The SBA and PROdition

prodition

pro·di·tion

prōˈdishən

 

betrayal, treason

 

From Latin proditio, from prodere to give forth, betray

 

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TIP OF THE WEEK

 

The Final Rule on  regulations on use of proceeds for partial changes of ownership, lending criteria, loan conditions, reconsiderations, and affiliation standards has been published.

 

It is now available on the Federal Register.    These changes will be in the next SOP.

 

Borrowers should no longer feel a sense of prodition with being unable to obtain a subordination on their EIDL loans.

 

The EIDL loans have been consolidated into a new servicing center which should make these requests flow better in the future with a goal of eleven business days to turn them around.

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Indices:

PRIME RATE= 8.00%

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SBA 504 Loan Debenture Rate for April

 

For 20 year debentures, the debenture rate is only 4.48% but note rate is 4.547% and the effective yield is 5.956%.

For 25 year debentures, the debenture rate is only 4.48% but note rate is 4.529% and the effective yield is 5.884%.

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AHEAD OF THE YIELD CURVE

 

Prodition from the Federal Reserve and the economy?   A profligate proliferation.

 

U.S. employers added 236,000 jobs last month, a solid gain but the weakest showing since December 2020.

 

At least through the March data, Fed policymakers will be able to characterize the labor market as strong enough to withstand another rate hike to combat persistent inflation.

 

Eurodollar futures can be prospicient.

 

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 several decades.

 

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

 

DEC23- 4.55

DEC24- 3.22

DEC25- 3.07

DEC26- 3.12

DEC27- 3.23

 

What does all this mean?

 

I don’t know.

 

The December 2023 implied rate is now at 4.55% down from 5.03% just four months ago.

 

Keep your eyes and ears open for three big things.

 

On Wednesday, the Bureau of Labor Statistics will release the Consumer Price Index.   Last month the CPI was up 0.4 percent in February from January and up 6.0 percent year-over-year.

 

On Thursday, Treasury will auction $18 billion in Treasury bonds.   At last month’s auction, the high yield was awarded at 3.877 percent, down from a high of 4.080 percent in November.    The 30 year is currently at 3.623%.

 

On Friday, the Federal Reserve will release its report on Capacity Utilization for March.   Capacity utilization was unchanged in February at 78.0 percent.

 

The Fed meets again on monetary policy May 2nd and 3rd.

 

 

 

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OFF BASE

 

Proditiophobia is the fear of being betrayed by someone you love.

 

It can be cured by remembering the words of perhaps Dr. Suess which were also the last comment by Vin Scully as he retired as the voice of the Dodgers:

 

“Don't cry because it's over. Smile because it happened.”