Liquidity Deterioration Drives Bearish Equity View

For some time now we have been growing increasingly concerned that rising interbank lending rates in the eurozone could have a severely negative impact on the European banking sector. With interbank rates now beginning to rise, we note that liquidity conditions in the eurozone are fast deteriorating, with the three-month EURIBOR rate recently rose to 0.715%, some 8 basis points above levels seen in late March.

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