QuiCQ 12/06/2024
Summer may get hotter than it seems today
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"There are decades where nothing happens; and there are weeks where decades happen."
-- Vladimir Ilyich Lenin
We started writing about the French situation two weeks ago in The Quotedian (click here) after a S&P downgrade to AA- of the countries debt, asking the question whether the French-German yield spread was wide enough. Last Monday, we then highlighted (click here) how exactly that spread had now ‘exploded’ to its widest in months, given Macron’s surprise call for elections in July. Which brings us to today’s QuiCQ chart below, which compares total debt to GDP in France and in the US. The really worrying part is the explosive rise of non-financial corporate debt of the former. This leaves the (corporate) landscape in a precarious situation should a new, extreme-wing party be elected next month. As Lenin said above, and Liz Truss found out in the autumn of 2022, “things” can unravel at lightspeed. Keep an eye on those European yield spreads and the EUR/USD.
