Odd Lots Here Are the Signs of a Slow-Moving Credit Crunch
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Apr 24, 2023 
Ben Emons, a senior portfolio manager at NewEdge Wealth and former PIMCO expert, dives into the current state of the banking system post-crisis. He outlines concerns over a potential credit crunch and its implications for the U.S. economy. The discussion covers the impact of rising interest rates on lending practices, the differences between private and traditional lending, and the evolving mortgage market. Emons also sheds light on the crucial role of the repo market during financial disruptions and how these elements shape investor behavior today.
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H8 Data Importance
- The H8 data tracks bank credit, loans, and securities, revealing credit expansion or contraction.
- Increased attention to H8 data suggests potential market concerns about credit declines and Fed reactions.
Measuring Credit
- Measuring credit involves analyzing various factors like volume, business surveys, loan officer surveys, and spreads.
- Different credit market segments, like junk bonds and bank credit (mortgages, consumer loans), require a broad analysis approach.
Credit Contraction Dynamics
- A credit contraction can arise from increased regulatory scrutiny on interest rate risk, impacting banks' bond appetite.
- Banks' nervousness about the future might lead to reserve hoarding and reduced lending, further restricting credit.