The ECB survey on credit conditions in the Euro area was out last week and it revealed a small rebound in both the ease of getting credit and the demand for getting credit. The trends are interestingly slightly weaker in the US SLOOS survey, which is the first hint of a US Economy, which may surprise negatively 2-3 quarters ahead relatively to Europe.

Yes, I see a rate of change move from a very negative number to a slightly less negative number as a positive, as markets care about the rate of change and not nominal levels, even if it means that demand is still subdued.

Let’s have a look at the details!

Highlight 1: The credit standards tighten in sharp contrast to Europe

Credit standards on corporate loans tightens again in Q3 in the US, in contrast to Europe where less banks tighten standards in Q3 compared to Q2. This is the biggest difference between Europe and the US. The supply side seems MORE constrained in US banking compared to Europe – maybe as a consequence of  liquidity considerations post the spring-banking-crisis.

From the SLOOS-survey:

“Major net shares of banks also reported a reduced tolerance for risk, deterioration in their liquidity positions, worsening industry-specific problems, increased concerns about the effects of legislative changes,”

Chart 1: European credit standards are likely easier than US peers by now