SFA Market Snapshot: December 2, 2022
Provided by Structured Finance Association
New issuance across non-agency RMBS, CMBS, ABS and CLO is down 30% year-over-year. Compared to the broader market and other asset classes, ABS supply has been relatively steady, down 13% for the year. Market participants expect ABS supply in 2023 may further decline, particularly in subprime sectors, as rising interest rates further suppress borrower demand and credit concerns impact investor demand. In his recent speech, Fed Chairman Jerome Powell attempted to manage expectations about the length of time it might be “necessary to hold policy at a restrictive level.” Chair Powell said that several closely watched macroeconomic data points including the labor market—jobs available/workers available currently at a 1:1.7 ratio)—would have to moderate further before the Fed would be prepared to be less restrictive.