Monday, May 19, 2014

The SBA and avulse

To pull off or tear away.
From Latin avellere (to tear off), from a- (away from) + vellere (to pull, pluck).


Several pages have been avulsed recently from SBA’s playbook the SOP (Standard Operating Procedures) making it easier and easier for both borrowers and lenders to participate in the SBA’s loan programs.

Industrial real estate’s avulsion from the recession appears complete.  According to CoStar, vacancies now sit lower than pre-recession levels in the industrial property sector. 
If you would like a copy of CoStar’s Commercial Real Estate Sales Indices report for May 2014, let me know.


SBA LIBOR Base Rate May 2014 = 3.15%
SBA Fixed Base Rate May 2014 = 5.39%

SBA 504 Loan Debenture Rate for May
The debenture rate is only 3.00% but note rate is 3.05% and the effective yield is 5.08%.

Will the Federal Reserve ever avulse itself of low interest rates?

The last time the Federal Open Market Committee met on monetary policy they said that they might have to keep “the target federal funds rate below levels the Committee views as normal in the longer run.” 

Keep your eyes and ears open for this week’s release of the minutes from the Fed’s last meeting on monetary policy.  Ever since the Fed moved up the release of the minutes to three weeks after a meeting from six in January 2005, people parse each word looking for clues to policy.  This became a habit after former Federal Reserve chairman Alan Greenspan once remarked:
                “ I know you think you understand what you thought I said but I'm not sure you realize that what you heard is not what I meant”

The bond market does not seem to think interest rates are going up anytime soon.

At last week’s $16 billion dollar auction of 30 year Treasury bonds, the 30 year bond sold at a yield of 3.44%.

The long bond yield has dropped more than 50 basis points since the start of the year. April’s $13 billion auction of 30 year Treasury bonds sold at a yield of 3.525%.  In March the auction drew a yield of 3.630% compared to February’s yield of 3.69%.  January’s auction sold at a yield of 3.899% compared to December’s 3.90%.  

Here is what the 30 year Treasury bond has been doing and this week’s interesting little table:
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- 2.77
2013- 3.25

The 30 year Treasury bond is currently at 3.34 percent.

What does all this mean?

I don’t know.

Traders are betting the Federal Reserve won’t raise interest rates any time soon.

We should all be avulsing ourselves from work and the office this Monday as it is Memorial Day.
According to the Federal Reserve, here is our remaining holidays for 2014:
Memorial Day May 26
Independence Day July 4
Labor Day September 1
Columbus Day October 13
Veterans Day November 11
Thanksgiving Day November 27
Christmas Day December 25 

To many this marks the beginning of summer although technically summer really does not start until June 21st, the summer solstice, which is the day with the most hours of sunlight during the whole year.  After that, the days start getting shorter and shorter.

To all of us, it should be a day to remember those who died serving our country. The holiday, which is celebrated every year on the final Monday of May, was formerly known as Decoration Day and originated after the American Civil War to commemorate the Union and Confederate soldiers who died in the Civil War. 

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