.
JP Morgan also recounts its forecasts for the performance of the Greek economy, expecting a growth rate of 2.3% this year, with inflation projected at 2.8%.
Greece is anticipated to reduce its budget deficit below 1%, with a primary surplus expected at 2.5%. The country’s debt is forecasted to decline to 152% of GDP, but the current account deficit will be at 6.1%.
