Delinquency, Bonds & Debts - News and my thoughts from last week (19May25)
News and my thoughts from last week (19May25)
Some of us are fixated on the tariffs. While we wait on the tariffs outcome, there are other areas that we should monitor - banking, debts (federal, corporate and consumer - auto, mortgage, credit card, BNPL, credit), real estate, retail and insurance.
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US consumer credit card serious delinquencies are rising at a CRISIS pace: The share of US credit card debt that is past due at least 90 days hit 12.3% in Q1 2025, the highest in 14 YEARS. The percentage has risen even faster than during the Great Financial Crisis. Ouch.
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Global 30-Year Bond Yields from Europe to North America to Asia are screaming "EMERGENCY" - X user BarChart
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Michael Burry has sold every stock in his portfolio except for a new position in Estee Lauder, - X user The Kobeissi Letter
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Toyota has forecasted a 21% profit decline for the current financial year, per Reuters
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Bottom 60% of U.S. households cannot afford a "minimal quality of life" — Ludwig Institute for Shared Economic Prosperity (LISEP). This measures education, healthcare, child care, technology gadgets etc. Neoliberal capitalism causes huge inequality. Don’t be fooled by GDP. - X user SL Kanthan
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US household debt jumped $167 billion, to a record $18.2 TRILLION in Q1 2025. In 10 years, household debt has surged by a MASSIVE $7 TRILLION. In Q1, mortgage debt rose $199 billion to a record $12.8 trillion. As a % of GDP, household debt is ~72%. - X user Global Markets Investor
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Total Household Debt rises to a new all-time high of $18.21 trillion - BarChart
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The US government cannot afford a recession: In previous economic cycles, the US budget deficit widened by ~4% of GDP on average during recessions. This would imply a ~$1.3 trillion deterioration of US government finances if a recession hits in 2025. That said, if the US enters a recession, long-term interest rates will likely go down. A 2-percentage-point decrease in interest rates would save ~$568 billion in annual interest payments. However, this means government finances would worsen by more than DOUBLE the amount saved in interest due to a recession. An economic downturn would be incredibly costly for the US government.
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30-Year Treasury Yield jumps to 4.94%, sitting near the highest levels of the last 18 years - BarChart
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With the latest tariff updates, we can expect there to be an increase in shipping costs and possible delays with a surge of orders. Let us plan for both "Just in time" and "Just in case" scenarios.
Bank of America, Wells Fargo and Citigroup Set Aside $34.86 billion for Credit Losses Amid Rising Macro Uncertainty - DailyHodl
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