Swiss bank strategists recommend “underweighting” non-financial cyclical stocks. (© Freepik)
The strategists of the Swiss bank encourage releases on cyclical stocks and on growth stocks.
Credit Suisse strategist Andrew Garthwaite and his team do not see the default of US bank SVB as a systemic risk, especially since US authorities have guaranteed customer deposits.
The spread between the U.S. three-month interbank rate (Forward Rate Agreements or FRA) and the Fed’s risk-free rate (Overnight Index Swap or OIS), reflecting stress in the banking sector, experienced a fever pitch up to 60 basis points, but it has since fallen to 38 points (it was less than 10 points before the crisis).
The FRA-OIS spread is however far from the peak reached in March 2020 at 79 basis points and from the highs of the financial crisis at 165 points in September and December 2008.
Above all, the CDS on the major European and American banks (price of insurance once morest a risk of default) do not signal any major stress on the sector.
Banking stress under control
New financial accidents are nevertheless to be expected, in a market phase where central banks have moved from Quantitative Easing (monetary expansion) to Quantitative Tightening (monetary restriction).
However, we should remain cautious on risky assets, as investors are once once more anticipating an upcoming easing in key rates.
The inversion of the yield curve (the two-year maturity
