Banks

A consumer loan ABS issued last week by Consors Finanz, a fully-owned subsidiary of BNP Personal Finance, highlights the remarkable appetite investors are currently showing for mezzanine ABS bonds.

There is little disagreement among investors and economists that the last few years have been highly unusual in many respects. An inflationary shock in developed markets, one of the fastest rate hiking cycles on record, the worst year in decades for government bonds (2022), and mild recessions with no movement in unemployment are just a few of the dynamics that have strayed from recent norms.

The forecast-defying strength of the US economy has been one of the key drivers of financial markets in recent quarters, but as economic prospects diverge, Europe is where we see the better relative value in fixed income today.

For any fixed income investors that follow the England football team, the plan for H2 2024 may feel somewhat familiar – no substitutions in the second half.

We do not usually comment on press articles, but we were all quite surprised to read a piece on Bloomberg titled “A fragile banking system won’t make Europe stronger”.

In spite of what looks like a quiet week ahead, there are a couple of data releases in the coming days that require close attention, these releases could potentially disturb the fragile calm that we are enjoying in the first trading hours of the week.

The European Central Bank (ECB) will almost certainly start their rates cutting cycle next month. Supportive inflation data and clear guidance from the governing council has driven market implied probabilities of a June cut to almost 100%, with little in the way to derail that.

The most important event this week is likely to be this Wednesday’s US Consumer Prices Index (CPI) release.

The first four months of this year have seen €11.6bn in gross Additional Tier 1 (AT1) issuance from European banks, across euros, dollars and sterling markets.

On ​​​​​this webinar, Chris Bowie (Partner, Portfolio Management) provided a macro update on fixed income markets and how these views are reflected in the positioning of our short-dated funds.

The Federal Open Market Committee (FOMC) meeting was a relatively uneventful one, but there are a few points worth highlighting.

Recently, BBVA announced that it had approached the management of Banco Sabadell, to explore a possible merger between both entities, with BBVA also appointing advisers for this purpose.