Correspondent Blog

The FOMC’s recent hawkish pivot and indications of multiple rate hikes in 2022 have created market volatility and an increase in longer-term interest rates. In a period of rapid change (or high volatility), we see about 50% of banks fall into a common trap of mispricing their commercial credits.  This loan pricing mistake does not…

Fed Minutes Might Overshadow December Jobs Report The December jobs report is due out this morning (8:30 ET), but the most consequential market moving event has already occurred and that was the release of the FOMC December minutes on Wednesday. We discuss in more detail below our thoughts on the minutes and what the market…

Banks investing in tech funds were all the rage in 2021, with hundreds of banks getting involved and investing for their first time. The timing was good for almost all these banks as some of these funds produced triple-digit returns. These technology funds are pitched as a great way to earn an above-average return while…

Investors Weigh Virus Impact While Awaiting December Jobs Report The first trading week of the new year arrives and while the December jobs report on Friday will deliver some first-tier economic news, the market will likely be focused early in the week on the developments with the Omicron variant as schools reopen and others return…

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…