But it is not as bad as it sounds.
The top 4 US banks accelerated their reserve building in Q4 ‘22: +$2.9B, or +4.4% Q/Q.
This is the 3rd consecutive quarter with a reserve increase since Q2 ‘22, as the Fed began the current rate hike cycle.
The current total reserve of the top 4 banks is $69.4B, 16.5% higher from Jan 1st, 2020, right before the pandemic.
But it is not as bad as it sounds.
If you consider the inflation, the number is on par with 3 years ago.
The signals are pointing to the increased odds of a soft landing:
- Inflation slowly drops
- Consumer default is low
- The employment market is still strong
- The rate hike expected to be near the end
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