Back
10 Feb 2016
Systemic risk, recently dormant, is stirring – Goldman Sachs
Charles P. Himmelberg, Research Analyst at Goldman Sachs, suggests that financial credit spreads are spiking, especially in Europe possibly signalling a reactivation of systemic risk concerns in markets.
Key Quotes
“Pressure on bank equities has been building for weeks reflecting concerns that slower global growth will weigh on bank earnings via slower loan growth, diminished deal flow, rising credit risk on bank balance sheets, falling net interest margins, and negative policy rates.
Financial credit spreads have also been leaking wider, although the move accelerated on Monday. We have fewer systemic concerns than credit markets are pricing. That said, we are acutely mindful that systemic fears, once in place, can be self-fulfilling and difficult to reverse. These systemic concerns, if sustained, would be a new headwind for credit, and risky assets more generally.”
Key Quotes
“Pressure on bank equities has been building for weeks reflecting concerns that slower global growth will weigh on bank earnings via slower loan growth, diminished deal flow, rising credit risk on bank balance sheets, falling net interest margins, and negative policy rates.
Financial credit spreads have also been leaking wider, although the move accelerated on Monday. We have fewer systemic concerns than credit markets are pricing. That said, we are acutely mindful that systemic fears, once in place, can be self-fulfilling and difficult to reverse. These systemic concerns, if sustained, would be a new headwind for credit, and risky assets more generally.”