Correspondent Blog

September Jobs Report Last Before November FOMC Meeting The September employment report will be released at 8:30 am ET this morning and it will be the last jobs report before the November FOMC meeting and the expected quantitative easing tapering announcement. That being said, we don’t think the tapering decision hangs in the balance on…

September Jobs Report Last Before November FOMC Meeting It’s perhaps a quirk of the calendar that this Friday’s September Employment Report will be the only one before the Fed’s next FOMC meeting on November 3. So the question becomes how consequential can it be? We think the risks are asymmetric in that it would take…

A good bank strategy is a multi-layered cube. In this article, we present the four horizontal layers and then follow this article up with the vertical layers to round out the construction of the basic framework that can be used to set any bank’s strategic planning. The reality is that many banks fail to plan…

The most common question we hear from borrowers is, “Should I refinance my debt?”  This can be a difficult question for lenders to answer, but as a trusted advisor, every lender should understand the strategy, and the process to answer that question for every client.  We will address the knowledge that commercial lenders must have…

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…