MyStratWeekly – July 4th 2023

Topic of the week: Access to finance of enterprises in the Eurozone and investment

• The bi-annual ECB survey on access to finance of Euro area enterprises reveals a significant gap between corporate financing needs and their availability – the highest since the sovereign debt crisis;
• Corporate financing conditions have deteriorated sharply;
• Faced with sharp increases in interest rates, companies are reducing their demand for loans, which will weigh on investment;
• Continued unprecedented monetary tightening by the ECB creates uncertainty about the scale of the adjustment.

Market review: A resilient US economy

• Markets are almost in line with the Fed’s rate guidance;
• US GDP growth revised up to 2% in 1Q 2023;
• T-note burst past 3.80%, Bunds held under 2.50%;
• Equities end the first half of 2023 on a positive note.

Axel Botte's and Aline Goupil-Raguénès' podcast

• Topic of the Week: Resilience of the U.S. Economy;
• Access to finance of enterprises in the Eurozone and investment.

Chart of the week

Central banks in developed countries are particularly sensitive to the risk of a price-wage spiral.

Developed economies are in fact dominated by the service sector where wage costs represent between 30% and 45% of costs depending on the sector. The manufacturing sector is more capital-intensive and the share of wages is lower by 3% to 14% depending on the sector considered.

In emerging countries, the share of wages is much lower.