ECB: Lagarde: Financial Stability Risks Remain Elevated
Jun-05 13:03
- Risk-free interest rates have remained broadly unchanged since our last meeting. Equity prices have risen, and corporate bond spreads have narrowed, in response to more positive news about global trade policies and the improvement in global risk sentiment.
- Our past interest rate cuts continue to make corporate borrowing less expensive. The average interest rate on new loans to firms declined to 3.8 per cent in April, from 3.9 per cent in March. The cost of issuing market-based debt was unchanged at 3.7 per cent. Bank lending to firms continued to strengthen gradually, growing by an annual rate of 2.6 per cent in April after 2.4 per cent in March, while corporate bond issuance was subdued. The average interest rate on new mortgages stayed at 3.3 per cent in April, while growth in mortgage lending increased to 1.9 per cent.
- In line with our monetary policy strategy, the Governing Council thoroughly assessed the links between monetary policy and financial stability. While euro area banks remain resilient, broader financial stability risks remain elevated, in particular owing to highly uncertain and volatile global trade policies. Macroprudential policy remains the first line of defence against the build-up of financial vulnerabilities, enhancing resilience and preserving macroprudential space.
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MNI: US REDBOOK: APR STORE SALES +6.7% V YR AGO MO
May-06 12:55
- MNI: US REDBOOK: APR STORE SALES +6.7% V YR AGO MO
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EQUITIES: Estoxx put spread
May-06 12:53
SX5E (17th Apr) 3500/3400ps, bought for 5 in 5k.
STIR: TD Securities Recommend Paying EUR 1y1y vs. GBP 1y1y/USD 1y1y.
May-06 12:50
TD Securities see “more room for USD front-end outperformance on a cross-market basis”.
- They believe that the expected “inflation bump in both the U.S. (H2) and UK (Q3) will be temporary supply- rather than demand-driven.”
- TD also highlight that “even though the UK's growth dynamics are closer to the Euro area, it still has a stronger beta to U.S. markets”
- Meanwhile, they expect “the ECB to ease to 1.5% or lower only if global conditions worsen. In that scenario again, it’s more like that the U.S. (or GBP) front-end still outperforms vs. EUR”.
- As a result, they recommended paying EUR 1y1y vs. GBP 1y1y/USD 1y1y.
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