Read our market review and find out all about our theme of the week in MyStratWeekly and its podcast with our experts Stéphane Déo, Axel Botte, Aline Goupil-Raguénès and Zouhoure Bousbih.
Summary
Four topics for 2023
Like last year, each of us is presenting a topic that we think is crucial to monitor this year. We would also like to take the opportunity to wish you a very happy new year.
- High supply of sovereign bonds and ECB’s QT will converge to create risks for the sovereign market;
- Financial fraud is a late-cycle phenomenon. The fraud cycle tends to follow the economic slowdown;
- China, after three years of isolationism, the world’s second economic power is finally opening and in force!
- Liquidity risks linked to the continued tightening of monetary policies and the stronger presence of non-banks.
Market review: The Fed’s dilemma
- Fed officials confronted with easing of financial conditions;
- Euro area core inflation (5.2%) keeps rising;
- Notable pickup in European stock inflows;
- Fixed income markets absorb a flood of issuance.
Stéphane Déo's podcast
- Is the energy crisis over?
Chart of the week
End of an era!
The volume of negatively yielding debt amounted to more than 18 trillion in 2021 and was still above 14 trillion at the end of 2021. This week it went back to zero for the first time since early 2010. The JGB mar-2024 was the last bond to reach a zero yield.
Negative debt evaporated last year in Europe and the recent moves by the BoJ has resulted in JGB moving back into positive territory. The drop has been quite impressive indeed and illustrates the scale of the change we went through since the beginning of last year.
Figure of the week
France is the fourth country out of 76 in the MIT’s “Green Future Index country ranking”.
Indisputably, much remains to be done, but France scores quite well indeed.
