European banks in mind in July

The ECB has left its rates unchanged. Therefore, adopted a restrictive tone, reducing the probability of a short -term drop. In addition,

July was marked by the finalization of commercial agreements. Therefore, globally positive economic surprises and the first publications of the second quarter results. However, European banking values have largely outperformed, the SX7R index winning 7.24%, supported by solid results and upward reviews. Similarly, European shares as a whole (SXXR) increased by 0.97%, while American reference indices such as SPX (+3.17%) and BKX (+3.49%) also recorded solid gains, supported by robust economic data. Consequently, The Subfin and the Xover ended the month down, respectively 96 bp and 269 bp. For example, Sovereign yields increased: BUND yields increased from 2.60% to 2.70%, those of treasury bills at 10 years from 4.23% to 4.33% and the EUR 1 year swap rate in european banks mind july 1 year climbed to 2.13%.

Commercial news dominated the macroeconomic landscape. In addition, The United States has finalized a 15% tariff agreement with the EU, like the agreement previously concluded with Japan. However. Meanwhile, detractors judged this unilateral agreement, promoting the United States thanks to significant European commitments in terms of energy purchases and investment in the defense. Similarly, Investors reacted by strengthening the dollar. Nevertheless, a weakening of the euro, worried about the impact on EU growth, which should be reduced by 15 to 20 bp. Similarly, At the same time. Similarly, other countries such as Switzerland, Taiwan, Brazil and Canada have faced high customs duties imposed by the United States, while negotiations with China and India continue.

The central banks were at the center of attention. Therefore, The ECB has left its rates unchanged and adopted a restrictive tone, reducing the probability of a short -term drop. Meanwhile, european banks mind july The Fed also maintained its unchanged rates for the eighth consecutive month. For example, but the markets still anticipate two drops before the end of the year.

The results of the second quarter of European companies were mixed according to the sectors. Therefore, Investors have turned away from the media sector which is going through a period of structural questioning. In addition, while semiconductors and information technologies have generally published disappointing results. Similarly, The defensive sectors have erased their gains since the start of the year. Nevertheless, the chemistry sector has been the subject of many warnings on its results. On the other hand, the banks display exceptional results. The sector has recorded a median surprise of the benefits of around 7% despite unfavorable exchange effects. thanks to the improvement of income, costs and the quality of assets, while exceeding distribution forecasts. The market has continued to reward the Momentum. european banks mind july Commerzbank, Sabadell and Deutsche Bank values, more than 15% since the beginning of the month.

On the Fussement-Acquisitions Front, activity has remained supported in the banking sector. Unicredit gave up its offer on BPM due to the persistent uncertainty of the use of “Golden Power” by the Italian government. but converted its participation in Commerzbank. BPER crossed the threshold of 66.7% of the capital of Popolare di Sondrio, paving the way for a merger by absorption. In the United Kingdom, Close Brothers sold its subsidiary Winterflood for 103.9 million pounds sterling. an amount greater than the forecasts of analysts, which made it possible to increase the CET1 ratio by 55 base points. Other mergers. acquisitions have made the front page in Germany, the Handelsblatt announcing that the Landesbank Helaba could acquire real estate lender Aareal, owned by a investment capital fund, which gave a boost to the Aareal obligations. On european banks mind july the regulatory level. the Bank of England noted the MREL thresholds of 15-25 billion pounds Sterling at 25-40 billion pounds of total assets, an amount higher than that initially proposed (20-30 billion pounds sterling), a favorable development for small establishments such as Metro Bank. The new threshold will be applicable from January 2026 and will be the subject of a next review in 2028.

