The costs of capital have increased because of Fed hikes and tighter credit conditions. As a result, there are firms every day that cannot get a new loan or refinance their maturing loan.
This is how monetary policy works. Higher costs of capital slow down financings and, ultimately, growth and inflation.
With the Fed saying that interest rates will stay high for “a couple of years,” this process will continue to slow down the economy. Our outlook for regional banks is available here and documents current trends in detail.
Source: FDIC, Apollo Chief Economist. Data as of Q3 2022.Source: Census, Apollo Chief EconomistSource: FRB, Bloomberg, Apollo Chief EconomistSource: Federal Reserve Board, Haver Analytics, Apollo Chief EconomistSource: ICE BofA, Bloomberg, Apollo Chief Economist. Note: Unweighted average spreads of bonds from ICE 5-10 Year US Banking Index, C6PX Index for bonds issued before Jan 1, 2023. There are eight banks in the Regional index and 41 banks in the Diversified index. Regional banks include BankUnited, Citizens Financial, Huntington, and Zions. Diversified banks include JP Morgan, Citibank, and Bank of America.Source: FRB, Haver Analytics, Apollo Chief EconomistSource: Conference Board, FRB, Haver Analytics, Apollo Chief EconomistSource: NFIB, FRB, Bloomberg, Apollo Chief EconomistSource: FRB, Bloomberg, Apollo Chief EconomistSource: New York Fed Consumer Credit Panel / Equifax, Apollo Chief EconomistSource: FRBNY Consumer Credit Panel, Equifax, Haver Analytics, Apollo Chief Economist
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