Lather, Rinse, And Repeat

The beginning of 2015 looks much the same as 2014.
Kevin Heal

The beginning of 2015 looks much the same as 2014, with the bond market looking for higher rates, but they keep heading lower.

Interest Rates: Money, Money, Money

The FED released the minutes from its December meeting Wednesday at 2 p.m.The report confirmed the FED will not raise rates before its meeting in April and in the near-term at least inflation will remain lower than its 2% target. As Chip Filson explained in his blog this week, the first quarter is when credit unions experience the majority of inflows CASH! primarily from bonus payments and tax returns. Credit unions might want to issue some competitively priced CDs in the first quarter to lock in money before the FED raises rates in the summer. Take a closer look at how Interra Credit Union raised deposits on

Unemployment: Will Work For Pay

The Department of Labor will release December’s employment statistics on Friday. The unemployment rate is expected to remain below the 6% target desired by the FED. The consensus among economists is it will be 5.7%; it will be a concern if it comes in higher then 5.8%. Why? Because a higher rate might indicate the economy is not growing at the pace the FED wants.

Oil Prices: WTF (Why The Fall? Like Phil on Modern Family, I know my lingo)

Oil prices continue to decline. West Texas Intermediate (WTI), aka U.S. oil, is less than $50 per barrel. Brent Crude, aka European oil, is also less than $50 per barrel. Everybody is racing to produce more oil in case it continues to decline.

We now have a glut of oil around the world. Countries like Russia, Venezuela, and Iran need to continue to produce it because they have nothing else to sell. This interrupts the activities of many aggressive countries and terrorist factions that rely heavily on funding from the proceeds of guess what? Oil.

Falling oil prices and the positive results of put the FED in a quandary. It’s good for Americans, but the FED is aiming for 2.0% inflation, and falling oil prices all but guarantee there will be little or no increase in the general level of prices.

Mortgages: Turn Those Machines Back On (Mortimer Duke in Trading Places)

Credit unions are poised to rev up their mortgage origination machines in 2015. Mortgages have been the main driver of credit union non-interest income during the past couple of years. In his blog, Tim Mislansky at Wright-Patt Credit Union discusses why credit unions want to increase their share of the mortgage market.

With the recent rally in the bond market, 30-year mortgage rates have declined from 4.13 % to 3.68% in the past three months. To put that into perspective on a $300,000 mortgage, the monthly payment drops from $1,454 per month to $1,377 per month. That’s a savings of $77 per month. Remember, 30-year mortgage rates are based off the U.S. Treasury Department 10-year note. So as that note goes lower in yield, mortgage rates move in the same direction.

Kevin Heal is vice president of Callahan Financial Services ( He has more than 25 years of sales and trading experience with both large investment banks and regional broker-dealers.

January 8, 2015

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