Luck that takes
the form of finding valuable or pleasant things that are not looked
Coined by novelist
Horace Walpole based on the fairy tale The Three Princes of Serendip. The
Princes were supposedly making these happy discoveries they were not looking
_______________________________________________ TIP OF THE WEEK
with SBA 7(a) loans.
The IRS has issued
a new Form 4506-T and all SBA 7(a) and 504 related requests for IRS tax
transcripts must be submitted to IRS Service Centers using the new IRS Form
4506-T (Rev. August 2014).
LIBOR Base Rate December 2014 = 3.16%
Fixed Base Rate December 2014 = 5.19%
________________________________________SBA 504 Loan
Debenture Rate for December
The debenture rate
is only 2.70% but note rate is 2.74% and the effective yield is 4.782%.
OF THE YIELD CURVE
the yield curve has flattened.
What a minute, how
can a flatter yield curve be considered a good thing? Doesn’t a flatter yield
curve mean things will actually slow down?
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. The
rule of thumb is that an inverted yield curve (short rates above long rates)
indicates a recession in about a year. More generally, a flat curve indicates
weak growth and conversely, a steep curve indicates strong growth.
between yields on two-year notes and 30-year bonds, is at 207 basis points. It
flattened to 201 basis points Dec. 23, the least since 2009.
The yield on the
30-year bond ended the year at only 2.74 percent. It was at 3.97 percent in
January of 2014.
Are these lower
longer term rates a harbinger of slower economic growth
economic growth has helped push the U.S. budget deficit down to the
lowest level since 2008, marking the sharpest turnaround in the government’s
fiscal position in at least 46 years. The shortfall of $483.4 billion in the 12
months ended Sept. 30 was 2.8 percent of the nation’s gross domestic product of
$17.2 trillion over the same period. The figure peaked at 10.1 percent of GDP
in December 2009. The Congressional Budget Office in August predicted the
deficit will shrink further this fiscal year, to 2.6 percent of GDP, before
rising to 2.9 percent in the presidential election year of 2016. Before the
fourth quarter of 2008, the last time the deficit-to-GDP share reached 2.8
percent was in April 2005. The reprieve is enabling the government to reduce
the amount of debt sold in the short term.
Here is what the
30 year Treasury bond has been doing and this week’s interesting little
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
Keep your eyes and
ears open for this week’s auction of 30 year Treasury bonds.
auction of $13 billion in 30-year bonds yielded only 2.86
In its final
policy statement of the year, the Fed used a new word — "patient" — to basically
let the market know that it isn't in a rush to hike short-term
flattening of the long end of the yield curve implies investors are rethinking
the timing of Federal Reserve interest-rate hikes.
Now isn’t that
the prospect of a full work week after the Christmas and New Year’s holidays
seems daunting, hang in there. We’ve got a three day weekend coming
to the Federal Reserve, here are our holidays for
of Martin Luther King, Jr. January 19 Washington's
Birthday February 16 Memorial
Day May 25 *Independence
Day July 4 Labor Day
September 7 Columbus
Day October 12 Veterans
Day November 11 Thanksgiving
Day November 26 Christmas
Day December 25
Day this year falls on a Saturday – so the Board of Governors is closed on July
3, 2015 and bankers get a three day weekend!