July 14, 2022

Can ABS Survive the Fed Onslaught?

U.S. household finances are in great shape heading into the economic downturn. Similarly, the underlying fundamentals of consumer ABS pools are favorable, including substantial buffers against defaults. ABS has been a great place to pick up a little spread this year while waiting to see how the economy responds to rising interest rates. However, the problem for ABS is that the Fed will continue tightening until unemployment rises and consumers buckle. Is it time to downgrade? See today’s report.