Global credit assets are likely to perform well in 2024, boosted by strong investor demand, moderating economic growth, decelerating inflation and interest-rate cuts by central banks, Morgan Stanley Research analysts say in a note. Weaker-than-expected growth would be bad for credit, however, even as central banks lower interest rates. "We think policy is restrictive and the Federal Reserve, European Central Bank and Bank of England will be cutting [interest rates] over August-September," they say. ([email protected])
U.K. banks' use of the Bank of England lending facilities to access liquidity is expected to increase in the coming months as the BOE continues to unwind its bond holdings, Jakub Lichwa portfolio manager at asset management company Twenty Four says in a note. The BOE introduced the short-term repo facility in October 2022, at the start of the BOE gilt sale program, to provide short-term funding to banks. "Over time [BOE lending facilities] should mean greater stability through reduced funding and liquidity risk, and perhaps even eliminate the stigma around banks using central bank facilities altogether," he says. ([email protected])
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