LONDON Feb 21 A big bond fund's bet against the
euro that has stood since 2013 could be removed later this year
if Europe navigates its way through political tests in the likes
of France and Germany.
Ryan Myerberg, a portfolio manager in Janus Capital's
fundamental fixed income group, which manages around $40
billion, said his fund has been underweight the single currency,
to varying degrees, for around four years.
"We have a long-standing short in the euro which we are
happy to wear ... it is mainly for political reasons but also we
think the U.S. Fed is behind the curve," Myerberg said.
"But it could be a tale of two halves for the euro in 2017.
If we get positive results in the elections in the likes of
France and Germany then we would be positive on the euro again."
Myerberg said a positive result in the French election would
see a centrist candidate such as Emmanuel Macron or conservative
Francois Fillon defeat the eurosceptic, far-right leader Marine
Le Pen in May's run-off.
He said the optimal result in Germany, which holds Federal
elections in September, would be a win for Socialist Martin
Schulz over incumbent Angela Merkel who has governed Europe's
biggest economy for over a decade.
"A Schulz government likely entails more spending and
probably a more pro-European stance. This would be very positive
for European risk," Myerberg said.
A more stable political environment coupled with rebounding
euro zone growth and inflation could also see the European
Central Bank scale back its monetary stimulus and Myerberg said
this would strengthen the euro.
(Reporting by John Geddie; Editing by Alison Williams)