Monday, February 14, 2022

The SBA and PROceleusmatic

 Proceleusmatic

pros-uh-loos-MAT-ik

Inciting, exhorting, or inspiring.

 

From Late Latin proceleusmaticus, from Greek prokeleusmatikos (calling for incitement), from keleuein (to rouse to action).

 

One of the derivatives of keleúein, the agent noun keleustḗs, means “coxswain, one who beats time for the rowers,” referring specifically to the very quick rhythm to incite rowers charging into battle to ram enemy ships.

 

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TIP OF THE WEEK

 

A proceleusmatic prospicient House of Representatives passed a Continuing Resolution (CR) to fund the federal government, including SBA, through March 11, 2022 by a vote of 272-162.

This new CR maintains current funding levels and policies for SBA which are set to expire under the current CR on February 18.

 

Currently, the exact timing of Senate consideration is unclear but all indications are that the Senate will pass this latest CR and avoid a shutdown. President Biden is also expected to sign this CR.

 

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Indices:

PRIME RATE= 3.25%

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SBA 504 Loan Debenture Rate for February For 20 year debentures, the debenture rate is only 2.22% but note rate is 2.259% and the effective yield is 3.454%.

For 25 year debentures, the debenture rate is only 2.42% but note rate is 2.4526% and the effective yield is 3.598%.

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AHEAD OF THE YIELD CURVE

 

Rates are going up, rates are going up is the  proceleusmatic prognostication proliferating.

 

The US government’s deficit however is going down.

 

The federal government ran a budget surplus of $119 billion in January compared with a deficit of $163 billion in the same month last year, the Treasury Department reported last week.

 

Spending in January was $346 billion while receipts totaled $465 billion.   For the fiscal year to date, the deficit was $259 billion compared to $736 billion last year.

 

The deficit looks relatively tame during the first four months of the fiscal year mainly because last year the government had kept open the spending floodgates in 2021 to battle the effects of the coronavirus pandemic on the economy.

 

So what will the Federal Reserve do at their next meeting on monetary policy?

 

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 10 plus years.

 

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

 

DEC22- 1.92

DEC23- 2.275

DEC24- 2.13

DEC25- 2.14

DEC26- 2.145

 

What does all this mean?

 

I don’t know.

 

Keep your eyes and ears open for the Minutes from the Federal Reserve’s last meeting on monetary policy that will be released February 16th.

 

The December 2022 implied rate is now at 1.92% up from 1.18% a month ago and up from only 0.17% in October.

 

At last week’s auction of 30 year treasury bonds the high yield was 2.34%, up 26.5 basis points from last month's auction rate and the highest awarded for the bond since May of last year.

 

The Federal Reserve’s next meeting on monetary policy is March 15 and 16.

 

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OFF BASE

 

Where a number of individuals have been accustomed for centuries to perform exactly the same work at the same time, it is evident that they labored together to the rhythm of some familiar melody, the time of which was adapted to suit the particular requirements of the task in which they were engaged.

 

The ancient Phoenician builders of the Temple at Jerusalem, and the skilled stone-masons who were employed by the Kings of Egypt to construct the great pyramids sang songs so as to secure concerted effort. Otherwise they might never have been able to place their huge monoliths in position at all.

 

Proceleusmatic promulgations can become a profligate tyranny of rhythm.

 

It is important to sometimes take a break from that and a three day weekend approaches!

 

The Federal Reserve has proscribed banks from being opened on the following days:

Washington's Birthday February 21

Memorial Day May 30

Juneteenth      June 19

Independence Day July 4

Labor Day September 5

Columbus Day October 10

Veterans Day November 11

Thanksgiving Day November 24

Christmas Day December 25

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