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A new podcast from FHN Financial looking at the most important things driving fixed income markets and the macroeconomy. Every episode features experts who give unique insights on topics like the regional banking landscape, commercial real estate, or how to translate Federal Reserve policy into market strategies. Tune in to better understand what’s been moving markets lately, and what to keep an eye on in the weeks and months ahead. Listen and subscribe wherever you get your podcasts
24 Episodes
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Loans issued by the Small Business Administration are pooled into securities that are backed by the full faith and credit of the US government, have a quarterly adjusting feature, and have no floating rate cap. The SBA market is big and liquid enough to function smoothly through shocks like legislative risk and the 2023 regional banking crisis. In this episode, we talk with Matt Peterman and Ruben Rodriguez of FHN Financial about the structure of SBA 7(a) securities, how the SBA market functioned through the pandemic economy, and the securities’ strategic role in the current interest rate environment.
Recent research from the Congressional Budget Office suggests that an initial undercounting of undocumented migrants may help explain the surprisingly resilient US economy during the last two years. From a macroeconomic perspective, the future path of migration flows will significantly affect longer-term estimates of potential economic growth and public budget trajectories. In this episode, we talk with Julia Gelatt, Associate Director of the US Immigration Policy Program at the Migration Policy Institute, about the current state of US immigration, the most important drivers of US migration flows, the role of policy versus external factors, and the impacts of migration on the US economy and federal budget.
The Federal Home Loan Bank system started as a Great Depression-era effort to support homeownership across the United States. Ever since, it has transformed into a vital source of liquidity for its member banks in good times and bad. In this episode, we talk with James Hotchkiss, Senior Director of Strategies and Solutions at the Federal Home Loan Bank of Chicago, about the FHLB system’s history, how it serves its member banks, and its role in the US financial system.
The labor market is at the center of overall economic activity and how the Federal Reserve understands inflation. It can be difficult to gauge underlying trends for employment and compensation, however, when some data series appear to be telling different stories. In this episode, we talk with Preston Mui, Senior Economist at Employ America, about how to understand the most important labor market data, how the Fed views labor market tightness in its fight against high inflation, and the outlook for 2024.
The use of derivatives has evolved since the global financial crisis, giving banks opportunities to protect against the risks and uncertainty that stem from aggressive Fed tightening. Now that the Fed is poised to begin policy easing later this year, these tools can also help banks weather falling interest rates to support financial system stability. In this episode, we talk with Brian Matochik and Christian Turner, Senior Vice Presidents with the Derivative Products Group at FHN Financial, about the value of derivatives for banks in a wide range of market environments, how regulators view the use of derivatives, and how institutions of any size can benefit from their use.
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 and customers in an attempt to elevate banking sector resiliency. In this episode, we talk with Greg Baer, President and Chief Executive Officer at the Bank Policy Institute, about Basel III’s key elements, the tradeoff between profitability and banking sector stability, and the road ahead for the proposed legislation.
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 so far weathered these changes without an industry-wide collapse, cyclical forces can always cause distress down the line. In this episode, we talk with Mark Palim, Vice President and Deputy Chief Economist with Fannie Mae, about how the housing market has adjusted to pandemic disruptions, the future for home sales and house prices, and the potential for any systemic risks.
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 appear to be temporary pandemic adjustments. In this episode, we talk with Adriana Reyes, Assistant Professor of Public Policy and Sociology at Cornell University, about the most important demographic trends in the US.
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 all set to reach critical inflection points during the next few months. In this episode, Ethan Heisler, editor in chief of The Bank Treasury Newsletter, discusses how banks can best position themselves in this dynamic environment.
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 Government and Industry Relations with the Bond Dealers of America, about what to expect for bond market taxes and regulation in 2024 and onward.
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 discuss the biggest trends in 2023 and what they’re keeping an eye on in 2024.
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, former Fed researcher and founder of Sahm Consulting, about the resilient 2023 economy, why sentiment surveys tell such a different story than the hard data, and what she sees on the horizon for 2024.
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 this episode, we talk with Marc Goldwein, Senior Vice President and Senior Policy Director at the Committee for a Responsible Federal Budget, about the primary drivers behind recent Federal deficits and how to think about the future budget trajectory.
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 this burgeoning industry. In this episode, we talk with Annie Rothrock, Vice President of the firm ATREG, about how the semiconductor microchip industry changed throughout the pandemic and how recent Federal legislation will shape its future.
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 predictive power during the last few years, calling into question how well we understand what drives inflation. In this episode, Peter Hooper, Managing Director and Vice Chair of Research at Deutsche Bank, discusses inflation models at the Fed and in the post-pandemic economy.
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, former Head of Global Portfolio Strategy for the Chief Investment Office at JP Morgan, discusses what drove the 40-year bond bull market, whether he thinks those forces are set to change, and what it means for fixed-income investing moving forward.
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 this episode, Sophia Kearney-Lederman of FHN Financial talks about what goes into the Fed’s projections, how to interpret them, and how much value they have at this point in the tightening cycle.
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 banks have adjusted their balance sheets during this cycle of Fed tightening and how they can best position themselves for the year ahead.
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 potential for systemic pressures in the near future, and the most important things to look out for in the year ahead.
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.
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