US: Banks could become more cautious with regard to lending and tighten financing conditions. Eurozone: Strong economic figures and a resilient banking sector, but growth drivers are coming to an end. China: Retail sales and the real estate sector are showing initial signs of stabilisation.

Damian Künzi, Head Macroeconomic Research, Swiss Life Asset Managers comments on the current state of the economy

Chart of the month

graphic shows expected increase of workforce over 12 months

Due to the rise in interest rates, US banks are record-ing large accounting losses on safe bonds – precisely the asset class in which the banks “parked” a lot of money in 2020 and 2021. Interest rate risks are not a problem if properly hedged, as the quality of these investments should remain high even in a recession. Losses in credit quality or even a credit crisis are much more problematic during downturns. The biggest credit boom in the past ten years has occurred in commercial real estate – an area in which regional banks are very active. As a result, the focus of the financial markets is likely to shift strongly towards this sector in the coming months.

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