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  • Writer's pictureEdward Ballsdon

Opportunities from stalled private sector credit

Research Content


This note examines the recent assertion by Central Bankers that there is little risk in delaying rate cuts. In summary:

 

  • Markets are pricing that monetary policy will remain restrictive at year end 2024

  • The credit cycle is not uniform because of changing bank supply and differing types of demand at various stages of the cycle

  • Updated data provided in this report shows a widespread further decline in credit growth across the developed world

  • There is a risk that a stall in credit growth inflicts unnecessary economic difficulties.

  • Past credit cycles show that low interest rates do not bring a resumption of credit growth, and that it can take many quarters/years for credit growth to resume to the “normal” levels” required to keep a fiat currency system intact.

  • The longer Central Bankers wait, the bigger the risk to the economy, and thus to disinflation and a need for looser policy in the future and further currency debasement.

  • In an environment of stalled credit growth, Gold should perform very well, and current bond yields look very attractive.

  • 10 year bond yields are testing very important support levels. A break below the levels outlined would pave a way for the resumption of the bond market rally that started in October23.

  • Existing identified opportunities remain attractive, and they would be joined by outright bond trades if supports are broken.

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