Financial conditions in the US
Lending to consumers
Lending to Corporates
Financial conditions
Insights
CONCEPT
Financial Conditions summarize the current level of financial market stress, reflecting where interest rates, credit spreads, market volatility, FX and equity prices stand. Banks look at financial conditions to determine how easily households, firms and governments can access funding by adjusting lending standards (easier/tighter) to the current economic landscape (improving/deteriorating).
CURRENT READINGS
- Financial Conditions in the US are VERY EASY (at -0.51) and have turned easier vs the previous week's average. The number of banks tightening lending standards vs past quarter on credit card loans is 2.0% - meaning that consumer lending standards are in NEUTRAL territory - while on corporate loans is 8.1%, translating into TIGHTER business lending standards.
MARKET IMPLICATIONS
Lending standards (= credit availability) follow the evolution of financial conditions. Easy financial conditions (below 0.15) with cause lending standards to turn easier, stimulating demand for mortgages/loans and ultimately supporting future economic growth: it means that consumers spend and companies invest. Conversely, tighter financial conditions (from 0.15/0.2) will cause standards to turn tighter, slowing mortgage/loan demand and ultimately contributing to slow-down the economic.