Banks continue to go through a tough patch. Their balance sheets are in the process of cleaning up the low yielding producing assets they accumulated during the years of zero interest rates. Typically, banks benefit during interest rate hikes, but this time they haven’t, simply because they have not been able to raise interest due to those low yielding assets. That money has gone into treasury bills and banks are now poorly funded to commit to lending. As you can see in the chart below, since 1955, only during the #gfc banks lending showed negative growth, until now. Even with the government assistance through the Bank Term Fudning Program, banks are not able to lend. This is a very powerful indicator that rarely gives a signal, and it’s now pointing towards recession.
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