TwentyFour

When market participants were asked at the end of last year to enumerate the main risks investors would face in 2024, the vast majority of those surveyed counted politics and elections amongst the top factors to consider for the unrewarding task of forecasting total returns for major asset classes over the following twelve months.

In spite of what looks like a quiet week ahead, there are a couple of data releases in the coming days that require close attention, these releases could potentially disturb the fragile calm that we are enjoying in the first trading hours of the week.

The European asset-backed securities (ABS) market saw a record issuance last week with €5bn of primary issuance.

The UK’s Office for National Statistics (ONS) released their monthly inflation report this morning. In spite of April’s numbers showing a marked decrease in most inflation measures, it is fair to say that the report was significantly worse than expectations.

The European Central Bank (ECB) will almost certainly start their rates cutting cycle next month. Supportive inflation data and clear guidance from the governing council has driven market implied probabilities of a June cut to almost 100%, with little in the way to derail that.

The most important event this week is likely to be this Wednesday’s US Consumer Prices Index (CPI) release.

Following an incredible 2023, collateralised loan obligation (CLO) investors are again having a great year with the asset class outperforming the more traditional asset classes.

The first four months of this year have seen €11.6bn in gross Additional Tier 1 (AT1) issuance from European banks, across euros, dollars and sterling markets.

Recently, BBVA announced that it had approached the management of Banco Sabadell, to explore a possible merger between both entities, with BBVA also appointing advisers for this purpose.

Money supply measures such as M1 and M2 enjoyed a relatively brief period of fame and glory just after the pandemic.

Following yesterday’s release of Italian energy company Enel's 2023 annual sustainability report, it was confirmed that they had failed to meet the emissions reduction key performance indicator (KPI) linked to a number of their sustainability linked bonds (SLBs).

Volatility made an unwanted come back this week. A combination of rising tensions in the Middle East, strong Consumer Price Index (CPI) and labour market data in the US in previous days, and markets that looked somewhat expensive in certain sectors, all conspired to cause a widening in spreads and a correction in equity prices.