The gulf between financial markets' and Federal Reserve Chair Jerome Powell's view of the U.S. economy could not be wider, but two national credit conditions and lending surveys within 24 hours of each other could narrow the chasm.
The Fed releases its quarterly Senior Loan Officer Opinion Survey, or 'SLOOS', on Monday May 8, and the National Federation of Independent Business's April survey of small businesses will be released the following day.
The question is how much more - enough to actually tip the economy into recession and force the Fed to cut rates in the second half of the year, as futures markets are aggressively pricing? Or not? That would be a quick pivot to rate cuts from hikes, but not unusual. In fact, it would be in line with historical trends - according to Joe Lavorgna at SMBC Nikko Securities, the median pivot over the last 18 tightening cycles going back to the 1950s is two months, and the average is three.
The NFIB's last survey, meanwhile, showed that credit conditions for small firms measured by the Loan Availability Compared to Three Months Ago index deteriorated sharply to the worst in over a decade.
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