UK

UK banks will start reporting fourth-quarter 2023 earnings only in about a month or so, which feels like an eternity for eager bank analysts. Fortunately, the Bank of England published two interesting reports last week that offer a useful and insightful preview into last quarter’s key lending, asset quality and funding trends.

Within the European ABS landscape, Volkswagen Leasing has solidified its role as a benchmark issuer under the Volkswagen Compartment Leasing (VCL) platform. Volkswagen uses this platform – with over 25 years of history – to finance standard German auto loans. It is probably one of the least exciting platforms but also one of the most liquid ABS investments you can buy.

Last year saw returns in European high yield (HY) of approximately 12%, driven by tighter spreads (-102bps) and lower government bond yields (five-year bunds were -59bps).

After a horrible year for financial markets in 2022, the macro-outlook for 2023 had a lot of consensus views, with most predicting a much better year ahead, helped by supportive rate cuts from central banks and positive returns from both government bonds and credit.  

This morning the ONS published its monthly update on the UK labour market. Of all the G7 countries, the UK has had the most puzzling labour market dynamics post pandemic, as we discussed in a previous blog.

Following the recent publication of the European Central Bank's monthly “Monetary Developments in the Euro Area” report, Felipe Villarroel takes a deep dive into how this report evidences the impact that successive rate hikes are having on the economy

The European ABS market is making a strong comeback post-summer, witnessing two of the busiest weeks in over a decade, driven by robust demand.

Eoin Walsh shares his thoughts following last night's statement from the Federal Reserve, concluding that for now while treasury yields aren’t helping, credit looks attractive based on the rosy economic forecasts.

Aza Teeuwen takes a deep dive into the recent reports and press coverage on record residential rent increases by UK landlords, equity injections into RMBS and how they might be helping to reduce refinancing risks.

The labour market has been one of the major headaches the Bank of England has had to deal with in their battle against inflation. Yesterday the ONS released their monthly labour market update and although some of those headaches’ causes are not abating, there are others that are actually showing signs of progress.

Pauline Quirin asks the question "How are UK mortgages weathering the storm?", exploring pre and post Global Financial Crisis mortgages and how the surge in rates has impacted the performance of UK RMBS.

Felipe Villarroel shares his thoughts on the recently released preliminary PMI data, which he concludes is a reminder that the hiking cycle only started 18 months ago and there are lags that are yet to be felt in the real economy, reiterating some of his previous views.