Not exact matches
I noted a week ago that Bernanke had essentially eased monetary policy
by spurring a loosening of financial
conditions via higher stock prices, lower bond yields,
tighter credit spreads, and a weakening of the U.S. dollar.
We've already seen some easing off in
credit growth to the household sector, and this is part of the mechanism
by which
tighter financial
conditions can be expected to restrain demand over time.
However, when financial
conditions were easing, indicated
by tighter credit spreads, the Russell 2000 outperformed
by roughly 1 percent a month.
Looking back over the past fifteen years, in months when high yield
credit spreads were widening, indicating
tighter financial
conditions and more risk aversion, the S&P 500 outperformed the Russell 2000
by an average of roughly 0.45 percent.
Large global sellers,
by contrast, who choose
credit insurance primarily for financing purposes, retain a portion of the
credit risk on their balance sheet and manage it through their
tighter payment terms and
conditions.
Overall, as the statements after the past five Board meetings have made clear, the sequence of changes to the cash rate, other adjustments
by lenders in response to the rise in term funding costs since mid 2007 and
tighter credit standards have combined to produce financial
conditions that are
tight.
Trends and Economic Environment: We believe that the deteriorating economic
conditions, rising unemployment,
tight credit markets, and heightened uncertainty in financial markets during the past 18 months have adversely impacted discretionary consumer spending, including spending on the types of electronic devices that are accessorized
by our products.
Buyers who are currently held back
by tight mortgage
credit standards should work to improve their
credit scores so they'll be able to qualify for a mortgage while
conditions are still favorable.»