October 14, 2022

September 2022 Capital Markets Update


Welcome to the monthly market update from Modern Bank, hosted by Managing Director, Head of Capital Markets, Robbin Park.

Let’s take a look at some of the top headlines recently.
First, August job market remains strong but the hiring pace was slower compared to July. This may indicate that the Fed can achieve the soft landing for the economy that it is trying to navigate. Second, The Fed remains committed to price stability. This will take time to achieve and will likely result in some short term pain for consumers and businesses. Jerome Powell is quoted saying, “Restoring price stability will take some time and requires using our tools forcefully to bring demand and supply into better balance.” Third, investors are buying the front end of the yield curve. That part of the curve may have already priced in the Fed’s remainder rate increases. If true, this will mean short term bond prices should not drop much when the Fed does move.

On that last point, Priya Misra said on Bloomberg, “The Fed is on a mission, and if inflation stays high, they are not afraid to keep going. The latest decision makes owning the front end not look attractive.”

Looking into 2023, market watchers expect the terminal rate to be 4.6%. The markets are pricing in another 75 basis point hike in November, followed by a 50 basis point increase in December. That will put us in the range of 4.25% to 4.5% at this year’s end.

That wraps up this month’s market update. Don’t forget, Modern Bank has a well-rounded team, specializing in C&I, CRE, and Energy lending. The team is led by Curtis Lueker, Chief Lending Officer and Head of Commercial Markets.

This information has been provided by Modern Bank, a federally chartered national bank. Modern Bank is an equal housing lender. Member FDIC. Modern Bank is headquartered in New York City. You can reach us by email at commercial@modernbank.com. See you next month.

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