Correspondent Blog

Last week a seven-year-old asked us what banks do.  That question got us to pause.  How do we explain a whole industry to a seven-year-old in less than a minute, keep his interest, and do justice to the answer?  The simplest answer is that banks allow customers to change the timing of their cash flows….

While the bond market was closed Monday for Columbus Day, equities posted strong gains like kids without supervision.  But with the bond adults back in the house yesterday it was fixed income investors who liked yields that had been backing up for two weeks and it generated a nice bit of buying in Treasuries, particularly…

September Retail Sales & CPI Head This Week’s Releases We are one week closer to the election and it seems the markets are getting comfortable pricing in a Biden win and that has helped give a lift in Treasury yields over the past week. The thinking is if the win is decisive enough to be…

Allow us, during a slow week of economic releases, to do a little self-promotion. We will be hosting a Capital Markets Forum on October 15 in a livestream format. If you’re curious where the economy and interest rates might be headed, and what to do about it, spend a couple hours in the comfort of…

Elections and COVID One presidential debate down and with the president beset with a case of COVID (but set to be released today) that could be it for debates this cycle. Thus, we travel into November with a contested election still a serious consideration. How that impacts yields is anyone’s guess but we think the…

The Covid-19 pandemic has decimated the US economy, and the recovery may take longer than initially suspected.  However, currently, community banks have an opportunity to identify and win or retain longer-term, credit-worthy relationships at better credit spreads. There are also substantial challenges facing the entire banking industry. One major challenge is to understand is that…

The combination of the COVID-19 pandemic and the interest rate environment drives every bank to rethink their branch delivery. In a world with six percent net interest margins, banks can have all the branches they want. However, in an environment with sub-three percent margins, banks can no longer afford an extensive bank network. Banks that…

Economic NewsInitial Jobless ClaimsThe Dollar and TIPs Breakeven RatesMarket Rates   Economic News The September Employment Report is out  and it missed the headline expectation mainly due to government job cuts. For the month,  661 thousand jobs were created versus the 875 thousand median estimate. This miss came largely from government losing 216 thousand jobs….

The end of the quarter is upon us so those month-end and quarter-end rebalancing trades may drive some volatility today but it’s been a sharply rangebound fixed income market for almost all of September. October will have the added heat of the election campaign in its home stretch and while that’s likely to up the…

While lots of banks talk about culture and innovation, few can execute. If you are looking to capture the mindset of what a culturally strong and innovate bank looks like, listen to the 30-minute interview with Jill Castilla, the CEO of Citizens Bank of Edmond. Jill talks about experimentation, marketing, the customer experience, the meetings…

Based on our observations, we estimate that somewhere between 20% and 25% of community banks have adopted a policy requiring minimum yield or credit spreads for their newly originated commercial loans. The strategy requiring minimum commercial credit spreads may be well-intentioned, but the results for banks may be less than optimal. We understand and are…

Election Calculus Enters The Equation This is a week with a ton of first-tier data but will it matter? With the first of three presidential debates set to air on Tuesday evening, election scenarios will move front and center as market drivers ending of course on November 3rd. Or perhaps, not ending on that date…