Correspondent Blog

The Trump administration’s impact on the US economy has been thoroughly analyzed and will continue to be debated (and closely watched) for its entire four-year term.  Economic scenarios may unfold in a myriad of unexpected ways.  However, one result of the administrations stated policies will be highly likely – we estimate at least a 90%…

Current congressional and presidential polls are showing a close election this November.  The elections are still three months out, with plenty of time for unexpected events to develop.  However, we would like to identify one important macroeconomic variable that will affect the banking industry regardless of the makeup of the legislative and executive branches of…

In a few short months, stronger economic data (higher GDP, stronger job market, and stubborn inflation) changed the market’s and the Fed’s view on the future path of interest rates. The market and the Fed are now aligning on only one rate cut in 2024 – obviously this will change over the course of the…

The Federal debt is already impacting banking. Cyclical economic changes are driven by business cycles. These changes may occur swiftly, such as interest rate changes, inflation changes, or unemployment rate changes. Cyclical changes and their impact on the economy dominate the news and the attention of corporate boardrooms because they are immediate and need to…

On September 20, 2023, the Federal Open Market Committee (FOMC) left its benchmark rate unchanged, but it would be a mistake to conclude that the committee did not send a strong message about the projected path of future interest rates.  The FOMC revised its view on future projected interest rates – rates will be “higher…

For the first time in ten meetings and the first time in 15 months, the Federal Reserve left its fed funds rate unchanged at 5.00–5.25%.  However, far from settling future interest rate moves, the “Fed Pause” creates several perplexing future monetary scenarios. While the Fed did pause, it increased its terminal rate forecast by another…

In the last 12 months, the Federal Reserve went from arguing that inflation was a transitory phenomenon to raising interest rates to fight runaway inflation by three percent in just six months.  The result is not only higher rates but the most severe interest rate hiking cycle in the past 35 years –  and it…

Last week the Federal Reserve again raised the Fed Funds rate by another 75 basis points – and again, that was in line with the market’s expectation. The question is when will the Fed stop, and what will be the terminal Fed Funds rate? We do not believe that the Fed’s “dot plot” fully reflects…