Protend
proh-tend
verb (used with object)
to stretch forth.
to extend in duration; postpone; defer
verb (used without object)
to stretch forward.
Latin protendere, from pro- + tendere to stretch
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TIP OF THE WEEK
SBA has not protended on SBA 7(a) guarantee fees
effective October 1st, 2023.
The new guarantee fees are:
For loans of $1,000,000 or less: 0.00%.
For loans of $1,000,001 to $2,000,000: 1.45% of the
guaranteed portion of the loan up to and including $1,000,000, plus 1.70% of
the guaranteed portion of the loan over $1,000,000.
For loans $2,000,001 and greater: 3.50% of the guaranteed
portion of the loan up to and including $1,000,000, plus 3.75% of the
guaranteed portion of the loan over $1,000,000.
The State Small Business Credit Initiative (SSBCI) and
State Small Business Loan Guarantee Program guarantee fee is 2.5% of the
guarantee portion.
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Indices:
PRIME RATE= 8.50%
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SBA 504 Loan Debenture Rate for September
For 20 year debentures, the debenture rate is only 5.39%
but note rate is 5.466% and the effective yield is 6.867%.
For 25 year debentures, the debenture rate is only 5.41%
but note rate is 5.464% and the effective yield is 6.812%.
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AHEAD OF THE YIELD CURVE
Will the Federal Reserve protend interest rate increases when
it meets on monetary policy on September 19th and 20th?
Fed policymakers might find the August employment report
in line with their expectations for a cooling labor market. The numbers could support a decision to
pause in hiking rates at the September meeting.
Interpreting the August increase there are other factors
to take into account. The bankruptcy at
Yellow Corp. led to a 36,700 decline in truck transportation. This will be a
one-off and many of these workers could find jobs elsewhere due to a reported
shortage of drivers.
On Wednesday the Bureau of Labor Statistics will report
on the consumer price index for last month.
Also on the same day, keep your eyes and ears open for
the Treasury’s auction of $20 billion in 30 year Treasury bonds.
This auction provides the bond market interpretation of
the CPI data.
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
2014- 3.97
2015- 2.91
2016- 2.32
2017- 3.16
2018- 3.13
2019- 2.594
2020- 1.216
2021- 1.88
2022- 2.375
2023- 3.741
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.
So what does all this mean?
I don’t know.
The offering of $20 billion is slightly less than the $23
billion last month. It had been $18
billion the prior two months.
The offering size remains below its record high of $27
billion in August 2021, exactly two years ago, when rates were half their
current level.
Results were good for last month’s 30-year bond auction
as the market continues to show a hearty appetite for Treasury paper.
The high yield was awarded at 4.189 percent, up from
3.910 percent in July.
The 30 year Treasury closed at a yield of 4.34% on
Friday.
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OFF BASE
Summer protends until the fall equinox on September 22nd.
The word “equinox” comes from Latin aequus, meaning
“equal,” and nox, ”night.” On the equinox, day and night are roughly equal in
length.
After the autumnal equinox, days become shorter than
nights as the Sun continues to rise later and nightfall arrives earlier. This
ends with the winter solstice, after which days start to grow longer once
again.