Credit ratings continued their upward tendency: Société Générale’s prospects were revised to “stable” by Moody’s. Banca Popolare di Sondrio was noted by S&P, and Commerzbank, Direct Line and Munich Re have all seen their ratings or their revised upwards, reflecting the improvement of their fundamentals. On the Legacy front. Axa bought its CMS XS0184718764 $ 150 million obligation

Emerging Marchés

In July, the attention of the markets again focused on trade negotiations between the United States and its partners, whose advances were favorably welcomed. At european banks mind july the start of the month. Trump extended the postponement – from July 9 to 1^is August – of the entry into force of the prices announced during the Liberation Day, thus agreeing more time to finalize agreements. In parallel. the American president unveiled the letters sent to certain heads of state, threatening them with customs duties sometimes higher than those initially announced in April, for lack of satisfactory progress in the discussions. This approach led to several commercial compromises, to the sometimes still fuzzy contours. In Asia. agreements were announced with the Philippines, Indonesia and Vietnam, which receive customs duties of 19% for the first two and 20% for the third. Japan. South Korea accepted 15% prices on its exports to the United States, as part of agreements, however, providing for certain preferential rates-notably for Japanese cars-and investment plans of several hundred billions of dollars in the United States. An european banks mind july agreement was also reached with the European Union. articulated around a rate of 15% applied to the majority of European products and a European commitment relating to 750 billion energy imports and 600 billion new investments in the United States.

For the countries with which no agreement has yet been concluded. while a new deadline is set for August 7, higher customs duties have sometimes been announced: Canada will face 35% tariffs on products leaving USMCA, India will see its exports to the United States taxed up to 25% and Brazil at 50%. India is also accused of being one of the main customers of Russian oil. a position deemed problematic while the US administration threatens to impose a new customs tariff of 100% on countries buying Russian energy products if a ceasefire is not signed soon. This threat led to a significant increase in the price of a barrel, european banks mind july the Brent closing the month up 7.3% to 72.5 dollars per barrel. In the case of Brazil. a country which displays a deficit trade balance with the United States and initially subject to the floor rate of 10%, the motivations of the American administration are explicitly political. This is a sanction sent to Brasilia. in response to legal proceedings engaged against the former president and ally of Trump, Jair Bolsonaro, accused of attempted coup. Negotiations remain underway between the two countries. and nearly 700 products have already been spared by these new tariff measures, remaining subject to the 10% announced in April. Mexico. for its part, has obtained a new 90-day postponement from the application of customs duties of 25% initially announced on Off-USMCA products, in order to continue negotiations.

In addition to these advances on the commercial front. market optimism – illustrated by a tightening of 25 PDB of european banks mind july the credit spreats on the bond emerging in July – was strengthened by the publication of reassuring data as to the health of the American economy. American GDP displayed an annualized growth of 3.0% in the second quarter, against 2.6% expected, and statistics on the labor market estimated job creations in June 147,000 in the United States, surpassing expectations. This panorama also moved away from Donald Trump. the prospect of a drop in guiding rates by the American federal reserve, especially since underlying inflation remains at relatively high levels and the tax law passed in the congress should accentuate budgetary pressure in the coming years. Consequently, the American rate at 10 years finished the month at 4.37%, up 15 base points in July. However. the 1^is August, the publication of the report on employment creations in July thwarted this narrative and erased the increase in July’s rates: in addition to european banks mind july a slowdown in employment creations in July, the report revised drastically downwards the figures for the previous two months, including the good figure in June. Less than 35,000 jobs were finally created in total in May and June, nearly 260,000 less compared to previous estimates.

Benefiting from the tightening of credit spreats. the asset class displayed a positive performance in July, the emerging corporate index of JP Morgan, the Cembi Broad Diversified, Progressing +0.7% in Euro over the month. In the primary markets. the strong activity observed in May and June continued in July, especially in the first half of the month. Nearly 27 billion dollars were issued this month on the emerging corporate bond. and we have participated in three of these new programs in Latin America, targeting issuers with solid credit fundamentals and relatively defensive profile. During the month, we continued to strengthen short bonds offering an attractive european banks mind july portage and a measured credit risk. In June, the fund issued a performance of +0.9% in euros. The main contributor to the performance of the fund was the Turkish electricity company Zorlu Enerji. which benefited from the announcement of the sale of one of its assets, a key step in its deleveraging plan.