prodigal
prod·i·gal
characterized by profuse or wasteful expenditure : lavish
recklessly spendthrift
Latin prodigus, from prodigere to drive away, squander, from pro-, prod- forth + agere to drive
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PROTREPTIC OF THE WEEK
SBA Guarantee Fees effective March 26, 2025:
For loans of $150,000 or less: 2% of the guaranteed
portion.
For loans of $150,001 to $700,000: 3% of the guaranteed
portion.
For loans of $700,001 to $5,000,000: 3.5% of the
guaranteed portion of the loan up to and including $1,000,000, plus 3.75% of
the guaranteed portion over $1,000,000.
Per SBA Notice 5000-865758 just released.
Guarantee fees remain at 2.5% of guaranteed portion for
SSBCI guarantees.
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Indices:
PRIME RATE= 7.50%
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SBA 504 Loan Debenture Rate for March
For 20 year debentures, the debenture rate is only 4.97%
but note rate is 4.82471% and the effective yield is 6.315%.
For 25 year debentures, the debenture rate is only 4.97%
but note rate is 5.02251% and the effective yield is 6.246%.
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AHEAD OF THE YIELD CURVE
The prodigal son, the bond vigilantes, return.
Rates on the longer end of the yield curve continue to
climb.
At last week’s $22 billion auction of 30-year Treasury
bonds the high yield was awarded at 4.813 percent versus 4.623 percent a month
ago.
This continues to be a reduced offering compared to a $25
billion average a year ago.
Normally the reduced supply would cause prices to go up
causing the yields to go down.
Here is what the 30 year Treasury bond has been doing and
this week’s interesting little table of data:
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
2024- 4.015%
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 long end of the yield curve prognosticates
inflationary expectations and ultimately market rate expectations.
Just after Labor Day last year the inversion of the yield
curve ended with two year treasury rates now below the 10 year yield.
The yield curve had been inverted for a staggering 783
consecutive days, the longest such period in U.S. history.
More procellous promulgations on the yield curve is
profligate.
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OFF BASE
Prodigal Son is the only song on the Rolling Stones album
“Beggars Banquet” not written by Mick Jagger and Keith Richards.
It was written by Reverend Robert Wilkens, an African
American/Cherokee country blues guitarist from the 1920s.
