Daily Commentary

MarketMinder’s View: We found this discussion of the private credit market mixed overall. On the positive side, it gives a decent primer about recent happenings in the space, noting private credit firms “essentially act as banks, but without all the regulations that force actual banks to mitigate risk and make their balance sheets public.” (Also, MarketMinder doesn’t make individual security recommendations and firms referenced here are coincident to the broader theme we wish to discuss.) It also, perhaps inadvertently, illustrates just how opaque the private credit space is—as one columnist cited in the conclusion notes, there isn’t a consensus definition of private credit, let alone any reliable reporting. Where we think this piece misses is the assertion that recent private credit weakness could bring a redux of 2007 – 2009’s global financial crisis. “If private credit sours, big banks that lent to the industry would lose money. In turn, those banks could be forced to tighten lending across the board, including to everyday consumers and small businesses. And that’s where the 2008 Part Two fears kick into high gear.” With private credit’s opaque valuations and illiquidity, the article suggests broader weakness could go unnoticed until it is too late, hitting exposed banks and other financial institutions. Perhaps. But the 2007 – 2009 comparison overlooks several key factors. For one, as the article notes, big banks have around $300 billion in loans to private credit providers (per ratings agency Moody’s, as of October 2025). That number sounds big on paper—and a sudden private credit collapse would cause pain—but those loans represent a fraction of the multi-trillions of dollars in assets on big banks’ balance sheets. Secondly, 2008’s cause wasn’t tied to “toxic assets” but was instead more about mark-to-market accounting rule FAS 157 forcing banks to mark their assets to the latest price for comparable securities, spurring a disastrous spiral when some hedge funds offloaded securities at rock-bottom prices to meet margin calls. There is no such analogue to today, and private credit’s troubles are getting far more attention than the mark-to-market accounting rule’s application to illiquid, hard-to-value assets in 2007 did. For more, see our recent commentary, “Putting the Latest Private Credit Implosion in Perspective.”

MarketMinder’s View: “An expectations index by [German think tank] Ifo institute dropped to 86 from a revised 90.2 — the lowest in more than a year. That was in line with the expectations of analysts in a Bloomberg survey. A gauge measuring current conditions unexpectedly held steady.” As the title suggests, most of this negativity is tied to the Middle East conflict potentially leading to supply squeezes and higher energy costs knocking Germany’s chemicals industry and broader household consumption. One central banker quoted here even suggests the war could spur European Central Bank (ECB) rate hikes. To us, this is all a bit speculative and speaks more to where sentiment is than the likely economic outcome. Firstly, no soundbite, quote or economic datapoint is sufficient to predict monetary policy. Central bankers are famous for defying prior forward guidance as conditions and opinions evolve. Heck, ECB Chair Christine Lagarde (quoted herein) said in 2021 that “conditions to raise rates are very unlikely to be satisfied next year” before the central bank hiked rates six times in 2022. Secondly, we already have some early data reflecting Germany’s economy amid the war in S&P Global’s March flash purchasing managers’ indexes, and they aren’t pointing to armageddon. Namely, Germany’s services, manufacturing and composite gauges all exceeded 50, indicating expansion (Source: S&P Global). That suggests the war didn’t cause business activity to cease immediately—rather, businesses are likely adapting (as they did in 2022 when Russia’s war with Ukraine began). To us, this flagging sentiment gauge signals sentiment toward Europe’s largest economy remains in the doldrums—a counterintuitive bullish sign, as it raises the likelihood of positive surprise.

MarketMinder’s View: The UK consumer price index (CPI) stood pat at 3.0% y/y in February, matching analysts’ predictions for an unchanged rate. A closer look at the report reveals a second consecutive month of falling oil and gas prices—just before the Middle East conflict began on February 28—offset rising prices for clothing, jewelry and tobacco products. Stripping away volatile prices for energy, food, alcohol and tobacco, CPI sped from January’s 3.1% y/y to 3.2% in February. Still, this article predictably spends most of its pixels stressing about how war-related energy price spikes risk sending UK CPI skyward. Perhaps, but note two scale-related things here: One, energy prices comprise only around 6% of UK CPI (per FactSet). Two, while it is true higher global energy prices may lead to higher costs for UK households—especially since natural gas is critical in electricity generation—don’t presume this equates to hotter broad inflation to come. Higher prices in a handful of high-profile categories isn’t the same as an economywide rise in prices—the latter requires too much money chasing too few goods and services. That isn’t the case today. Oh, and ditch the monetary policy speculation in here, too. One month’s inflation reading (and predictions for future readings) won’t reveal how the nine voting members of the Bank of England’s Monetary Policy Committee will act at April’s end. There are too many other factors at play.