FR – AMF’s publication of its 2023 Markets and Risk Outlook
The AMF publishes its 2023 Markets and Risk Outlook the 7 July 2023. Against a backdrop of tighter monetary policies and rising inflation, the 2023 edition highlights that the risk of an asset price correction remains high.
Financial stability risks are linked to the ability of financial market participants to adapt to the new interest rate environment by managing their liquidity and credit risk.
The interest rate environment has a direct impact on the cost of credit and can also make it more difficult to refinance outstanding debt. In the corporate bond segment, for example, liquidity conditions have deteriorated significantly and volatility has risen sharply since spring 2022.
In terms of financial stability, financial market participants must adapt to this new interest-rate environment which is leading to a relative scarcity of liquidity and could result in an increase in credit risk. In particular, the AMF continues to pay close attention to investment funds with exposure to the commercial real estate sector, following a sharp contraction in trading volumes and prices and also on refinancing conditions for these actors in an environment of higher interest rates.