Sunday, August 12, 2012

The SBA and somnolence



A state of sleepiness or drowsiness.

From Latin somnus (sleep).



No somnolence with SBA lending!



SBA LIBOR Base Rate August 2012 = 3.24%
SBA Fixed Base Rate August 2012 = 3.97%

504 Debenture Rate for July  

The debenture rate is 2.38% but note rate is 2.42% and effective yield is only 4.46%. 



At the most recent meeting of the Federal Open Market Committee, they said that “economic activity decelerated somewhat over the first half of this year.”

The smart money does not seem to be losing too much sleep however.

At last week’s $16 billion auction of 30 year Treasury bonds, the yield rose to 2.76 percent.

This is an eight week high after it had touched a record low 2.44 percent on July 26.

Here is what the 30 year bond has been doing:

2001- 5.49
2002- 5.43
2003- ND
2004- ND
2005- ND
2006- 4.91
2007- 4.84
2008- 4.18
2009- 3.89
2010- 4.61
2011- 2.89
2012- 2.76

Wait a minute, why no numbers for 2003, 2004, and 2005?

One month after the 9/11 attacks, the Treasury 30 year bond is discontinued. When the Treasury mothballed the 30-year bond in 2001, experts speculated it was trying to drive down long-term interest rates, which had remained stubbornly high while the Federal Reserve was slashing short-term interest rates to revive the economy. When the Treasury discontinued the 30-year bond in 2001, its yield fell 35 basis points in one day. Why? A shrinking supply of the 30-year Treasury bond caused increased demand to drive rates down.

What does all this mean?

I don’t know.

The slope of the yield curve—the difference between the yields on short- and long-term maturity bonds—has achieved some notoriety as a simple forecaster of economic growth.

A flat curve indicates weak growth, and conversely, a steep curve indicates strong growth.

The yield curve is getting a little steeper.

Sleep well.



Somnolence seems to go hand in hand with the dog days of summer. 

And just what is a dog day?  Is it so hot, you just lay around like a lazy dog on a hot summer day? 

The name comes from the ancient belief that Sirius, also called the Dog Star, was out during the day heating things up during the summer.  This is the bright star you see rising in the east at dawn.  From late July through August it closely tracks the Sun. 

The name "dog star" came from the ancient Egyptians who called Sirius the Dog Star after their god Osirus, whose head in pictograms resembled that of a dog.

Sirius was up in the sky at the same time as the Sun and ancient Egyptians and Romans argued that it was responsible for the summer heat by adding its heat to the heat from the Sun.

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