Who does not remember a day in April that dawns with a radiant sun and in a matter of hours a heavy downpour falls? The month that we now begin is rich in sayings and many label it as unstable and treacherous.
Something similar is happening in the world economy. The first quarter of the year was undoubtedly marked by the resilience of economic activity which, supported by household savings and the strength of the labor market, managed to overcome the energy crisis and the rise in official interest rates for the central banks. All of this put an end to fears of a sharp contraction in activity during the winter and made it possible to face the arrival of spring with renewed hope.
However, recent weeks have brought us new obstacles: like a spring storm, the bankruptcies of some regional American banks and the forced bailout of Credit Suisse have deteriorated financial conditions, and will punish growth in the coming months .
Although the final outcome of these turbulences is still uncertain, what is clear to us is that, from now on, the financial sector will face a higher cost of capital and greater scrutiny over the soundness of its deposits. This context of less confidence will lead to a rise in the cost of credit in the second half of the year and, with it, a further slowdown in activity.
We estimate that the greatest negative impact will take between six and nine months to be reflected and that it will imply around 0.7 percentage points less GDP growth in the second half of this year, both in the United States and in the Eurozone. Although these figures are manageable and therefore the recession is still avoidable, the truth is that the instability experienced brings us back to less rosy scenarios.
On the other hand, the greater restrictions on credit will act as an additional brake on the growth of loans, thus carrying out part of the work that the central banks aspired to with their more restrictive monetary policies. Bearing in mind that, in addition, the inflation ceiling has already been confirmed, we think that, from now on, the next steps taken by the monetary authorities will be more prudent and that we are getting closer and closer to the pause in the increases in guys.
From our point of view, both the Fed and the ECB are very aware of the need to maintain financial stability to achieve a correct transmission of their monetary policies and will try by all means to avoid contagion of liquidity problems in specific entities. the system as a whole and the economy in general.
Waiting for the mistrust to subside and for us to accept the "spring water, if it's not torrential, fill the bread basket" as good, for the moment we must remain cautious and the best opportunities are found in fixed income, particularly in the segment of corporate debt with the highest credit quality, where the IRR levels offered by these bonds are considered to adequately remunerate the risk.
