Correspondent Blog

As shown in the graph below, we may be witnessing the end of a multi-decade bull run in bonds.  After many decades of decline, interest rates may be on the rise for years to come.  This development is creating an opportunity for community banks to book longer-term fixed-rate loans with higher profit margins.  However, borrower…

Given the events of last Wednesday, we hope 2021 didn’t just tell 2020, “hold my beer”, but in the Treasury market good times are certainly being priced in. Long-end Treasury yields have risen every day in this young year, until yesterday. Driving that increase is the expectation that the Heroes Act will contribute to growth…

Politics Driving Markets With the elections finally settled in our federal government, we think,  investors are now trading around the idea of a unified Democratic government and all that that means. First, a third stimulus bill seems the first order of business with the $2,000 stimulus checks front and center. Both new Democratic Senators Ossoff…

  Economic News The December Employment Report is out and it missed the headline expectation of 50 thousand new jobs with a notable decline of 140 thousand, the first decline since April. Partially offsetting that was a 135 thousand upward revision to the prior two months. The private sector saw 95 thousand jobs cut versus…

The results of the twin Senate runoffs in Georgia were as close as advertised but Democrat Rev. Raphael Warnock has been declared the winner in his race while Democrat Jon Ossoff is leading by 16,000 votes in his race with 98% of the vote counted. His lead over David Perdue is less than 0.5% so…

Georgia Elections and Jobs As a new year opens, investors will be fixated on the political once again. First, the Georgia senatorial run-off election concludes tomorrow but the closeness of the polls indicates it may be Wednesday or later before we know the final results. A win by one or both Republicans will keep that…

Of all the lending programs in banking history, the Paycheck Protection Program (PPP) has to be one of the most complicated ever to enthrall bankers. Consider that in the next couple of weeks, banks will be:  originating the second draw of PPP (PPP2) under new guidelines; originating PPP loans under the initial set of guidelines…

A credit tenant loan (CTL) is a loan secured by the real estate pledged as collateral and the obligation of a credit-rated tenant of that real estate.  These loans are a cross between a bond (because the tenant’s obligation to pay rent is a senior obligation of a creditworthy obligor) and a commercial mortgage (because…

We’re closing in on Christmas but with a half-day tomorrow and trading desks already thinning out, today is really the last consequential trading day of the week. Also, because of the approaching holiday, we get a ton of economic reports dumped on us today from jobless claims, to personal income and spending (more on that…

Stimulus 2.0 Passes While Virus Mutates This holiday-shortened week opens with Congress finally reaching an agreement on a second stimulus bill and it should be voted on today with the president signing it into law soon thereafter.  The latest sticking point over ongoing funding for the Fed’s emergency lending programs was ironed out over the…

With the Fed meeting behind us, and not much movement off of it, the market turns its complete attention to negotiations over a Stimulus 2.0 Bill. Senate Majority Leader Mitch McConnell said late yesterday a deal is close at hand, but several sticking points remain, as they always do in these things. The nearly $900…

The Fed’s last meeting of 2020 concludes today, and while there will be no rate change there is still plenty that the Fed watchers and investors will be mulling over in the statement, press conference, and updated economic and rate forecasts. We discuss more of what we expect from the Fed in the next section….