Correspondent Blog

The FOMC lowered the Federal Funds target range to 0.00%-to-0.25% in March of 2020, and it has remained there since.  But now, the market is convinced that the FOMC will raise rates in 2022 through 2024 to better align short-term interest rates with expected market conditions.  This pivot by the FOMC has bankers, and customers,…

FOMC Decisions Continue to Ripple Through Markets The market will get to spend its pre-holiday week digesting what was learned from the latest FOMC meeting. That meeting represented a clear shift in the reaction function of the Fed to one of inflation-fighting, first and foremost. With an acceleration of tapering expected to be completed now…

Fed Pivots to Price Stability Mandate for 2022 We mentioned, not long ago, that once inflation had jumped from a business section story to the front pages the Fed would have to be seen as doing something, and Wednesday’s FOMC meeting fulfilled that demand. While Fed Chair Powell’s congressional testimony two weeks ago signaled the…

FOMC Meets to Accelerate Taper and What Else? The FOMC meeting concludes this afternoon and we provide some early expectations of what we think we’ll see from the meeting in the sections below. With an updated economic and rate forecast, quarter-end meetings always have their fair share of intrigue, and with expectations of a faster…

While the branch still has its place in banking, it has radically changed since the pandemic. Branch profitability is now harder than ever to achieve. Driven by changing traffic patterns (data HERE), we talked about how these changes permanently altered branch strategy HERE and gave readers five new tactics HERE. In the past, we also…

FOMC Tapering Decision Headlines the Week All eyes will be on the Wednesday afternoon announcement from the Fed on whether they will accelerate the pace of QE tapering. While that is likely to occur, the meeting won’t stop there with providing a couple other news-making items. It’s expected the tapering pace will be doubled, starting…

US prudential regulators are clear that after 2021 banks may no longer use USD LIBOR as an index.  The remaining USD LIBOR cash and derivative instruments will continue until June 30, 2023, at which point all USD LIBOR settings are expected to be discontinued, and most legacy LIBOR contracts will be converted to a Fallback…

Supply Chains to Remain Tangled Well into 2022 As you read this the November CPI numbers will likely have been released and will probably signal another month of steamy inflation that will have the Fed poised to increase the pace of tapering at next week’s FOMC meeting. The overall CPI is expected to print the…

Inflation Numbers Likely to Speed Up Tapering Schedule Team Transitory retired from the field of play last week and it could be like the grizzled veteran that saw the handwriting on the wall. We talk here about the upcoming CPI report for November, due on Friday, that we discuss in more detail below. It seems…

Most bankers have a hard enough time lending on real estate, let alone real estate that is not physically there in the “metaverse.” However, before you decide that you NEVER would lend on a virtual property,  consider that the world is changing. Thinking about how you would lend on virtual real estate is an interesting…

November CPI Will Headline a Sparse Week of Data The economic calendar is light this week and the Fed has gone into radio silence mode prior to next week’s FOMC meeting. That leaves the biggest event of the week on Friday with the release of the November CPI Report. While last Friday’s jobs report for…

Historically bankers used the Treasury, FHLB, or swap yield curve to discern the future path of interest rates. At the time of this writing, the three-month Treasury-Bill is yielding four basis points, the two-year note is 0.59%, and the 10-year note is yielding 1.33%. Historically, such a yield curve prognosticated minimal interest rate changes over…