The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.
Banking

Bond Outlook March 18th

Optimism after Bernanke’s speech and higher housing starts is probably overdone. The banks’ problems are not yet fixed and underlying causes of the recession will take years to clear.

Bond Outlook [by bridport & cie, March 18th 2009]

Moderation in all things, including the optimism that we have expressed in recent Weeklies! It is encouraging to see housing starts increase in the USA, to hear of business optimism to edge upwards in Germany, to observe a stock market recovery and to read Bernanke’s assurance. However, from there to conclude that the crisis is over is to go too far too fast. The L-bend is still many months away.

At the risk of over-simplification, we link the bottoming out of the GDP (and the beginning of a long period of little or no growth) to the banking system being repaired. Admittedly, the bond market is fulfilling many of the roles of commercial banks, but for small and medium enterprises (which are the real source of economic growth), the absence of lending facilities is crippling. Geithner is about to take a further step cleaning up toxic bank assets, and this has to work for the L-bend to be reached.

Restoration of banking health is necessary to stop the GDP falling, but is not itself enough to return to GDP growth.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree