Bank Loans and Deposits Show Slight Increase

Bank loans and deposits in the U.S. financial system experienced a slight rise at the end of July, indicating overall good health despite growing caution among lenders.

Bank Lending on the Rise

According to the Federal Reserve's latest report, total bank lending increased by $12.6 billion, reaching $12.12 trillion in the seven-day period ending July 26.

Steady Growth in Bank Deposits

Bank deposits also saw an uptick, rising by $3.3 billion last week to reach $17.34 trillion. It's worth noting that deposits had reached a peak of $18.21 billion in mid-April.

Commercial and Industrial Loans Maintain Steady Growth

Commercial and industrial loans, which play a crucial role in driving economic activity, increased by $2.9 billion to $2.75 trillion. However, this increase was observed solely among large U.S. banks, while smaller banks slightly reduced these loan amounts.

Before experiencing setbacks due to the collapse of Silicon Valley Bank, the value of these business loans had reached a peak of $2.82 trillion in March.

The Bigger Picture

In response to recent bank failures, lending has been curtailed, and borrowers now face stricter requirements to qualify for loans. This cautious approach has had a gradual impact on the U.S. economy, leaving it relatively unaffected thus far.

However, if the decline in loans continues, the economy may suffer. Borrowing is a vital catalyst for growth, particularly when funds are utilized to start new ventures or expand existing ones.

Market Performance

On Friday, the Dow Jones Industrial Average (DJIA) closed lower, while the yield on the 10-year Treasury note fell by 12 basis points to 4.06% following a softer July jobs report.