Economy/Interest Rates

Our take on the latest trending events:

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Reserves are increasing among credit unions due to bad loans and a decline in income. This comes as credit unions see a high volume of low rate mortgages and sluggish lending in more profitable loans. Credit unions may want to sell off bad assets and replace them with purchased high-quality loans.
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Despite the ongoing health crisis and the recent uptick in infections, the US economy continues to recover, and faster than expected.
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New data suggests that the US economy is recovering, and given this optimistic environment, now may be a great time for lenders to sell loans to create a more robust loan portfolio.
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Household debt and delinquencies are down, and with fewer delinquencies, there are fewer charge-offs, creating a supply/demand imbalance. This may be a good time for lenders to sell delinquent accounts.
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nterest rates continue to remain at historic lows thanks to the recent Federal Reserve meeting. This is helping loan assets to be priced at attractive levels for banks and credit unions, who may want to act now to sell off certain assets.
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Despite the fact that bank profits are way down due to the coronavirus pandemic, they were still profitable. Banks may want to revisit their loan portfolio and sell off pre-COVID distressed assets to make room for loans that are just now exhibiting stress.
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Banks are making an effort to help out consumers and businesses suffering financially due to the coronavirus pandemic, but their helping hand has a long history that goes back a century.
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A recent survey suggests that the non-manufacturing sector is contracting. Meanwhile, respondents express concern over when business will resume to normal operational levels as the COVID-19 pandemic looms.
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Fear of lawsuits, which are currently running rampant, will slow the back-to-work effort following the COVID-19 pandemic when it finally gets underway. Such concerns are triggering businesses to adopt coronavirus-protection plans to avoid litigation.
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Consumer spending has slowed thanks to the COVID-19 pandemic. And with slower spending comes slower or negative growth in the economy, leading to business and loan failures.
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In response to the economic turmoil stemming from COVID-19, the government is taking extreme measures to prop up the economy. And one such effort is the Federal Reserve adding massive amounts of liquidity into the market.
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Strong numbers in job growth and wage increases over recent weeks point to a healthy labor force. And with positive sentiment among American consumers, they are in a better position to manage their debt, which is a good thing for both consumers and lenders.
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With the cycle coming to a close, lenders, fund managers, and investors are prepping for the next recession. And to do that, they are making efforts to reduce their exposure to distressed and delinquent assets.
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The economy is in a good place for now, but it's also the right time for banks to de-risk their loan portfolios. With a stable economy and interest rate environment, banks should be looking to de-risk sooner rather than later and sell into a hungry or seller's market instead of waiting for a downturn when prices are much lower.
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The US Treasury is selling bonds at a negative interest rate for the first time. The bonds are inflation-protected, so the interest rate can certainly increase in the future, but for now, they yield a negative 0.550 percent, which mirrors foreign countries that are stuck in slow or no-growth economies.
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With LIBOR slated to be replaced by SOFR in a couple of years, many banks are concerned about the effects that the transition may have on their bottom line. That said, there are steps that banks should take to prepare for the change, including reassessing their loan portfolios.
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The Federal Reserve's recent cuts to interest rates have narrowed profit margins for banks. This puts them in a position to make some strategic moves when it comes to their loan portfolios to ward off future risk.
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Restaurant loans are struggling right now with many casual dining chins filing for bankruptcy protection. Could this be a sign that an economic downturn is looming?
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Unemployment among youths is at a low over recent years, which is a sign that people are more eager to work and that the economy is stronger than it has been in a long time.
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With banks and credit unions now in a lower rate environment, reporting asset growth and quality in the coming quarters will be necessary. Offsetting the pressure of low rates on margins can be done by pushing for more loan growth and expanding loan portfolios.
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With economic uncertainty still lurking and the impact of the recent slash in interest rates, banks need to be more carefully assessing their portfolios. Thinking long-term about growth and asset management is prudent.
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With recently imposed tariffs on Chinese goods, many are expecting the Federal Reserve to slash rates shortly. Here's a glimpse of what might be in store.
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The latest numbers paint a picture of a stronger economy over the first quarter, but what will the second half of 2019 show?
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Lower bond yields and weaker consumer spending point to mild inflation and a continued low-interest environment, concerning investors and prompting lenders to take a closer look at their loan portfolios.
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The economy might not be as strong as it could be right now, but it may be showing signs that it's stabilizing. That said, it's still somewhat of a fragile growth story. Read on for more about the current state of the economy.
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Over the past decade, the number of "zombie" companies has been on the rise. What does this mean for the economy and lending as a whole? Read on to find out.
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What's the likely scenario on interest rates for 2019? Click here to find out.
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A majority of the earnings reports are in for the S&P 500, and corporate profits remain strong. Analysts are, however, predicting a dip in earnings growth in 2019 thanks to several factors.
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The Fed is mulling over the idea of letting inflation go over the 2 percent target more often while dealing with the real possibility that interest rates will continue to hover around historic lows.
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If warning signs are on the horizon, what portfolio adjustments should you be making today?
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The banking system is healthy, but there are challenges ahead.
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Home prices and sales are sluggish, but the consumer is doing just fine due to a strong employment picture. For lenders, now may be a good time to get out of long-term low-interest rate assets such as mortgages, and invest in shorter duration, higher-yielding assets.
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Job creation in the U.S. slowed in November, but the unemployment rate is still the lowest seen in half a century. Despite this strength, though, several economic factors are more ominous, such as trade war uncertainty, slowing home sales, and slackening car sales.
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Recently, the yield curve on U.S. Treasuries (specifically between the 3 and 5 year) inverted for the first time in 11 years. An inverted yield curve is often viewed as a sign that a recession may be coming. While the U.S. Federal Reserve has indicated it will raise interest rates through 2019, the market has begun pricing in declining rates in 2020. Investors with a risk-on stance may want to contact a loan sale advisor such as Garnet Capital to add higher interest-rate assets to their portfolio.
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The labor market has had a very positive year, and October was no exception. Roughly 250,000 jobs were added last month and wages climbed modestly, a welcome change from previous periods of stagnating wages. The robust job market is leading to strong business and consumer sentiment and an expanding gross domestic product.
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Banks have varying perspectives on the current economy. Some are trimming their sales on credit card issuance and limits; others are growing the balances on credit cards. This could reflect the difference between subprime and affluent borrowers and anxiety about how one or the other group will react to an economic downturn.
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Major banks are expected to experience strong earnings growth in the third quarter - growth significantly over that of the entire S&P 500, in fact. But a number of issues, including slow loan growth, are likely to hold back bank stock performance despite the forecast strong earnings.
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Competitive pressures and rising interest rates are affecting the interest rates banks offer on their savings products. Rates on the latter are climbing, which pressures banks' margins.
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