While everyone was focused on the "front end" of central bank announcements in the form of Draghi jawboning, Yellen hemming and Kuroda panicking, something more troubling took place on Monday afternoon on the "back end", when the FED released its latest quarterly senior loan officers survey.
What it showed was that in Q4, lending standards tightened for the second consecutive quarter.
This is problematic because as DB's Jim Reid writes, two consecutive quarters of tightening standards "has never happened before without it signalling an eventual move into recession and a notable default cycle. Once we have 2 such quarters lending standards don't net loosen again until the start of the next cycle."
If there is any silver lining, it is that as DB points out, so far the tightening of standards are still only mild, especially relative to recessionary levels. So although it does continue to feel like we're late cycle, it could still be a number of quarters for the full cycle to unravel.
In other words the countdown is on, not only for the Fed to admit policy error, which Bill Dudley hinted at yesterday, but also a countdown to the admission that the US is in a recession and the long overdue collapse in the world's most crowded (if only until recently) trade, being long the US Dollar.