Investor Account Access
Investor access to Shareowner accounts and Closed End Funds accounts.
Market Nervous on Deutsche Bank, but Fundamentals of European Banks are Solid
Monday 27 March 2023
Investment Talks
Market Nervous on Deutsche Bank, but Fundamentals of European Banks are Solid
March 2023 | Uncertainty in markets continued at the end of last week, with additional volatility in the banking sector. Credit Suisse had viability and profitability challenges as it was struggling to turn around its investment bank franchise. On top of that, it was one of the banks with the lowest amount of insured deposits in the sector (c. 15% of total). The set-up and strength of Deutsche Bank are much better - the group is profitable, while its liquidity is very robust with a loan-to-deposit ratio of 78% at December 2022 year-end (vs Credit Suisse's 113%) and significant liquidity reserves. Moreover, we would expect the group to benefit from a more loyal, stickier diversified depositor base compared with Credit Suisse, as a greater proportion of Deutsche Bank's deposits fall under government guarantees.
01 | Uncertainty in markets continued at the end of last week, with additional volatility in the banking sector and Deutsche Bank experiencing pressure in particular.
02 | In an attempt to calm markets down, European Central Bank President Christine Lagarde reiterated the strength of the European banking sector, while German Chancellor Scholz also said that Deutsche Bank appears profitable and there is no reason to worry.
03 | Markets appear to be mostly driven by rising recession fears at present, following a strong start to the year amid excessive complacency; however, we see little change in terms of the fundamentals in comparison to previous weeks.
Important Information
Unless otherwise stated, all information contained in this document is from Amundi Asset Management US (Amundi US) and is as of March 27, 2023. Diversification does not guarantee a profit or protect against a loss. The views expressed regarding market and economic trends are those of the author and not necessarily Amundi US and are subject to change at any time based on market and other conditions, and there can be no assurance that countries, markets or sectors will perform as expected. These views should not be relied upon as investment advice, a security recommendation, or as an indication of trading for any Amundi product. This material does not constitute an offer or solicitation to buy or sell any security, fund units or services. Investment involves risks, including market, political, liquidity and currency risks. Past performance is not a guarantee or indicative of future results. Amundi Asset Management US is the US business of the Amundi Asset Management group of companies.
Other news
01/10/2025
Investment Talks
January 2025 US High Yield Market Outlook & Positioning
Although full year 2024 returns for High Yield were strong and spreads tightened during the fourth quarter, fourth quarter returns were weak with losses in both October and December due to yield curve headwinds. While defaults have moderated over the last few months, Moody’s recently increased its year-end global speculative grade default by issuer forecast to 4.6% on weaker US employment. Moody’s also projects the global default rate by issuer count to decline steadily across 2025, reaching 2.7% by next November.
12/31/2024
Investment Talks
What is in store for tech?
To date, the US tech winners have been those companies that are engaging in substantial AI investments. The question is how and/or when will these be monetized. In the US, we expect a reset of the tech sector valuation levels, and we prefer to diversify risk away from monothematic AI plays. Specifically, leading memory players are building up capacity in high-bandwidth memory, which supports the training of AI models, and there could be a risk of over-capacity. There is also a greater focus on geopolitics among investors, and share price volatility could increase in 2025 as Trump's government is inaugurated. The primary issues are tariffs, revisions to the US Chip Act and a fall in China-US relations, all factors that could hurt the semiconductor supply chain globally.
12/23/2024
Investment Talks
Floating Rate Loans: Attractive Income Potential in an Expensive Market
Corporate debt spreads have tightened to near-record levels as the US economy has continued to expand and the Fed has begun to decrease its short-term interest rate target. We believe the improving credit health of the loan universe, the fact that loan coupons are priced off the front end of the still-inverted curve, and the strong possibility that the Fed will be unable to cut rates quickly due to sticky inflation, support the inclusion of loans in income-oriented portfolios. Additionally, considering the likely continuing stickiness of core services inflation, we believe floating rate assets such as loans are currently an attractive option to add diversification to investors’ fixed income portfolios, which are generally weighted in favor of fixed-rate instruments. In effect, we consider loan allocations to represent hedges against continuing high inflation.
Before investing, consider the product's investment objectives, risks, charges and expenses. Contact your financial professional or Amundi US for a prospectus or summary prospectus containing this information. Read it carefully. To obtain a free prospectus or summary prospectus and for information on any Pioneer fund, please download it from our literature section.
Securities offered through Amundi Distributor US, Inc.
60 State Street, Boston, MA 02109
Underwriter of Pioneer mutual funds, Member
SIPC.
Not FDIC insured | May lose value | No bank guarantee Amundi Asset Management US, Inc. Form CRS Amundi Distributor US, Inc. Form CRS