All articles tagged with #credit crunch
Originally Published 2 years ago — by The Wall Street Journal
Federal Reserve Chair Jerome Powell is facing a difficult situation as he tries to prevent a credit crunch, which requires looser monetary policy, while also fighting high inflation, which demands tighter monetary policy.
Originally Published 2 years ago — by Fox Business
Former Federal Reserve Bank of Dallas President and CEO Robert Kaplan advised against raising interest rates at the moment, citing concerns that it would disproportionately hurt small and mid-size banks and businesses. He called for a "whole of government approach" to address the issue of inflation and warned of a potential slowdown in GDP, though he did not predict a recession. The Federal Reserve recently raised its benchmark interest rate but signaled that future rate increases will depend on "incoming information."
Originally Published 2 years ago — by Markets Insider
The Federal Reserve's periodic Financial Stability Report has revealed that the central bank's own economists are most concerned about banking stress, stubborn inflation, and commercial real estate. The report warned that a credit contraction could lead to an economic slowdown, and also sounded the alarm on commercial real estate as work-from-home trends have reduced demand for office space. The Fed has ramped up its monitoring of the performance of CRE loans and expanded examination procedures for banks with significant CRE concentration risk.
Originally Published 2 years ago — by Fox Business
The Federal Reserve's Senior Loan Officer Opinion Survey shows that more banks are tightening their lending standards due to concerns about the credit quality of their loan portfolios, reduction in risk tolerance, and concerns about bank funding costs, liquidity position, and deposit outflows. The report also points to a sharp slowdown in demand for credit, which could lead to a potential credit crunch. The banking turmoil, which began in early March, has added to the stress in the sector, reigniting fears of a credit crunch for U.S. households. Mid-sized banks are struggling, in part, from higher interest rates, which the Fed raised rapidly over the past year from near zero to more than 5%.
Originally Published 2 years ago — by Financial Times
The Federal Reserve has warned of the risk of a credit crunch following the recent turmoil in US banks. The central bank has urged lenders to maintain strong risk management practices and to be prepared for potential losses. The warning comes as several US banks have reported significant losses due to the collapse of Archegos Capital Management.
Originally Published 2 years ago — by Barron's
The Federal Reserve is set to release a report on Monday that may show banks are significantly reducing their lending due to regional bank failures and stresses in commercial real estate. The extent of the credit pullback remains uncertain.
Originally Published 2 years ago — by Reuters
Asian shares edged higher as investors prepare for a week where US inflation data will test wagers the next move in interest rates will be down, while worries about a possible credit crunch weighed on the dollar. The Federal Reserve's survey of loan officers will draw an unusual amount of attention as markets seek to gauge the impact of regional banking stress on lending. The Bank of England is widely expected to lift its rates by a quarter point on Thursday.
Originally Published 2 years ago — by Yahoo Finance
TCW Group CEO Katie Koch believes that sentiment in the banking industry is too high, as regional banks stumble and the economy heads into a credit crunch. The dual pressure from deposit outflow and commercial real estate exposure is putting pressure on regional banks, which could lead to a credit crunch and weigh on the economy and jobs. Despite this, the S&P 500 is down less than 1% in the past month and up roughly 6% on the year.
Originally Published 2 years ago — by Fox Business
The collapse of a third US bank this week has worsened the credit crunch for American households and businesses, leading to a decline in lending and tighter lending standards. This could lead to less spending by consumers and businesses, and a potential recession this year. The Federal Reserve is expected to approve a 10th straight interest-rate hike at the conclusion of their two-day meeting on Wednesday and hint at a coming pause in increases.
Originally Published 2 years ago — by Markets Insider
Blackstone, the largest owner of commercial real estate in the world, saw a major decline in distributable earnings as the demand for commercial real estate properties faltered in the last year. Meanwhile, Brookfield reportedly defaulted on $161 million in commercial real estate debt tied to office properties. The commercial real estate market is under pressure from rising interest rates and tighter lending conditions as banks pull back after the turmoil in March. Experts have warned of an impending crash in the commercial real estate market that could echo the 2008 crisis.
Originally Published 2 years ago — by CNBC
The banking turmoil of March will lead to a credit crunch for "small-town America," according to veteran strategist David Roche. The collapse of Silicon Valley Bank and two other small U.S. lenders last month triggered contagion fears that led to record outflows of deposits from smaller banks. Roche argued that central banks are "trying to do two things at once" and predicted that this eventually results in credit tightening, with fear transmitting to major commercial banks that receive fleeing assets and "don't want to be caught up in a systemic crisis" and will be more cautious on lending.
Originally Published 2 years ago — by Fox Business
Investor pessimism has surged to the highest level in five months due to concerns over tighter credit conditions and a potential credit crunch for US consumers and businesses. Nearly two-thirds of investors expect a weaker economy in the next 12 months, marking the most bearish survey of the year. The majority of investors see a stagflation scenario as very likely and anticipate the Federal Reserve will approve a final, quarter-percentage-point interest rate hike during its meeting next month. However, fund managers expect central bank policymakers to begin an "easing cycle" in the first quarter of 2024.
Originally Published 2 years ago — by Markets Insider
Morgan Stanley's CIO, Mike Wilson, has stated that the credit crunch stemming from the bank crisis in March has begun, with data showing a clear tightening of lending standards by banks. This could raise the risk of a recession this year as companies and households experience difficulty obtaining credit. Wilson believes that the stock market is in for more pain in 2023, with a potential 20% drop in the S&P 500 as corporate earnings drop.
Originally Published 2 years ago — by Markets Insider
Investors are worried about a potential credit crunch hitting the US economy, which could trigger a recession. The recent collapse of Silicon Valley Bank and Signature Bank due to a tidal wave of withdrawals has sparked fears that regional US banks could also run into trouble. Elevated interest rates, which have played a part in SVB's demise by slashing the value of its bond portfolio, have fanned fears that other mid-sized and smaller lenders face similar risks, causing a flight of deposits. If lending dries up, that could weigh on the value of stocks, real estate, and other assets, and crimp overall demand — a recipe for a painful recession.
Originally Published 2 years ago — by Fox Business
JPMorgan CEO Jamie Dimon warned that tighter financial conditions, particularly in the real estate sector, will increase the odds of a recession, but he advised against using the term "credit crunch." JPMorgan reported a 25% increase in overall revenue to $38.3 billion. The commercial real estate market could crash as higher interest rates make it harder for investors to refinance trillions in looming debt, with small and regional banks holding about 80% of the sector's outstanding debt. JPMorgan shares are up 9% over the last five days.