So this kinda answers my question – it is being somewhat misleading at this time then to my mind at least.

Following Friday's dreadful news of the U.S. unemployment rate soaring into double digits to 10.2%, stock and other so-called risk assets prices jumped Monday on Wall Street and markets around the globe.

The latest leg up in the “risk trade” came after the Group of 20 over the weekend confirmed their resolve to continue their economic stimulus programs. In addition to fiscal measures, that would keep in place the ultra-low interest-rate policies followed by most of the major central banks, notably the Federal Reserve. Not that there was any question for the U.S. central bank, which just last week confirmed its intent to continue maintain its rock-bottom 0-0.25% federal funds rate target for “an extended period.”

But another Fed report released Monday shed light on why nearly free money has had so little impact on the real economy. In its quarterly survey of senior bank lending officers, the Fed found that credit conditions had tightened again, albeit less than in its previous survey taken during the summer.

Mind you, there has been no actual easing of lending standards since the screws were turned excruciatingly tight a year ago during the worst of the financial crisis following the collapse of Lehman Brothers. Nevertheless, this was greeted as yet another example of less-bad-is-good news. But, as JP Morgan economist Abiel Reinhart points out, “Lending standards have already tightened significantly, so there is limited room for further tightening.”

Even so, the downward spiral in consumer credit accelerated in September, the Fed reported separately Friday. Consumer lending contracted at a stunning 7.2% annual rate in the latest month for which data are available, half again the decline in August, which was tempered by the “cash-for-clunkers” giveaway that temporarily arrested the plunge in auto loans and sales.

Non-revolving credit, which includes car loans, fell at a 3.7% annual rate in September after edging up 0.1% in the August clunkers craziness. But revolving credit, which includes credit cards, collapsed at a stunning 13.3% annual rate, the 12 straight monthly decline.

Nothing like that has been seen since the Carter-era credit controls in 1980. Nearly three decades later, once again the visible foot of government is squashing the economy.

The Fed's latest survey of loan officers included a special question about the impact of the Credit CARD Act of 2009, which was supposed to correct banks' abusive plastic practices. “As a result of the act, banks reported that they expect to tighten (or have already tightened) many terms on credit card loans for both prime and nonprime borrowers,” according to the Fed.

More stringent credit requirements, higher interest rates and reduced credit limits were among the ways banks were responding to this regulatory reform. Consumers have responded to this turn of the screws by paying off their balances as fast as they can, or are forced to.

More to the point, the Fed noted that “sizable” numbers of both domestic and foreign-based banks were cutting credit lines for existing customers for loan facilities ranging from home equity lines of credit, commercial construction credit lines and lines of credit to financial firms.

Instead of making loans, banks have ramped up their purchases of securities, notably Treasuries. That no doubt contributed to robust demand for Monday's auction of $40 billion three-year notes, which attracted a massive $133 billion in bids.

It wouldn't seem that a 1.40% yield would set off such a stampede, but for banks or other investors that can finance a leveraged position at 0.25%, the 1.15-percentage point spread between the borrowing cost and the note's yield — multiplied 20 or more times by leverage seems juicy. Who needs the hassle of dealing with credit cards and new regulation when you can lever up nearly free money in riskless government securities?

Or, better yet, purchase risk assets, from commodities to equities to foreign currencies to corporate credit? While the Fed found banks continued to tighten standards for commercial and industrial loans, blue-chip corporations such as Cisco Systems (ticker: CSCO) was able to raise $5 billion in the bond market Monday. Indeed, the networking giant could have borrowed a multiple of that amount as underwriters had to turn away eager bond buyers.

As colleague Eric Savitz pointed out in the Tech Trader column in this week's Barron's magazine, Cisco sees signs of recovery. Evidently, it's raising billions in the welcoming corporate bond market to take advantage of opportunities it sees.

Goldman Sachs economists observe that large corporations such as Cisco have access to the capital markets or the commercial paper markets, which Goldman observes have improved far more than the bank loan market.

All of which lays bare the problem policy makers face to a far greater extent than past cycles: The Fed can “print money” but it cannot create credit alone. That process requires a willing lender and an able borrower. It takes those two to tango and expand credit, which goes toward increasing business activity and employment.

Absent that, the cheap money is deployed to pump up asset prices rather than create to support real business and jobs. Wall Street enriches itself on free money while Main Street gets little stimulus while local bankers keep a tight rein on loans.

So, don't mistake improvement in the stock and bond markets with better times for the real economy. Money matters but credit counts.

See here for an explanation. You know you could have googled “DXY index definition”

https://www.theice.com/publicdocs/nybot/ICE_Dol...

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