Correspondent Blog

If you are looking to make best-in-class decisions, it pays to have a variety of best-in-class tools at your disposal. Oftentimes, a reason why banks don’t innovate more is that they lack the tools and experience to properly understand the risk and the return. Without a way to quantify the risk, stagnation occurs. As banks…

Treasuries Happy in the Range A slow week of economic data is allowing Treasuries to drift around within the 1.60% – 1.70% range for the 10yr and that is likely to continue for a time. Next week brings personal income and spending numbers for April and the expectation is that they will look a lot…

Our previous publications discussed current banking industry dynamics for loan pricing, how community banks are responding, and some winning strategies for community bankers.  We contend that excess liquidity and tepid loan demand are the main culprits in driving community bank net interest margin (NIM) to the lowest level in recent history.  With loan-to-deposit ratios dropping…

Fed Speakers Get Another Chance to Talk Transitory Inflation After a week of consequential economic data, this week is a bit thin in that respect but we do get some Fed input that will be closely followed by investors.  The minutes from the April 28 FOMC meeting will be released on Wednesday, and while the…

Treasuries Still Standing After CPI and New Supply The Treasury market rather easily absorbed hotter-than-expected CPI and PPI reports, not to mention new 3yr, 10yr, and 30yr supply. So that begs the question, if a red-hot CPI and fresh supply can’t move yields over recent highs what will it take? Maybe today’s retail sales report,…

April CPI to Add to Inflation Story Later this morning we get April CPI and the equity market hasn’t waited around to sell on the rumors. Expectations are that overall CPI will reach a ten-year high of 3.6% while core CPI is expected to spike to 2.3% versus 1.6% in March. This is the base…

If you are a traditional company in America, you produce a product, get some beta customers and then write a press release to announce the product or service to the world. You create the narrative in your press release to fit reality. However logical this seems, it might be the wrong way to do it….

April CPI and Retail Sales With a Heavy Dose of Fed Speak We wrote in this space last Monday that after the week is over we should have a good idea if April was able to outshine March as far as economic activity and while expectations were such, the reality failed to live up to…

Many community banks are struggling with excess deposits and weak loan demand.  The common question posed to us is, “should management focus on loan growth by accepting lower margins or wait for margins to recover?”  This blog will address current banking industry dynamics, how banks are responding and what we see as some winning strategies….

April Employment Report Misses Badly The April Employment Report badly missed expectations of 1.0 million new jobs with just 266,000 jobs created, while the March report was revised lower from 916,000 jobs to 770,000. With the latest numbers, around 8.2 million people remain unemployed from the pandemic. The problem now, with the disappointing April numbers,…

The Tells of April About to Appear This week is filled with three reports that will quickly define the economic activity in April: the ISM Manufacturing, ISM Services, and BLS Employment Report. The ISM Manufacturing ostensibly disappointed but it was due solely to supply constraints. Large backlogs and scant inventory point to robust orders but…

In business and banking schools an often-taught principle is that the demand for banking products is normally distributed. A bank would set its product and price, some people wouldn’t care, others would care a lot and the bulk in the middle is where a bank would focus its sales and marketing resources to convince them…