The Only Line Where Demand Rose
Lending standards held steady. That was the read on the Federal Reserve's quarterly survey of senior loan officers, published on November 2.
Standards on business loans to large and middle-market firms were basically unchanged. Most consumer categories were unchanged as well.
The survey covers 61 domestic banks and 18 American branches of foreign banks. It asks each of them about standards and about demand, loan type by loan type.
One of the two barely moved this quarter.
The key observation is that credit cards were the only category in the survey where loan demand strengthened.
The other question is where the survey moved.
Banks reported weaker demand for business loans at firms of every size. A net 11.6 percent of them saw it from large and middle-market borrowers, and a net 11.9 percent saw it from small firms.
Commercial real estate ran further. A net 25.8 percent of banks reported weaker demand for construction and land development loans.
The net reading was 22.8 percent for multifamily and 10.6 percent for other nonresidential property. All three of those lines also drew tighter standards.
Demand weakened across every residential mortgage category the survey tracks. It weakened for auto loans.
Inside mortgages the standards split by borrower. Banks eased on jumbo loans and tightened on subprime.
Terms moved against the riskiest borrowers even where standards did not. Banks tightened premiums on riskier loans for firms of all sizes.
Credit card demand strengthened. It was the only line in the survey that did.
Two categories came through close to unchanged on both. Home equity lines and other consumer loans moved on neither standards nor demand.
Dollar shock incoming
Something strange just happened in the bond market.
For years, foreign nations have been dumping U.S. Treasuries in a torrent.
China alone has offloaded more than half a trillion dollars from its peak holdings…
The BRICS nations sold $47 billion in a single month, earlier this year…
And central banks have been swapping dollars for gold at the fastest pace since the Cold War.
Billionaire investor Ray Dalio calls it the "breakdown of the monetary order."
And the legendary Jim Rogers predicted the dollar would lose its reserve currency status within just a few years.
But then – almost overnight – the trend simply reversed.
Despite America's $36 trillion debt. Despite the war in Iran. Despite the UFO memes, the Epstein files, and the never-ending scandals consuming Washington…
Foreign nations are buying U.S. Treasuries again, and at record pace.
Barely reported in the mainstream press, holdings have surged more than $587 billion in the past 12 months alone, to an all-time-high of $9.49 trillion.
What’s going on?
What force is powerful enough to reverse a multi-decade-long exodus from the dollar – in the face of everything working against it?
In the back rooms of the State Department, the leaders of 13 nations quietly signed an historic agreement.
A treatise that one of America's own Under Secretaries of State says will give the U.S. "a competitive edge so steep, so insurmountable, that no adversary or competitor can scale it."
This is a secured-unsecured divergence.
Every category where demand fell involves borrowing to buy something, whether a plant, a building, a house or a car.
A credit card balance buys time instead. Demand for the first group fell and demand for the second rose inside the same three months.
Banks moved on cards as well, and they moved the other way. They tightened credit limits and tightened lending to borrowers below their credit score thresholds.
What drives card demand is not separated here. Balances can rise from more spending or from less income, and the survey records the request rather than the reason.
Standards did move on small business loans, where a net 5.1 percent of banks tightened. Construction and land development drew a net 15.6 percent, the largest tightening reading in the business table.
The survey went out on September 21 and closed on October 5. The answers describe the three months before that.
Major financial changes rarely arrive with a warning. By the time the headlines finally confirm what is happening, the early movers are usually already positioned and protected. That is one reason GOLD is drawing renewed attention from retirement savers, conservative investors, and anyone worried about the future value of the dollar. This free report explains what smart money tends to do quietly, well before uncertain markets force everyone else to finally react.
P.S. The goal is not panic, it is preparation. Understanding how GOLD has historically reacted during past economic transitions may help you make calmer, smarter decisions ahead. The guide is free, so please request it today.
Which book grows
Commercial and industrial loans outstanding. The weekly bank balance sheet counts loans sitting on the books rather than what officers reported about appetite. Continued growth would show firms borrowing despite the survey. A flat or falling balance would carry the pullback onto the ledger. (Source: Federal Reserve)
New orders for nondefense capital goods excluding aircraft. Firms commit to this spending before they draw the loan that pays for it, and the figures arrive monthly. An increase would put investment appetite ahead of the credit. A decline would track what the loan officers reported. (Source: Census Bureau)
Credit availability in the small business survey. This asks borrowers rather than lenders whether the loan they wanted was there, and it comes out monthly. More firms reporting credit harder to get would put the constraint on the bank. No change there, against demand this weak, would leave it with the borrower. (Source: National Federation of Independent Business)
Credit conditions get read off what the lender decided. In this survey the lender barely moved, and the borrowers settled it.
Talk soon,
The Playbook Daily
