Weekly Update:

Good morning!

There is now over 41 trillion of government debt with negative yields.  Yes, it is hard to believe this.  Why would anyone give a government money and receive less when it matures?  There must be a belief that the other options are a lot worse.  Fear can drive irrational actions, and it appears to be working.

Margin contraction is our biggest concern as we look forward.  We see loan and investment yields declining with the changes in the treasury yields.  It is not going to be easy, but we are going to need to start to lower deposit yields to try to offset some of the lost income.

Having strong sources of non-interest income is always important.  The recent drop in interest rates is highlighting this need even more.  The mortgage refinance boom that we are now in (it just started) is a great way to gather income.

Contact your MFA advisor to discuss ways to grow profitability with an inverted yield curve.  All of us at McQueen Financial are dedicated to your long-term success.

Have a great week!

Charley

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