by Calculated Risk on 6/12/2009 04:00:00 PM

Some stats: There have been 37 FDIC bank failures in 2009 (about 1.6 per week).

Click on graph for larger image in new window.

This graph shows the bank failures per week through the first 23 weeks of 2009.

There have been six weeks with no failures, and two weeks with four failures.

Note: Corus Bankshares Inc. faces a June 18th deadline imposed by bank regulators to raise capital or find a buyer. I wouldn't be surprised if Corus is seized next week.

The second graph is from Doug Short of dshort.com (financial planner): "Four Bad Bears".

Note that the Great Depression crash is based on the DOW; the three others are for the S&P 500.

by Calculated Risk on 6/12/2009 03:03:00 PM

From Brad Setser at Follow the Money: Just who bought all the Treasuries the issued in late 2008 and early 2009?

... the Fed’s flow of funds data leaves little doubt that — at least during the first quarter — the rise in public borrowing was fully offset by a fall in private borrowing.

Who bought all the Treasuries the US government has issued in the last four quarters of data (q2 2008 to q1 2009)? Foreign demand for Treasuries — as we have discussed extensively — hasn’t disappeared, unlike foreign demand for other kinds of US debt. But foreign demand hasn’t increased at the same pace as the Treasury’s need to place debt. The gap was filled largely by a rise in demand for Treasuries from US households.

Before the crisis, foreign purchases formerly accounted for almost all new Treasury issuance. Over the last 12 months, foreign demand accounted for more like half of total issuance even as foreigners bought a record sum of Treasuries. And from what we know about the second quarter, I don’t think the basic story has changed.

And for a great series of charts comparing the current recession to prior recessions (from Paul Swartz): The Recession in Historical Context

by Calculated Risk on 6/12/2009 12:28:00 PM

Here is another look at a few credit indicators:

From Dow Jones: Key US Dollar Libor Rate Falls To Record Low

The cost of borrowing longer-term U.S. dollars in the London interbank market fell Friday, with the three-month rate reaching its lowest level since the advent of British Bankers Association Libor fixings back in 1986 as funding pressures continued to ease.

Data from the BBA showed three-month dollar Libor, seen as a key gauge of the effectiveness of the Federal Reserve's monetary policy, dropped to 0.62438% from Thursday's 0.62938%.

The three-month rate peaked at 4.81875% on Oct. 10.

Click on graph for larger image in new window.

There has been improvement in the A2P2 spread. This has declined to 0.55. This is far below the record (for this cycle) of 5.86 after Thanksgiving, but still above the normal spread.

This is the spread between high and low quality 30 day nonfinancial commercial paper.

Meanwhile the TED spread is now down to the normal range of 46.21. This is the difference between the interbank rate for three month loans and the three month Treasury. The peak was 463 on Oct 10th and a normal spread is around 50 bps.

The third graph shows the spread between 30 year Moody's Aaa and Baa rated bonds and the 30 year treasury.

The spread has decreased sharply, but the spreads are still high, especially for lower rated paper.

The Moody's data is from the St. Louis Fed:

Moody's tries to include bonds with remaining maturities as close as possible to 30 years. Moody's drops bonds if the remaining life falls below 20 years, if the bond is susceptible to redemption, or if the rating changes.

This graph shows the at the Merrill Lynch Corporate Master Index OAS (Option adjusted spread) for the last 2 years.

This is a broad index of investment grade corporate debt:

The Merrill Lynch US Corporate Index tracks the performance of US dollar denominated investment grade corporate debt publicly issued in the US domestic market.

Back in early March, Warren Buffett mentioned that credit conditions were tightening again - and this was probably one of the indexes he was looking at. Since March, the index has declined steadily.

by Calculated Risk on 6/12/2009 10:10:00 AM

From MarketWatch: Consumer sentiment rises to 69 in June

U.S. consumer sentiment rose in June, but remained at relatively low levels, according to media reports of a survey released Friday by the University of Michigan and Reuters. The consumer sentiment index rose to 69 in mid-June from 68.7 in May.

Click on graph for larger image in new window.

Consumer sentiment is a coincident indicator - it tells you what you pretty much already know.

But it does give me an excuse for a graph ...

Right now consumer sentiment is still very weak.

by Calculated Risk on 6/12/2009 08:49:00 AM

From The Times: One in ten homeowners fall into negative equity

One in ten homeowners fell into negative equity during the first three months of the year, the highest proportion for 15 years, the Bank of England said today.

The Bank estimated that between 7 and 11 per cent of homeowners with a mortgage owed more to their lender than their property was worth, the equivalent of 700,000 to 1.1 million householders.
...
Around 200,000 buy-to-let investors were also estimated to owe more on their mortgage than their property was worth ...

The research said that the overall number of those in negative equity during the first quarter of 2009 was comparable with those who suffered the problem in the mid-1990s, during the last housing market correction.

The Bank said house prices had fallen by around 20 per cent between the autumn of 2007 and the spring of 2009, the largest nominal fall in property values on record. In contrast, it took six years for house prices to fall by 15 per cent between 1989 and 1995.

The UK has about 10 million homeowners with mortgages; the U.S. has about 51.6 million.

Moody's has estimated there 14.8 million homeowners with negative equity in the U.S. (just under 30% of homeowners with mortgages) so the problem seems more severe in the U.S.