Simply Put

Decades ago, the Basel Accords attempted to minimize global financial risk by standardizing regulations across major countries. The current phase of legislation, initially crafted after the global financial crisis and now dubbed the “Basel III endgame,” would impose new risk-weighted capital requirements on US banks and widen the net of financial regulation, potentially increasing costs for banks...

The shift from rock-bottom interest rates early in the pandemic to mortgage rates eclipsing 8% has caused housing inventories to plummet and demand for new housing construction to increase. As the housing market reaches somewhat of a standstill from homeowners experiencing “mortgage lock,” rising house prices make first-time homeownership increasingly less affordable. While the housing market has...

Demographics are at the core of understanding future economic growth and the long-run environment for financial institutions. Population trends, migration patterns, generational attitudes towards homeownership, and shifting approaches to retirement significantly impact loan demand, the housing market, and the macroeconomy. While some trends have accelerated during the past four years, others appea...

The banking sector managed to avoid the worst case scenarios that some predicted in March 2023. But with banks still adjusting to the Fed’s aggressive monetary tightening during the last two years, they are now shifting their attention to managing prospective rate cuts later this year. Meanwhile, the Fed’s Quantitative Tightening, Reverse Repo facility, and the 2023 Bank Term Funding Program are a...

The bond market will be adapting to some new regulations this year while also keeping an eye on some new legislative proposals in the pipeline. With November elections up in the air, the future of some provisions from the Tax Cuts and Jobs Act that are set to sunset next year are top of mind for many fixed income investors. In this episode, we talk with Brett Bolton, Vice President and Head of Gov...

2023 began with widespread recession forecasts, stubborn inflation, and slowing job growth. Despite higher interest rates, months of debt ceiling anxiety, and a regional banking crisis this year, the US economy managed to avoid a recession and heads into 2024 with rising hopes for a soft landing. In this episode, FHN Financial’s Chris Low and Sophia Kearney-Lederman return to the podcast to discus...

With only a couple weeks left in 2023, the economy has managed to avoid a recession that one year ago seemed inevitable. Personal consumption has been robust and the unemployment rate has stayed below 4% despite aggressive Fed tightening and inflation eroding real spending power. Households and businesses nonetheless report dour views of the economy. In this episode, we talk with Claudia Sahm, for...

The US Treasury recently increased the size of its securities auctions to help accommodate a widening Federal deficit. With the biggest pandemic stimulus bills in the rearview mirror, bond investors are worried that big deficits are no longer a temporary phenomenon. Rising interest rates, demographic changes, and a gridlocked political climate are complicating any easy path to budget reform. In th...

A primary driver of early-pandemic inflation came from a shortage of semiconductor microchips, a technology essential to everyday items like automobiles and personal electronics that is both expensive and time-intensive to produce. While semiconductor manufacturing has since managed to narrow the gap between supply and demand, US policymakers have taken steps to increase domestic independence in t...

The Federal Reserve and many market analysts have been surprised by the inflation trajectory during the pandemic; first by the persistence and intensity of inflation that began in 2021, and more recently by the improvement that has occurred without a meaningful increase in the unemployment rate. Models that rely on inflation expectations and labor market strength have had relatively weak predictiv...

The rise in nominal bond yields the last couple of years has reversed a nearly four-decade trend of falling yields prior to the pandemic. With inflation now slowing and the economic effects of the pandemic fading, it’s unclear whether we will return to something resembling the pre-pandemic interest rate environment or if we are in the early stages of a new normal. In this episode, Terry Belton, fo...

Four times per year, the Federal Open Market Committee releases a Summary of Economic Projections that reports FOMC participants’ projections for the federal funds rate and key economic variables. The SEP, featuring the so-called “dot plot,” gives markets a sense of where the Fed feels the economy and monetary policy are heading the next few years, but the implications are not always clear. In thi...

Banks use Asset Liability Management modelling, or ALM, to position for different interest rate scenarios and economic shocks. Rapid interest rate hikes starting last year and March bank tensions have put unique stresses on bank balance sheets this year, and the prospect of eventual rate cuts can pose its own challenges in the future. In this episode, Mike DeLisle of FHN Financial discusses how ba...

Commercial Real Estate has come into focus from shifting asset valuations and higher interest rates prompted by the pandemic economy. With bank balance sheets exposed to some of these properties, some worry that any weakness in CRE will add to existing banking industry distress. In this episode, Landon Williams of Cushman & Wakefield discusses the primary drivers of CRE in the current environment,...

The pandemic turbo-charged a shift to remote work that has changed how we live and work. Every city has experienced this a little differently depending on demographics, local job composition, and flexibility of municipal budgets. In this episode, FHN Financial’s Abby Urtz discusses how the new remote work landscape is impacting cities and the municipal debt market.

In addition to lowering its policy rate at the beginning of the pandemic, the Federal Reserve engaged in Quantitative Easing, meant to lower longer-term interest rates and stabilize the mortgage market. Now that the Fed is aiming to remove accommodation from the economy, it is quietly shrinking the amount of Treasury securities and MBS on its balance sheet while markets focus on the path of the fe...

The low unemployment rate and improving inflation picture suggest a so-called “soft landing” could be on the horizon. Rate-sensitive sectors like tech and housing also seem to give a roadmap for how the economy can come into better balance without a significant increase in the unemployment rate. In this episode, FHN Financial’s Chief Economist Chris Low talks about why he’s skeptical the Fed can b...

There’s been relative calm in the banking sector recently after months of worry that a few regional bank failures in March were the first signs of much larger cracks in the financial system. Banks face ongoing liquidity risks, but the bigger issues in the next year could be in bank profitability and funding mix. In this episode, Gray Bowles, Senior Vice President of Portfolio Strategy with FHN Fin...