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: The Eurozone escapes recession

  • After a slight contraction, a timid recovery has begun;
  • Domestic demand contracted in many countries as a result of losses in purchasing power suffered by households;
  • The situation is contrasted between countries: Spain, Italy and Portugal are in the lead, benefiting from the recovery in tourism;
  • France and Germany are experiencing a more limited rebound;
  • Surveys point to an acceleration in service-led activity as manufacturing continues to contract;
  • The recovery should firm up but remain limited due to the impact of the strong monetary tightening carried out by the ECB.

Market review: Disinflation continues in the US

  • US inflation dips below 5%;
  • Nasdaq up strongly led by big caps;
  • Banks lead European stock markets higher;
  • Stability in sovereign and credit spreads.

Aline Goupil-Raguénès' and Zouhoure Bousbih's podcast

  • Review of the week;
  • Eurozone escapes recession.

Chart of the week

italy-s-monthly-exports-to-china-and-pharmaceutical-goods-billion-euros

Italian foreign trade is experiencing a surprising development, particularly in the pharmaceutical sector. The lifting of mobility restrictions has led the Chinese to buy drugs massively.

The announcement of Italy's possible withdrawal from the partnership with China through the Belt & Road Initiative after 2024 could, however, strain relations between Rome and Beijing, and limit access to the Chinese market for Italian companies.

Figure of the week

Since 1960, Congress has acted 78 separate times to permanently raise, temporarily extend, or revise the definition of the debt limit.

MyStratWeekly : Market views and strategy

Download MyStratWeekly – May 16th 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