Correspondent Blog

August CPI Headlines the Week   Treasuries are somewhat surprisingly finding an early bid this morning while awaiting the August inflation numbers tomorrow. That will be the key event of the week and provide the final piece of data for the Fed before hiking rates next week.   The debate around 50bps or 75bps continues,…

Inflation Trends Look Positive   Treasuries are well bid this morning after reacting negatively to Fed Chair Powell’s Cato conference comments yesterday that didn’t retreat from any of the hawkishness of Jackson Hole. Treated negatively yesterday, this morning the Treasury rally is being explained as “investors feeling rate hikes are getting close to being fully…

In the olden days, if you wanted to market deposits, the head of Retail would come to Marketing and say something like – “We need to raise deposits.” Marketing would then put together some ideas for a print or digital campaign; Retail would sign off on it, and then they would roll it out. Maybe…

US Dollar Climbs to New Record High   Treasuries are finding a bit of a bid this morning after what has been a rough couple of weeks, but we suspect smooth seas will be brief as the market contends with several forces.   Corporate supply has been heavy following Labor Day and that is not…

A common strategy for community banks, when faced with a borrower that wants a 10-year fixed rate loan, is to offer a five-year fixed rate that adjusts in five years. Historically, this has worked for some customers and banks because, over the last 40 years, five-year rates have generally fallen.  As interest rates fall, a…

Goldilocks Appears in August Jobs Report   Nonfarm payrolls increased 315 thousand while the unemployment rate rose two-tenths to 3.7%. Expectations were for 298 thousand new jobs, so the actual increase was just above expectations but trailed July’s 526 thousand new jobs. The largest gains came in healthcare, professional and business services, and retail trade….

Banks are full of documents. Each document contains an extensive array of data. Just keeping track of non-disclosure agreement terms is a huge task. Then there are vendor contracts, employment agreements, statements of work, loan documents, financial statements, tax returns, deposit account documents, policies, and an array of similar applications. The challenge is that most…

ADP Employment Change Report Reappears It had been a ritual for years during jobs week that the ADP Employment Change Report would be released on Wednesday and provide a bit of a heads up for the Friday BLS jobs numbers. Alas, ADP began to vary wildly from BLS numbers during the pandemic and recovery, so…

Over the last 15 years, an ever greater percentage of community banks have embraced some form of interest rate hedging.  Approximately 1,000 banks in the country use some form of hedging products to manage risk, generate fee income, or provide product offerings demanded by their customers.  Most of the top 100 banks (by asset size)…

Markets Still Adjusting to Jackson Hole Treasury yields continue to adjust from the tough talk at Jackson Hole last Friday, and that adjustment is mostly in the form of higher yields. The 2yr note overnight briefly hit 3.48% which eclipsed the 3.43% high set back in mid-June. That’s the highest 2yr yield since 2007 and…

Some Friendly Inflation News Appears Treasury yields are higher this morning but off the highs of the day as today’s inflation numbers came in better-than-expected (more on that below). The market is awaiting the keynote address by Fed Chair Powell at Jackson Hole, due at 10am ET. Once we get past that event, and unless…

Treasury Yields Drift Higher Ahead of Jackson Hole   Treasury yields are drifting higher this morning, but the moves are in range which is not surprising with Fed Chair Powell’s Jackson Hole appearance approaching this Friday.   The 10yr Treasury yield is back above 3.00% and is currently at 3.09% while the 2yr-10yr spread is…