QUICK QUILL — Auto defaults are mounting amidst rising mortgage delinquencies as forbearance on government-backed mortgages is finally exhausted. Moreover, a deepening deterioration in commercial real estate threatens as price discovery is forced upon market participants who’ve expended extraordinary efforts to prevent transaction volumes from rising for the past year. The reprieve in volatility should prove short-lived as the markets grapple with the tug-of-war between Treasury supply and a deepening labor market recession.
- With an update pending Monday from the Dallas Fed, and Q3 SLOOS data in tightening mode, nonperforming C&I loans are at their highest since December 2019, when the economy was slipping into recession; future C&I tightening in Q4 2024 SLOOS anticipated.
- In the Fed’s Q3 SLOOS, the net share of banks tightening lending standards for auto loans flatlined, echoing a similar trend in the Dallas Fed data; with Dallas Fed nonperforming consumer loans also at a record high, household finances continue to face pressure
- Save government-backed mortgages, banks reported net tightening and weaker demand across all residential real estate loans in the Q3 SLOOS; with mortgage delinquencies on the rise, residential fixed investments’ positive boost to GDP in Q3 should prove short-lived