The quarterly SLOOS survey from the Fed was released a bit more than an hour ago and the results resemble the quarterly credit surveys from Japan and Europe released ahead of the US ditto.

There is a sequential improvement in demand, while fewer banks tighten standards compared to Q3. So, is it good news or did the survey rather confirm the credit contraction? We lean towards the latter.

Let’s have a look at the highlights!

First, the demand side actually did improve from a marginal perspective. Fewer banks report weakening demand relative to Q4 and given how the survey is designed this ought to be seen as a positive compared to Q3, but levels are still abysmal when comparing them to current equity and credit valuations. See more below.

Chart 1: Demand for loans