The SBA and meiosis

meiosis

my-O-sis 

1. Understatement for rhetorical effect.

2. The process of cell division in which the number of chromosomes per cell is reduced to one half.

From Greek meiosis (lessening), from meioun (to lessen), from meion (less).  

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TIP OF THE WEEK 

SBA loans are OK.

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Indices:

PRIME RATE= 3.25%
SBA LIBOR Base Rate May 2013 = 3.20%
SBA Fixed Base Rate May 2013 = 4.52%

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Debenture Rate for May   

The debenture rate is 2.07% but note rate is 2.107% and effective yield is only 4.15%.

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AHEAD OF THE YIELD CURVE 

This month’s Treasury auction of 30 year bonds went off at a yield of only 2.98%, the lowest yield since December.

April’s auction had a yield of 2.998% compared to March’s 3.248%, the highest in a year.

 A factor in the favor of buyers of 30-year bonds--inflation fears, the biggest threat to the 30-year bond's value over time, have pulled back over the past month.  Several gauges of inflation in the U.S. released in recent weeks fell below the Fed's 2% target, and some bond bulls believe falling inflation gives the Fed breathing room.

The capacity utilization rate, which measures how much plants and factories are being used, is one of the Federal Reserve’s favorite gauges of the economy.  The Federal Reserve watches capacity utilization rates to see if production constraints are threatening to cause inflationary pressures. Bottlenecks or shortages often lead to inflationary pressures that would drive prices even higher.   Several analysts have pointed to a rate between 81% and 82% as a tipping point over which inflation is spurred.

Last week the Federal Reserve reported that capacity utilization fell to 77.8 percent from 78.3 percent the prior month.  This is only 0.1 percentage point above its level of a year earlier.

 Mild inflation gives the Federal Reserve more latitude to continue with its aggressive policies to spur greater economic growth. The Fed has said it plans to keep the short-term interest rate it controls at a record low near zero until the unemployment rate falls below 6.5%, provided inflation remains in check.

So where then are interest rates going?

Eurodollar futures settle at a three- month lending rate that has averaged about 22 basis points more than the Fed's target over the past 10 years.

Here is a summary of what the market expects for Eurodollar futures based upon the pit-traded prices at the Chicago Mercantile Exchange:

DEC13- 0.32

DEC14- 0.47

DEC15- 0.84

DEC16- 1.48

DEC17- 2.17

DEC18- 2.75

DEC19- 3.07

What does all this mean?

I don’t know.

It would appear that interest rates are never ever going up.

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OFF BASE

A three day weekend finally beckons.  

After three months without a holiday, Memorial Day is here.

According to the Federal Reserve, here are the remaining holidays for 2013:

Memorial Day May 27
Independence Day July 4
Labor Day September 2
Columbus Day October 14
Veterans Day November 11
Thanksgiving Day November 28
Christmas Day December 25