There is a saying on Wall Street with regards to the Federal Reserve hiking interest rates to help curb inflation: “Hike until something breaks.”

Interest rate hikes have been on a historic run over the past 12-15 months, currently sitting around 5%. For many, that “breaking” point came on March 10—and then again on March 12—marking the two biggest bank closures in U.S. history of Silicon Bank and Signature Bank, respectively.

But is the “breaking” point still yet to come? And could manufacturing business be in the crosshairs? A look at the two charts below shows that as lending standards get more difficult, demand for loans are on the decline.

“Loans and credit are the lifeblood of the economy, and the data is showing that the ability to get money is becoming more and more difficult,” says Nick Webb, Ryerson’s director of risk management, commodity hedging. “As we go into second half of the year, these scenarios could start to feed into the economy. I am not saying that lending activity will suddenly cease to exist, but I do believe that bank executives across the board are having a slightly higher level of scrutiny of lending practices.”

Could this compound on an already weakening manufacturing environment in the U.S.? According to the Institute for Supply Management, U.S. manufacturing activity dropped to the lowest level in nearly three years in March. This was driven in part by continued contraction in new orders as demand for goods has cooled amid rising borrowing costs.

[Bastion note: Joe Biden announced his campaign for another term today. We used to base America’s economic health in no small part on the state of US manufacturing. This article hints that all might not be well…]

This was originally published and disseminated by Ryerson Metals in their emailed newsletter, The Pulse