Delivering Global Macro Investment Insights

DeSaque Macro Research

DeSaque Macro Research Limited was formed by Said DeSaque in April 2012 with the view to delivering global macro investment insights aimed at providing new ideas to clients.

Said DeSaque has over 26 years of experience working as a professional economist in financial services. Prior to establishing DeSaque Macro Research, Said held positions as Senior Economist at Robert W Baird and William Blair. He began his career as a graduate at PaineWebber in 1986, where he eventually became Head of the London Economics Department.

Said takes a very keen interest in international relations, along with their implications for economic development. His research interests include the economic transformation of China and its implications for global capital markets, particularly in the United States. He is a member of Chatham House in London.

The US economy and capital markets have historically been Said’s main focus of attention. He frequently presents his views to institutional investors in diverse geographic locations. In recent years, Said has also been carefully monitoring economic developments in Asia, particularly China and Japan.

Lower Negative Real Interest Rates and Fiscal Stimulus Won't Trigger Higher Inflation Any Time Soon

Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Cross Asset Strategy

Multiple Countries / Cross Asset Strategy

The downward bias to economic forecasts and elevated level of uncertainty about the post COVID-19 recovery means that the financial outlook for banks possess a negative tone. The magnitude of forbearance policies during the current environment could have a major impact on future loan losses and lending capacity, particularly in banking systems hamstrung by weak profitability.
Due to the tight nexus between governments and their banking systems, banks are currently able to secure easy access to abundant liquidity at little or no cost and relief from regulation in return for ensuring sufficient private sector lending. Currently, banks have become an important funding source for corporations due to the lack of similar government backstops for companies, as well as the partial freezing of corporate bond markets, particularly in the speculative-grade arena.
After the recent easing of fiscal policy in G20 countries, sovereign credit ratings will still impact bank funding costs if markets question the financial capacity of governments to provide credible backstops for their banking systems. The risk is that slower growth in developed countries produces structural fiscal deterioration that compromises the ability of governments to properly safeguard banks and their creditors.
Currently, the consensus view is that banks are well placed to facilitate the economic recovery following the COVID-19 pandemic. Some banks will, however, be susceptible to excessive exposure to sectors that were disproportionately impacted by COVID-19, as well as oil &amp; gas, thereby raising the possibility of degraded asset quality.
Banking systems in advanced countries, including the US, face the prospect of continued headwinds to profitability due to the continuation of low central policy rates. Meanwhile, some emerging countries, notably India, entered the downturn with already elevated levels of non-performing loans, thereby suggesting lower capital buffers and, consequently, future lending capacity.

The downward bias to economic forecasts and elevated level of uncertainty about the post COVID-19 recovery means that the financial outlook for banks possess a negative tone. The magnitude of forbearance policies during the current environment could have a major impact on future loan losses and lending capacity, particularly in banking systems hamstrung by weak profitability.
Due to the tight nexus between governments and their banking systems, banks are currently able to secure easy access to abundant liquidity at little or no cost and relief from regulation in return for ensuring sufficient private sector lending. Currently, banks have become an important funding source for corporations due to the lack of similar government backstops for companies, as well as the partial freezing of corporate bond markets, particularly in the speculative-grade arena.
After the recent easing of fiscal policy in G20 countries, sovereign credit ratings will still impact bank funding costs if markets question the financial capacity of governments to provide credible backstops for their banking systems. The risk is that slower growth in developed countries produces structural fiscal deterioration that compromises the ability of governments to properly safeguard banks and their creditors.
Currently, the consensus view is that banks are well placed to facilitate the economic recovery following the COVID-19 pandemic. Some banks will, however, be susceptible to excessive exposure to sectors that were disproportionately impacted by COVID-19, as well as oil &amp; gas, thereby raising the possibility of degraded asset quality.
Banking systems in advanced countries, including the US, face the prospect of continued headwinds to profitability due to the continuation of low central policy rates. Meanwhile, some emerging countries, notably India, entered the downturn with already elevated levels of non-performing loans, thereby suggesting lower capital buffers and, consequently, future lending capacity.

Banking Systems Still Pose Risks to Post-Covid 19 Economic Recovery