A sector long-forgotten is back to boom times with a critical macro signal
It seems like the prevailing macro mood right now is one of pessimism.
But here’s an interesting datapoint..
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Globally, banks are reporting a resurgence in loan demand.
This follows an initial long recovery from the 2022/23 shadow recession and then again rebounding from the tariff-volatility shock earlier this year.
It also lines up neatly with what I’ve been yabbering on about with the ““ theme [as explained in the ].
While it is possible to see loan demand increase when firms are facing cash and liquidity pressures (e.g., in early 2020), the much more common driver is increased activity, capacity issues (strong demand), and optimism on the future.
Typically, businesses will take out loans to fund long-term expansion-oriented programs, e.g., M&A, real estate/premises purchases, investment in plant & equipment, and other growth initiatives.
Not only will they need to prove to the bank their current and anticipated ability to service the loan, but they also need to clearly articulate the anticipated uplift in revenues and cash flow from the investment (and timing thereof).
In other words, it’s a bullish macro sign to see corporate loan demand increasing.
And it’s a contrasting positive sign amongst all the pessimism and negativity that seems to be dominating the discussions lately, + definitely interesting as a point of confirmation for a prospective uptick in growth heading into 2026.
Key point: Loan demand is on the rise: a bullish signal for the growth outlook.
Bonus Chart 1 — Funding Conditions
It’s also interesting to track the trends in reported loan demand (chart above) alongside lending standards (whether banks are increasing vs decreasing hurdles and scrutiny for approvals), and monetary policy rates.
Loan demand typically will fall when economic conditions are poor and uncertainty is high, but also when interest rates are rapidly rising and at levels where the hurdle to return on investment is too high.
But the key takeaway on this second chart is: loan demand is recovering, lending standards are not tightening at any alarming rate, and interest rates are steadily declining — add to that tight credit spreads, and overall its a picture of much improved and generally supportive funding conditions for corporations (good for the growth and investment outlook).
Bonus Chart 2 — Bank Stocks
Lastly, it’s also worth pointing out the strength we’ve seen in global bank stocks. Breadth across countries is running at a very strong pace, and after retesting its previous big breakout in April, the global bank stock index has now broken out to new all-time highs.
It’s been a long time coming for banks to finally recover to pre-GFC levels, and as I’ve noted with a few other big breakouts we’ve been seeing this year, it follows a long period of ranging and consolidation (and repair/restructure) so it’s a highly significant development.
Very interesting itself as far as the stocks go, but also interesting as another arguably quite positive macro sign and signal here.