Some Worrying Developments

Banks are still important to national economies. Trust in the soundness of banks is important. Balance sheets that are able to support lending to mid/small companies is important.

(We accept that times are changing and that there are new channels for small and mid-size businesses to access funding)

Since May 1st 2019, European banks have been performing poorly:

Deutsche Bank: -14%

Société Générale: -20%

UBS: -13.8%

Nordea: -9.74%

HSBC: -1.5%

Global government bond yields are falling, 10 year yields:

Country              yield today                       yield April 28th                 Change in yield

U.S.                           2.37%                                2.85%                               – 48 bps

UK                             0.93                                   1.26%                               – 23 bps

Germany                -0.14%                               -0.01%                               -13 bps

Australia                  1.53%                                1.80%                               -27 bps

Italy                          2.69%                                2.58%                                11  bps

All major bond markets have seen yields fall, with the exception of Italy.

The VIX index is holding at the 17 level after having spent the first quarter of 2019 between 12.5 and 15

The market is waiting for the G20 meetings where the Chinese and the U.S. will hopefully provide the market with some positive news on trade.  This looks optimistic to us.

Brexit is still a challenge and we are not sure a new PM will be able to avoid a new referendum.

Italy is about to be fined by the EU for not delivering on its financial commitments.

Angela Merkel just announced that her succession plans are not going to pan out, causing uncertainty.


Will be interesting to see if global equity markets can rally into the headwinds we see currently.

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