Insert Pitchbook Title

1
Consumer Credit Trends If I Securitized It,
Will You Pay?
Consumer wealth and credit-worthiness. January
2006 Stephen Gallagher US Chief
Economist stephen.gallagher_at_sgcib.com
2
Fed RisksYield Curve to Invert as Fed Resumes
Rate Hikes
An inverted yield curve has preceded US
recessions by several months. Significant fed
rate hikes (100bp) are likely to invert Treasury
curve.
3
Fed RisksYield Curve to Invert as Fed Resumes
Rate Hikes
An inverted yield curve has preceded US
recessions by several months. Significant fed
rate hikes (100bp) are likely to invert Treasury
curve. A flat curve has been consistent with
solid growth, but not an inverted curve.
4
US Consumer Leverage at record high
5
US mortgage lending ratesLowest rate in decades
not the whole story
6
US ConsumerNear record wealth position
7
Consumer DemandWealth fuels demand Consumption
Growth soft relative to Wealth
A cushion? Even with a wealth erosion of 7.3,
the consumption to wealth ratio would return to
long-term norm. If wealth loss were just in
housing, a 14 value drop would re-establish the
long-term ratio. Of course, an abrupt asset
price drop would weigh on psychology and
heightened risk biases against debt financing.
8
US Consumer Delinquency Rates remained low
through falling equity market
9
US Housing Boom Very Recently a more mixed
picture
Home prices have recently outstripped income
gains Lately new home prices have slowed
appreciably as home-builders clear inventories
10
US Housing BoomEven with surging home prices,
owner costs are in line with income