Correspondent Blog

Finally, a Cooler CPI Report For the first time in what seems like forever, CPI came in cooler than expected and markets, both Treasuries and stocks, are rallying as a result.   The overall inflation rate was unchanged for the month versus the 1.3% increase in June and better than the 0.2% expected. It’s the…

With 100+ public banks reporting, we have more than a representative sample to see 2Q 2022 bank earnings trends and derive some operational insights on bank performance. We touched on the 33 Items That Stakeholders Want to Know, which highlights some of the industry’s concerns and serves as a good checklist of items to touch…

A yield curve is a relationship between yield and different maturity dates. The yield curve’s slope can provide insight into future interest rate changes and economic activity. There is much discussion in the market about the current inverted yield curve between the two and ten-year Treasury yields. However, for bankers, the critical dates on the…

Treasuries Shrug Off Strong July Jobs Report Treasury prices are higher this morning as the downdraft created by the stronger-than-expected July employment report was short-lived. We remain hard-pressed to see a catalyst to materially higher rates in the near-term as the market interprets the hot jobs market as a reason for the Fed to remain…

Strong Job Growth Continues and Wage Gains Accelerate Nonfarm payrolls increased 528 thousand with those gains continuing to be widespread while the unemployment rate dipped a tenth to 3.5%. Expectations were for 250 thousand jobs and the increase was well above June’s 398 thousand new jobs. It’s the highest monthly gain since February’s 714 thousand…

Fed Pushes Back on Thoughts of a Dovish Pivot   Yesterday, a pair of Fed officials firmly pushed back on the notion that Fed Chair Powell’s comments after last week’s 75bps rate hike represented something of a pivot to a more dovish Fed in upcoming meetings.   San Francisco Fed President Mary Daly and Chicago…

In wrestling, there are hundreds of thousands of moves to learn. You will fail if you try to learn them all early in your wrestling career. Moves come with experience. Concepts come first. To start, what is essential is conditioning and learning about angles. Defending your angles and using angles to attack. When it comes…

July Jobs and ISMs Headline Releases this Week There once was a time when Minneapolis Fed President Neel Kashkari was easily the most dovish member of the FOMC. The fact he was on the Sunday news shows yesterday reiterating the hawkish case is just another sign of how intent the Fed is in getting inflation…

Last week the Federal Reserve raised the Fed Funds rate by another 75 basis points – that was no surprise to the market.  However, in Powell’s unscripted remarks at the press conference, he stated that interest rates have reached a “neutral level.”  The market reacted to those words with equities and bonds both rallying.  We…

Over the past several years, bank investors have been hungry to hear about growth and expansion. Revenue and growth have fueled bank multiples. Now, the tone is markedly different. We have poured through the recent 2Q earnings releases, spoken with a rash of institutional bank investors, traded thoughts with analysts, and compiled the following list…

Last week we discussed how lenders might use swaps, caps, floors, and collars to help borrowers manage borrowing costs.  We outlined how the market values swaps and volatility instruments (like caps and floors), and we reviewed the fundamental reasons for how and why these hedging instruments are applied to commercial loans.  In this article, we…

Weak European PMI Readings Boost Treasury Prices Treasury yields are lower this morning after EU composite PMI readings unexpectedly slipped below 50.0 earlier today. Anything below 50 signals contraction and the recession warning sent EU-based yields lower and Treasuries have followed suit on what should be a quiet Friday trading day here.   We will…