Correspondent Blog

In the future, banks will make money on payment products by DELAYING settlements. That vision is ironic considering financial institutions are spending billions of dollars moving payments from one to three-day settlement to real-time. However, in the next three years, many banks will have the bulk of their payments settling in real-time, and delaying payments…

Inverted Curves and Recession Signals With the yield curve flat as a pancake across its belly, investors are wondering if the near inversion of the curve spells a coming recession. While the 2yr-10yr Treasury spread is still 21bps away from inverting, the trend is definitely going in that direction. While the 2yr – 10yr Treasury…

If your bank struggles to create a clear value proposition and brand differentiation, then we have a case study for you. In December 2021, a Brazilian bank, Nubank, went public in the U.S. and became the most valuable bank in Latin America. Their secret – fanatical customer service. This article looks at how this bank…

Last week’s FOMC Meeting resulted in an increase in short-term interest rates by 25 basis points (bps) and projected seven rate hikes in 2022 and another four hikes in 2023.  The FOMC projects the Fed Funds rate to reach 1.875% by the end of the year and 2.75% next year (see DOT plot below).  However,…

Light Data Week but Heavy on Fed Speak The week is light on economic data but heavy on more Fed speak. The microphones have already been turned on this morning and Atlanta Fed President Raphael Bostic was first out of the gate with several statements that sent Treasury yields immediately higher. First, he noted the…

If banking had an Olympics, creating loan value would be an event. The recent Fed meeting, with its hawkish tone, makes the sport of loan value creation even more important. While many lenders are good at gathering new business, they may lack the experience to create optimal mutual value. To make it into the podium,…

Fed Begins Rate Hikes. More to Come As expected, the Fed raised the overnight target rate 25bps to 0.25% – 0.50%.   The updated Dot Plot now shows a total of seven 25bps hikes in 2022, including today’s, and another three hikes in 2023 reaching 2.75%. The longer-run fed funds terminal rate is forecast to…

Countdown to Rate Liftoff Begins The March FOMC meeting concludes this afternoon with a 25bps rate hike a foregone conclusion. As we mentioned on Monday, the real focus for investors will be in the forecast for further rate hikes this year, and the updated economic forecast with inflation and GDP key items of interest in…

Community banks have solid competitive advantages when competing against insurance companies (primarily life insurance companies or “Lifecos”) and commercial real estate securitization conduit lenders (CMBS) for commercial borrowers. Unfortunately, some bankers are not positioning their services correctly to explain why borrowers should do business with their community bank. Some bankers even use fatalistic arguments that…

Investors Await Wednesday’s FOMC Meeting The FOMC meeting that concludes on Wednesday afternoon has the market’s attention, even though a 25bps rate hike is a foregone conclusion. The real focus for investors will be in the forecast for further rate hikes this year, and the updated economic forecast with inflation and GDP key items of…

February CPI Looms for Market The back-up in yields this week has several reasons driving it but concern about inflation is certainly one of the primary factors.   Part of the uncertainty about inflation will be answered by tomorrow’s February CPI report. The news is not expected to be good as the overall monthly CPI…

Ukraine War Will Continue to Dominate Trading This Week Even if the economic calendar were chock full of first-tier releases, it would be developments in the Ukraine war that would dominate trading. The fact we have a fairly light week of data makes the war influence that much greater.   Developments over the weekend haven’t…