Today I'd like to focus on some recent trends in US credit markets:
1. We start with US mortgages where originations hit a 13-year low. Tighter underwriting (driven in part by Dodd Frank) and a fairly sharp rise in home prices are some of the reasons. 
And while house price appreciation (HPI) has moderated, it remains unsustainable with US wages still rising at 2%. Yes, investors (foreign and domestic) have been driving this market higher, but ultimately HPA and wage growth should converge — one way or another.
2. Student loan delinquencies rose once again — the only major consumer credit category to do so. Time for Occupy Wall Street redux?
As student loan balances hit another record ($1.1 trillion), and with most student debt owned or guaranteed by the federal government, the graduates are sticking it to the taxpayers. My guess is that, in one form or another, this will eventually result in partial student debt forgiveness (which will make those who paid off their loans feel wonderful).
3. As a whole, US consumer debt is rising again as the deleveraging cycle ends. The increases are due to higher auto loans, stabilisation in credit card debt, and of course all the student debt. 
And just to put US consumer deleveraging into perspective internationally, here is a comparison to the UK.
4. Shifting from consumers to corporate credit, leverage on middle market sub-investment grade financing deals has been out of control this year. 
For many larger leveraged buyout deals, we are told not to worry because cash coverage is much stronger than during the bubble years. 
That’s not always true for middle market deals however. Plus we are about to test the “strong cash coverage” theory in the energy sector, with WTI crude prices hitting a four-year low (below $74).
And for those who have doubts that pain is about to be inflicted in the US energy sector if oil prices remain depressed, here is the spread between the CS Oil Services and Equipment Sub-index (HY bonds) yield and the overall CS HY Index yield.
Speaking of energy, renewables in the US have been outpacing nuclear energy. Looking ahead, however, it’s going to be increasingly difficult for renewables to compete with fossil fuels as oil prices fall.
Now some food for thought — a couple of items:
1. Remember how we kept hearing that the US jobs created in this recovery are mostly low wage service jobs? Apparently that’s nonsense. This recovery really favoured those with skills and punished those without.
2. An African-American child with a father who didn’t finish high school has a 50% chance of seeing the father incarcerated by the time she/he is 14. 
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