So says TSLombard.
The main question for global markets right now remains the resilience of the US consumer. Financial indicators and trends in US bank balance sheets suggest success so far for the Fed’s plan of supporting the weakest banks so that tightening can continue until the FOMC has the evidence it needs to stop (and, we think, reverse).
Discount window borrowing, significant use of the new Bank-term Funding Program and swap lines with other foreign central banks (that is, smaller CBs with no access to standing bilateral swap lines) all suggest that the system is under stress. But borrowing through all three of these facilities has ebbed according to the most recent data – another welcome sign that at this stage, things are settling down.
