Financial conditions tighten again to temper heated US economy: McGeever
© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange in New York City, U.S., October 23, 2023. REUTERS/Brendan McDermid/File Photo
The main cause of those squeezed conditions is renewed asset price losses. Treasury bond yields are the highest since 2006-07 at 5% or higher and Wall Street stocks have fallen some 10% in three months, with high yield credit spreads finally widening. Goldman Sachs research earlier this year showed that almost 70% of small firms' commercial and industrial loans are from banks with less than $250 billion in assets, and 30% from banks with less than $10 billion in assets.
Figures from the National Federation of Independent Business show that small businesses paid an average interest rate of almost 10% on their short-term borrowings in September, the highest since December 2006. This is important because yields drive consumer and business lending rates, and mortgage rates, which are nudging 8% for the first time in more than 20 years.
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