The SBA and PRObabilism

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

 

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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.

 

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Indices:

PRIME RATE= 8.50%

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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%.

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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.

 

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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