Cautious Banking Behavior Amid Economic Uncertainty

The banking system is exhibiting significant defensiveness, with banks globally opting to buy large quantities of U.S. Treasuries instead of lending to the real economy, despite reassurances about a 'soft landing' for the economy. Both U.S. and European banks are accumulating government bonds, indicating a widespread risk aversion in lending practices. This trend reflects a lack of confidence in economic recovery, demonstrated by the sluggish growth of lending and the prioritization of purchasing safe assets. As banks hoard these bonds, they signal a precautionary approach, likely anticipating further economic turbulence.