< The 2014 All-Europe Fixed-Income Research Team
Bank of America Merrill Lynch researchers overseen by Athanasios Vamvakidis earn an impressive debut in the No. 2 position on the strength of their “tactical insight [and] longer-term strategic views,” as one investor remarks. The London-based trio expects 2014 to be very different from last year, says Vamvakidis, given “the contrast between the accelerating U.S. recovery and the declining euro zone inflation.” Since the U.S. Federal Reserve is in the process of exiting its quantitative-easing program, no other major central bank, with the exception of the Bank of Japan, “will be doing QE by the end of the year,” he projects. “This suggests that foreign exchange will respond much more to data and fundamentals than we have seen in recent years. It will become a more normal market, with plenty of opportunities for those who get the economics right.” One such opening is in trading of the euro, which Vamvakidis and his colleagues expect to weaken. The currency has benefited from such drivers as the Fed’s more accommodative monetary policy vis-à-vis the European Central Bank’s and the improvement in the euro zone current-account balance. Going forward, however, they see these supportive factors “gradually losing steam or even reversing in 2014,” Vamvakidis says. “Timing is of the essence, but we will be selling the euro rallies.” |