The worst of monetary tightening for the financial market may be behind us, according to the latest quarterly Senior Loan Officer Opinion Survey released by the Federal Reserve on Monday. All indicators have shown significant improvement since the Fed ended its rate hike campaign. Lending standards ... READ MORE >
financial conditions
Financial conditions turn positive amid economic resilience
For the first time since February 2022, the RSM US Financial Conditions Index has turned positive amid a robust economy, strong labor market, easing inflation and rising real wages and personal disposable income. Barely above zero, our index indicates normal levels of risk being priced into the ... READ MORE >
RSM US Financial Conditions Index moving toward neutral
Having weathered turmoil in the banking sector and the standoff over the debt ceiling, financial conditions in the United States are easing, moving toward levels of risk normally priced into financial assets. But while signals from the equity market are positive, the bond market continues to ... READ MORE >
About that recession: Resilience now, risks ahead
We have made the case for some time that the “R” word that best describes the American real economy is resilience, not recession. Despite elevated inflation and interest rates, as well as tightening financial conditions and softening demand for loans, the economy has chugged along, thanks ... READ MORE >
Economic implications of further turmoil in the banking sector
The Federal Deposit Insurance Corporation seized First Republic Bank overnight and then sold a select portion of its assets and liabilities to JPMorgan as it imposed an orderly wind down of the troubled regional bank. The action should bolster confidence in the ability of the federal ... READ MORE >
Tighter financial conditions threaten Canada’s growth
After two years of whipsaw change, Canada’s financial and commodity markets have entered a period of relative calm in recent months. Volatility in the stock market has eased, oil prices have declined and prices of raw materials have largely held steady. Even the elevated volatility in the bond ... READ MORE >
The great deposit migration and emergency borrowing at the Fed discount window
The banking crisis has spurred a dramatic flight to safety at all levels of the financial system. From investors seeking the assurance of money market funds, to depositors shifting their money from smaller banks to systemically important financial institutions, to banks themselves accessing ... READ MORE >
U.S. financial markets in the new year
Financial markets have started the year facing a host of challenges, including the prospect of a stand-off over the debt ceiling in a divided Congress and the possibility of a recession later this year. At the same time, businesses are contending with higher costs associated with the ... READ MORE >
Financial conditions and Canada’s real economy
Tightening financial conditions are hurting the Canadian economy to the point where the rising risk of a recession and a housing contraction much larger than anticipated cannot be discounted. Although we expect the Bank of Canada to raise its policy rate to a peak of 4.75% early next year, after ... READ MORE >
Did fiscal spending go too far? Assessing the global economy.
Fiscal responses by governments around the world during the pandemic were unprecedented. Many governments put forward anywhere between 20% and 30% of gross domestic product in spending to mitigate the impact of economic shutdowns. Now, after months of elevated inflation and surging interest rates, ... READ MORE >