Financial Tightening Puts Pressure on Hot US Economy as Credit Dries Up

Financial conditions in the US are tightening again after 18 months of rising interest rates, putting pressure on the heated economy.

Tighter conditions are largely due to asset price losses, with Treasury yields at 15-year highs and stocks down 10% in 3 months.

Warning signs like weak regional bank stocks indicate tighter credit and higher costs for small businesses.

Since mid-July, financial conditions have tightened dramatically, equal to multiple Fed rate hikes.

Fed hopes tighter conditions will cool growth without recession, but full impact of tightening has yet to play out.