A superb note from Nordea:
The credit impulse has received a lot of attention as an asset allocation variable over the past years, and as the credit impulse is now clearly weakening, we go through how to position yourself for weaker credit growth.
The credit impulse variable has been widely debated as a global asset allocation variable in recent years due to the decently strong correlation to cross asset moves seen since 2011. It probably doesn’t come as a surprise to many of you that the impulse is now weakening (fast), as it almost couldn’t turn hotter than in the beginning of this year after cascades of combined monetary and fiscal support. New credit as % of the gross domestic product in the G3 (China, US and Europe) peaked at almost 7%, which is clearly the biggest credit impulse provided to the economy on data since 2005.
