probabilism
prob·a·bi·lism ˈprä-bə-bə-ˌli-zəm
a theory that certainty is impossible especially in the
sciences and that probability suffices to govern belief and action from Latin
probare, to test, approve
_____________________________________________
TIP OF THE WEEK
Probalilism proliferates with the protean promulgations
proscribing procedures with SBA guarantees.
Prodition with any SBA 7(a) or 504 loan delayed because
of an ETRAN error code that cannot be resolved in a timely manner can instead
utilize a SSBCI guarantee.
_________________________________________
Indices:
PRIME RATE= 8.50%
________________________________________
SBA 504 Loan Debenture Rate for December
For 20 year debentures, the debenture rate is only 5.23%
but note rate is 5.30472% and the effective yield is 6.707%.
For 25 year debentures, the debenture rate is only 5.28%
but note rate is 5.33413% and the effective yield is 6.594%.
_______________________________________________
AHEAD OF THE YIELD CURVE
Propitious prognostications.
The U.S. economy added more than 2.6 million jobs for the
third consecutive year—a feat that hasn't been accomplished since the most
recent soft landing in the 1990s.
Employers added 2.7 million jobs last year. That was down
from 4.8 million in 2022 as a post-COVID surge in the economy faded.
At last month’s auction of 30 year treasury bonds, the
high yield was awarded at 4.344 percent, down from 4.769 percent last month and
from 4.837 percent two months ago.
On Friday, the 30 year Treasury bond closed at 4.20
percent.
Keep your eyes and ears open for this week’s auction of
30 year treasury bonds.
Here is what the 30 year treasury bond has been doing:
Here is what the 30 year Treasury bond has been doing and
this week’s interesting little table:
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
So what does all this mean?
I don’t know.
Probabilism.
Why is the 30 year yield dropping?
The offering of $21 billion is less than the record high
of $27 billion in August 2021, over two years ago, when rates were half their
current level.
This is consistent with
a prior Treasury Department announcement that it would slow the pace of
increases in its longer-dated debt auctions in the November 2023 to January
2024 quarter.
This slightly reduced supply of longer term debt could
drive down longer term rates. 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.
Minutes from the Fed’s last meeting also said: "The
easing in financial conditions reversed some of the tightening that occurred
over the summer and much of the fall."
Easier financial conditions were in part due to declines
in nominal Treasury securities yields, "more so at longer
maturities", "as investors appeared to interpret incoming data as
reducing risks of prolonged inflation pressures.”
The Federal Reserve’s next meeting starts on January
30th.
__________________________________________
OFF BASE
How to deal with probabilism?
In his 1936 essay “The Crack-Up,” F. Scott Fitzgerald
writes that “the test of a first-rate intelligence is the ability to hold two
opposed ideas in the mind at the same time, and still retain the ability to
function.”
Here is something that is certain. A three day weekend approaches.
The Federal Reserve has proscribed banks from being open
on the following days:
Birthday of Martin Luther King, Jr. January 15
Washington's Birthday February 19 Memorial Day May 27
Juneteenth
June 19
Independence Day July 4
Labor Day September 2
Columbus Day October 14
Veterans Day November 11
Thanksgiving Day November 28
Christmas Day December 25
