Correspondent Blog

The Beatings Will Continue It’s a new week but the market seems to be in the same frame of mind when we left off last week and that is selling early and often.   The 10yr yield reached a high of 3.20% in early trading today as April CPI looms on Wednesday as does another…

Your bank’s  deposit beta is going to rapidly change. In our previous article (HERE), we reviewed the banking industry’s cost of funding earning assets (COF), and we compared how community banks’ COF behaves relative to national banks in a rising interest rate cycle.  We showed that the average community bank’s COF is highly correlated to…

Job Growth Continues While Wage Gains Show Some Moderation Nonfarm payrolls increased 428 thousand with those gains fairly  widespread. Expectations were for 380 thousand jobs and it matched March’s 428 thousand new jobs. The largest gains came in leisure and hospitality, in manufacturing, and transportation and warehousing. However, total nonfarm payrolls remain 1.2 million below…

Market Awaits FOMC Decision and Powell’s Comments It’s not so much the 50bps rate hike we expect from the Fed this afternoon, but how Powell frames expectations for the meetings to come that will be the focus for investors. That will have to come mostly in the post-meeting press conference since we won’t see refreshed…

Most banks think in terms of linear growth. As a result, bankers love the idea of a sales funnel – put enough prospects at the top of the funnel, and a certain number of customers will fall out the bottom. Add more resources, and you get more customers. It is easy to understand. Unfortunately, there…

This Week Should Provide Some Key Answers for Investors By the time we get to the weekend, we should have a lot more information in hand in regards to both the economy, the labor market, and monetary policy. The FOMC meeting’s rate decision on Wednesday is the highlight of the week, and the question is…

Based on the futures market, the Federal Reserve is expected to raise the Fed Funds rate to 3.00% at its December 2022 meeting. The Fed will also aggressively shrink its balance sheet to tame unwanted inflation. These two Fed moves, along with the economic environment and customer behavior will impact your forecasting of your cost…

Increasing Wage Gains Will Keep the 50bps Rate Hikes Coming   Treasuries are trading heavy this morning as the Employment Cost Index (ECI) came in above expectations and that is sparking concerns of the dreaded wage-price spiral. That is essentially when fatter wallets encourage more spending which in theory contributes to further price increases.  …

Banks that focus on the customer experience have come to learn that it is not the forward-facing customer experience that matters, but the “total experience” that now counts. Total experience is the business strategy for creating superior customer AND employee experience. In this article, we walk through why banks should focus on total experience (TX)…

Higher Rate Levels Take a Bite Out of Housing Activity   While the Fed has only hiked once to date, they will follow that with a 50bps hike next week, meanwhile, the market has been busy doing plenty of the heavy lifting for the Fed.   One sector that has been a real economic star…

Banks have ceased using LIBOR to price assets and liabilities after 2021. However, some community banks are still deciding on the correct term lending index to adopt. Many banks are uncertain that they have chosen the best term index for their products and markets. We believe that having more options for community banks is beneficial….

Fed Chair Powell Joins Hawkish Sweepstakes We mentioned earlier that it seems each Fed official is trying to out-hawk the other and Fed Chair Powell has joined that competition.   He mentioned yesterday in an IMF panel discussion that a 50bps rate hike is certainly on the table for May and that additional 50bps hikes…