Correspondent Blog

On October 23, 2020, the International Swaps and Derivatives Association (ISDA) published the much anticipated IBOR Fallback Protocol (Protocol).  Firms that sign up for the Protocol agree to the spread adjustment and the fallback rates if LIBOR becomes unavailable in the future.  Most community banks have some loans or deposits tied to LIBOR, and many…

Economic NewsInitial Jobless ClaimsCopper/Gold Ratio Points to Higher YieldsMarket Rates   Economic News The last of the presidential debates was held Thursday night and while not as explosive as the first debate did have its moments, but probably nothing that will alter the trend in polling. That polling has Biden leading in most of the…

Stimulus fever has hit the bond market as talks between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin were deemed positive enough to send 10-year yields above 0.80%, a four-month high, climbing as high as 0.834%. Currently the 10-year yield sits at 0.814%. While the odds of a deal passing prior to the election…

Examining Bond Portfolio Trends: Third Quarter 2020 Beginning in May 2012 we started tracking  portfolio trends of our bond accounting customers here at the Correspondent Division of CenterState Bank.  At present, we account for over 130 client portfolios with a combined book value of $11.5 billion, or $88 million on average per portfolio.  Twelve months…

Election Scenarios, Stimulus and Yields With the week devoid of much first-tier economic releases, Treasuries are likely to drift within the well-worn range that we’ve seen for what seems like forever but stretches back to March. And to be fair, even if we did have some first-tier data to trade around, the market is more…

Since the election falls right in the middle of bank’s budgeting and planning cycles, it is worth spending some time looking at potential outcomes. With a little more than two weeks before the election, the current polls and betting odds favor a Democratic Administration and both houses of Congress.  According to FiveThirtyEight, Biden has a +10.5%…

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…