top of page

Chart of the Week - Banks Taking a Cautious Approach

Credit Spreads vs Lending Standards: The latest Fed loan officer survey (which asks banks whether they are making it easier/harder for people to get a loan), showed banks taking a slightly more cautious stance towards commercial and industrial lending standards.

To be fair, it is still only about neutral, so on balance no change in lending standards, but it does mark a distinct change in trajectory.

We pay attention to changes in bank lending standards because it reflects changing economic and market conditions, but also gives a tell on the availability of credit. And as such, we can also draw insights from the data in terms of the outlook for markets.

A tightening of lending standards (or a shift in trajectory towards tightening) can be a harbinger of tough times ahead. We see this distinctly and clearly in credit spreads (which in some ways is a measure of credit availability in the capital markets).

The latest move in lending standards points to upside risk for credit spreads. This would be entirely consistent with Fed tightening, and the deteriorating macro outlook.

chart of lending standards vs credit spreads

Key point: Shifts in bank lending standards point to upside risk for credit spreads.

NOTE: this post first appeared on our NEW Substack:

Best regards,

Callum Thomas

Head of Research and Founder of Topdown Charts

Follow us on:

45 views0 comments

Recent Posts

See All


bottom of page