Subscriber Update FEB112026
Student Loan Delinquencies Explode
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First let’s take a look at some real data here out of the Federal Reserve bank of NY and the most recent Quarterly Report on Household Debt and Credit. If you want to know where the next cracks in the economy may be forming, start with delinquency data.
The latest FED numbers on serious delinquencies are alarming:
mortgage debt 90+ days past due is up 26.6%,
HELOC delinquencies are up 121.4%
student loan delinquency has exploded an extraordinary 2,213%.
We suspect this student loan issue, which to put this into perspective, student loan totals are about the same as auto loans at $1.67T. One is asset backed, the other, well not so much, anyway we believe by 2028 there will be a massive wave of non paying outright defaults in the student loan segment and the US govt will have to provide some sort of bailout package and most likely in the form of interest waivers or stipends. This could be a pretty hot topic for the presidential run come 2028 so it will be something to keep an eye out on.
Yes we know a lot of this student loan delinquency has to do with the delay in moving from the post pandemic period, however we also know that about 4m payers haven’t paid in a full year and that the IDR (income driven repayment plans) are sitting at about a 775k application back log! We really don’t think this data is going to get any better any time soon.
As far as the non farm payrolls report, we don’t take much stock in the headline number of +130k ( 2x above estimates). Why don’t we care, well because for the second year in a row we saw the BLS annual benchmark revision which revised down the 2025 employment gains from 584,000 to just 181,000 jobs added, a reduction of 403,000.
This equates to an average of only about 15,000 jobs per month, the weakest annual performance since the pandemic year of 2020.
The revisions lowered the total employment level by over one million jobs when accounting for adjustments back to 2024. In percentage terms, this is the largest annual revision since 2009. Last year’s benchmark (for 2024 data) also featured a significant downward adjustment of about 589,000 jobs.
The biggest problem we see with these revisions is not just the massive dislocation from the headline monthly prints, but the more broader impact these data points have upon the Federal Reserve and policy makers, who rely so heavily on these data prints for their quantitative models.
How can they possibly make good decisions when none of the data has any integrity what so ever?
One quick technical chart for the masses, that is the US Govt 10Y, even with its sloppy tailed auction today, doesn’t change the fact that a big move is coming. This breakout could determine the trajectory for quite some time!
Guys, if you’re serious about cutting through the noise, truly understanding what drives these markets, and positioning yourself ahead of the curve then subscribe now. We know you won’t be disappointed. The real edge is in the details we cover every day.
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