The Federal Reserve’s latest Senior Loan Officer Opinion Survey, released May 4, shows the net percentage measuring lending standards plunging to -26.8%, more than doubling the previous quarter’s -12.9% reading. This reading is well beyond the 0% to 5% range the Fed considers stable, indicating US banks are actively tightening their lending conditions at a historic pace. The survey covers approximately 80 large domestic banks and 24 US branches of foreign institutions. This credit tightening functions as a form of monetary tightening operating independently of the Fed’s interest rate decisions. Traders should monitor the next SLOOS release in August and the weekly H.8 report for commercial and industrial loan growth data.
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