Read our market review and find out all about our theme of the week in MyStratWeekly and its podcast with our experts Axel Botte, Aline Goupil-Raguénès and Zouhoure Bousbih.

Topic of the week: China-US: critical metals as a new battle line

  • The trade war between China and the United States is a race for technological and military hegemony;
  • Americans restrict tech exports to China, which retaliates by limiting exports of rare metals;
  • This situation is reminiscent of the Japanese crisis of 2010 which caused a surge in the price of rare earths;
  • This is arguably a new front line in the Sino-US trade war.

Market review: Disinflation, 60/40’s best friend

  • US headline inflation dips to 3% in June;
  • The T-note (3.80%) erases the tension observed after us employment;
  • Sharp upward acceleration on equities;
  • The credit carried by the hopes of monetary relief.

Axel Botte's podcast

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Chart of the week

global-surface-air-temperature-anomalies-for-june

We had the hottest June on record. This graph indeed shows an acceleration of the temperature drift in the air at the surface of the globe in June 2023.

The anomaly or deviation from the average observed between 1991 and 2020 is of an unprecedented magnitude of more than half a degree Celsius. It far exceeds the previous record of June 2019. Hottest temperature have been recorded in Europe and in particular in Ireland, the United Kingdom, Belgium and the Netherlands. They were significatly warmer in France and in parts of Canada, the United States, Mexico, Asia and Australia.

The trend rise in temperatures continued at the beginning of July with a historic high on July 3.

Figure of the week

$ 38 billion : this represents total inflows into European bond ETFs in the first half of 2023 as investors grab higher yields.

MyStratWeekly : Market views and strategy

Download MyStratWeekly – July 17th 2023
  • Axel Botte

    Axel Botte

    Head of markets strategy

  • Zouhoure Bousbih

    Zouhoure Bousbih

    Emerging countries strategist

  • Aline Goupil-Raguénès

    Aline Goupil-Raguénès

    Developed countries strategist

Reading time : 30 min.
INSIGHTS MARKETS
The fixed income bond market is comprised of different types of debt. Subordinated debt sits at the lower end of the debt stack, just before equity. In case of a default, repayment of subordinated debt will come after the other bond tranches.  This implies that subordinated debt bears a higher risk for investors. Therefore, in return, subordinated debt bonds compensate investors with higher yields. As a result, the asset class offers a compromise in terms of risk and returns, positioning it in the middle of the capital structure, just between equities and senior bond tranches. European banks represent the largest sub-segment of the subordinated debt asset class. This is related to the regulatory framework and its stringent rules in terms of bank capital requirements. Issuing subordinated debt allows banks to increase their capital ratios while at the same time it serves to strengthen their creditworthiness. In 2023, after a turbulent month of March, the subordinated debt market has moved back in the spotlight. The asset class’s valuations have improved, offering an opportunity to gain access to higher yields from subordinated bonds issued generally by investment grade quality signatures. The subordinated debt market is characterised by a strong “euro” bias, resulting from technical factors (European regulatory framework) that favour issuance versus issuing equity to strengthen capital structures. According to Ostrum Asset Management (Ostrum AM), subordinated debt is an instrument which can be used to diversify fixed-income allocations, offering additional yield pick-up. And it can add value to responsible bond allocation as the sustainable subordinated bond market is developing.
10/03/2023
Reserved for pros
Podcast
Reading time : 30 min.
NEWS MARKETS
Read our market review and find out all about our theme of the week in MyStratWeekly and its podcast with our experts Axel Botte, Aline Goupil-Raguénès and Zouhoure Bousbih.
09/08/2023
Reserved for pros
Podcast
Reading time : 30 min.
NEWS MARKETS
Read our market review and find out all about our theme of the week in MyStratWeekly and its podcast with our experts Axel Botte, Aline Goupil-Raguénès and Zouhoure Bousbih.
09/08/2023
Reserved for pros