Correspondent Blog

Democrats Continue to Wrestle with Reconciliation, Infrastructure Bills and Each Other Congress passed a funding bill last week that provides money through December 3 and avoids a temporary shutdown, but that was the easy part. The bigger lift is Biden’s reconciliation and infrastructure bills, along with the debt ceiling drama. Honesty compels us to say…

The Federal Reserve Chair, Jerome Powell, was clear last week that the central bank is highly likely to start reducing asset purchases in November and complete the process by mid-2022.  As shown in the dots plot, the FOMC members also expressed an inclination to raise interest rates next year (see graph below) – a shift…

As we have discussed before, your bank is a manufacture of credit, liabilities, and fee services. Whether you know it or not, you have a certain production capacity for each.  In today’s current environment, some banks are running at full and even overcapacity while some banks are operating at a 50% utilization level. The question…

Why are Yields Suddenly Moving Higher Following the FOMC meeting last week there was a brief pause in yields but on Thursday they bolted higher and haven’t really looked back since. Why is that? Well, in the sections below we discuss our rationale for why but suffice it to say that the combination of a…

Budget, Infrastructure, and Debt Ceiling Drama While yields seek a higher equilibrium level the market will also be keeping an eye out on the discussions in Congress over the fate of President Biden’s budget and infrastructure bills, along with any movement in the debt ceiling drama. House Democratic progressives are demanding that the larger $3.5…

Market Reacts to Powell’s Tapering Clarity The FOMC, rather Fed Chair Jay Powell, delivered a little more certainty in Wednesday’s meeting and press conference in regards to tapering and that certainty helped provide a little more clarity on the rate hikes that might follow. Powell stated that a formal tapering announcement is all but assured…

As we say – every bank must pay for growth. The most obvious case is when a bank hires staff to bring in and service new customers. People. marketing, branches, technology, capital, and many other items are all inputs or investments into growth. The need to grow is probably the single biggest driver for bank…

Competition for quality commercial loans is intense, and currently, the majority of borrowers favor fixed-rate loans for as long as possible.  We cannot blame borrowers for wanting to lock in financing costs at historically low index rates and low credit margins.  After all, the real economic carrying cost for these loans after tax and after…

FOMC Meets as Global Growth Questions Swirl 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, even when policy is expected to remain…

Investors Focused on Wednesday’s FOMC Meeting Quarter-end FOMC meetings always carry a bit more drama than other meetings, even when a change in rates or policy are not expected, and this meeting should be no different. With refreshed economic forecasts and the infamous dot plots the meeting will provide plenty of information for investors to…

Upbeat Retail Sales Revives Thoughts of Taper Talk Next Week Just when we thought it safe to conclude taper talks will not be a part of the September FOMC meeting along comes the August Retail Sales Report to bring it back front and center. The sales numbers were better-than-expected and that pressured Treasury prices lower…

Once a loan is booked, it needs to be reviewed over time for changes in credit. The problem is that many banks have only one type of commercial loan review.  This standard review usually requires approximately eight hours of work from credit, loan administration, and management. When this effort is combined with data expense, the…