Perspective - Fixed Income

Consumer delinquency - Thank u, next!

Headlines on consumer delinquency have taken a negative spin. Recent auto delinquency data is at near-peak levels despite today’s low unemployment. But it’s important to examine exactly what is being reported as “delinquency” when reviewing the data.

03/15/2019

Michelle Russell-Dowe

Michelle Russell-Dowe

Head of Securitized, US Fixed Income

Anthony Breaks, CFA

Anthony Breaks, CFA

Portfolio Manager

Headlines on consumer delinquency have taken a negative spin. Recent auto delinquency data presented by the Federal Reserve Bank of New York (FRBNY) shows auto delinquency at near peak levels, despite today’s low unemployment. If this seems a bit inconsistent, we agree. It’s important to examine exactly what is being reported as “delinquency” when reviewing this data.

That said, S&P/Experian data reveals there are weaker segments of consumers, which we believe are an important demographic trend. But in aggregate, as we see it, consumer performance backing our investments in consumer ABS and housing are generally strong. As far as problems go, we think consumer and housing feel good, leading us to the Ariana Grande approach to ex-boyfriends…thank U, next!

The views and opinions contained herein are those of Schroders’ investment teams and/or Economics Group, and do not necessarily represent Schroder Investment Management North America Inc.’s house views. These views are subject to change. This information is intended to be for information purposes only and it is not intended as promotional material in any respect.