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Europe Insights

Monthly update on European markets
30 August 2019
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    Summary

    • At the July 25th meeting , ECB opened the door to further stimulus measures, emphasizing downside risks to growth and inflation
    • The recent drop in short term rates continues to weigh on the banking sector’s profitability as a whole, the question about the efficiency of further rate cuts remains open
    • September meeting likely to see rate cuts, tiering of deposit rate, and re-launch of the Asset Purchase Program
    • It is safe to say that negative interest rate have benefitted the eurozone overall; however, lower rates have not yet boosted corporate investment and are adversely impacting bank margins
    • We lowered the beta exposure of our Investment Grade portfolio back around neutrality on valuations. In High Yield , we remain defensive from a rating perspective, being particularly cautious toward B rated issuer

     


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