properate
pro per ate
speed up
quicken
hasten
From Latin properatus, past participle of properare, from properus speedy
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TIP OF THE WEEK
Have you wished something would just hurry up and be done
with? That’s properation.
Effective June 1st is the new SOP 50-10-8.
It is a return to time-tested, prudent lending policies
SBA Lenders should be familiar with.
The differences between SBA and SSBCI guarantees are
unique.
It would be proficuous to know the distinctions.
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Indices:
PRIME RATE= 7.50%
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SBA 504 Loan Debenture Rate for May
For 20 year debentures, the debenture rate is only 5.07%
but note rate is 5.14339% and the effective yield is 6.416%.
For 25 year debentures, the debenture rate is only 5.14%
but note rate is 5.17343% and the effective yield is 6.397%.
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AHEAD OF THE YIELD CURVE
The Federal Reserve will not be properating any cuts to
interest rates.
The Fed Open Market Committee left the fed funds target
rate range at 4.25 to 4.50 percent at the end of the May 6-7 meeting.
It’s statement on monetary policy said it “judges that
the risks of higher unemployment and higher inflation have risen.”
I walked into Home Depot to see where the price of 2 x 4s
are.
Douglas Fir 8 foot 2 x 4s are always at the front by the
door at every store in America.
This is the most widely used wood in the country. It was what was used for all the railroad
ties and telegraph poles when the west was being settled.
Every new home and existing home project uses this 2x4.
As far as I could recall, the price of that 2x4 was
consistently under $3.
Now every time I go into Home Depot, I check the price of
this 8 foot 2x4.
Here is the price of the Douglas Fir 8 foot 2x4 over the
last couple of years:
5/15/2025
$3.83
5/15/2024
$3.63
10/31/2023
$3.07
7/22/2023
$3.63
7/16/2023
$3.63
5/6/2023
$3.34
4/1/2023
$2.98
2/18/2023
$2.98
2/12/2023
$2.98
9/24/2022
$3.97
8/12/2022
$4.65
6/4/2022
$5.92
5/22/2022
$6.64
What does this mean?
The price of soft lumber is up just over 5 ½ % from a
year ago.
Can’t really blame tariffs for that.
Canadian lumber accounts for roughly 30% of the U.S.
softwood lumber supply, making tariffs a significant factor for downstream
industries like homebuilding and manufacturing.
As of today, Canadian softwood lumber entering the United
States is subject to a combined 14.54% tariff rate.
On April 2 Canadian softwood lumber was exempted from the
new 25% reciprocal or baseline tariffs applied to other Canadian goods.
This exemption was a critical win for the forest value
chain, maintaining the status quo at 14.54% and avoiding a cost spike that
could have disrupted markets.
While the price of lumber may not be jumping, long term
interest rates are.
At the most recent auction of 30 year Treasury bonds, the
high yield was awarded at 4.819 percent versus 4.813 percent a month ago and
4.623 percent two months ago.
The offering amount at $25 billion is up from $22 billion
last month.
Increases in the amounts auctioned impacts rates from the
supply and demand side.
The U.S. Treasury Department has sharply increased its
borrowing estimate for the current quarter, projecting $514 billion in net
marketable debt from April through June. That marks a stunning 317% jump from
its earlier forecast of $123 billion, made just two months ago.
The big shift is largely due to the government starting
the quarter with far less cash on hand than expected.
Treasury expected to have $850 billion in its coffers by
the end of March. Instead, the balance was just $406 billion.
The lower balance is mostly the result of Congress still
not raising the federal debt ceiling, which limits the government's ability to
issue new debt.
Congressional properation and procrastination will
prognosticate longer term interest rates.
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OFF BASE
The week will properate.
A three day weekend approaches.
The Federal Reserve has proscribed banks from being open
on the following days:
Monday, May 26: Memorial Day
Thursday, June 19: Juneteenth
Friday, July 4: Fourth of July
Monday, Sept. 1: Labor Day
Monday, Oct. 13: Columbus Day
Thursday, Nov. 27: Thanksgiving
Thursday, Dec. 25: Christmas
