Economists in the News | The Great Debt Reset | Global Credit Conditions Update | Q2 CCC Preview | Global Banking Risk Monitor

Plenty to share with you in the latest edition of Essential Economics! We lead this week with my visit to Yahoo Finance to discuss the policy challenges facing the Fed with Julie Hyman and Brad Smith. Also, EMEA Chief Economist Sylvain Broyer appeared on the BBC to break down the ECB’s 50 basis point rate move last week. Senior Research Fellow Terry Chan and team look at rising global debt levels and debt servicing costs and ask whether a Great Reset is coming. Head of Corporate Ratings Research Gareth Williams and team provide a global credit update following the recent market turbulence, arguing that we still expect credit quality to come under pressure as rates rise and growth slows. We are coming to the end of our quarterly Credit Conditions forecasting round and we flag our forthcoming macro and credit reports, as well as a pair of webinars where our lead economists and credit analysts will discuss the findings. Finally, we continue to monitor the fallout from the collapse of SVB across the globe though our Global Banking Risk Monitor.

Gruenwald, Broyer Hit The Airways

I visited Yahoo Finance in New York earlier this week to talk about the recent market turbulence and the Fed’s challenge of balancing price stability with financial sector stability.

Sylvain appeared on the BBC to talk about the ECB’s recent 50 basis point rate hike and the central banking landscape in the year ahead.

To watch my Yahoo Finance interview, click here.

To watch Sylvain’s BBC interview (UK only), click here; to read CNN coverage of his views, click here.

Is A Great Reset Coming?

Terry and team report that global debt has hit 349% of gross domestic product, translating to $37,500 of average debt for each person in the world. Government debt-to-GDP leverage grew aggressively from 2007 to 2022 by 76%, to a total of 102%. Higher interest rates mean that debt servicing has become more difficult with an estimated $3 trillion more in interest expenses.

Bottom line: there is no easy way to keep global leverage down.

To read the report, click here.

Global Credit Conditions Update: A More Difficult Way Out

Gareth and team argue that the abrupt demise of Silicon Valley Bank and Signature Bank and UBS' rapid takeover of Credit Suisse are reminders of banks' sensitivity to confidence and liquidity. Emergency liquidity measures by central banks and the expedited takeover have likely lowered the odds of broader banking system contagion, but broader credit risks remain elevated.

Although this year has seen some credit supportive developments, we still expect credit quality to come under pressure as rates rise and growth slows.

To read the report, click here.

Week Ahead Preview: Q2 Credit Conditions Publications and Webinars

Next week at the completion of our Q2 Credit Conditions round we will release our full suite of flagship macro and credit reports. We will wrap it all up with two complimentary webinars where chief economists join our senior credit colleagues to focus on continuing macro headwinds and the recent stressors in the banking sector.

To register for the US/EMEA webinar on Friday, March 31, click here.

To register for the APEC webinar on Monday, April 3, click here.

Global Banking Risk Monitor

Following the collapse of Silicon Valley Bank and volatility spreading to U.S. regional lenders and banks across geographies, we continue to assess the macro ramifications and monitor contagion risk in the broader financial system and markets.

To access the monitor, click here.

Featured in the monitor this week is the replay of the Global Banks Risks webinar, in which I participated. To watch the replay, click here.