This month is the 20th-anniversary issue of the newsletter. In this edition, we look back at some of the major stories we have covered in the world of bank treasury. From rate cycles to accounting issues, Basel capital, AOCI, mark-to-market, and hedging, we delved into bank treasury investment strategies, trends in deposit balances and betas, and cost of funding. We covered the transition from LIBOR to SOFR and from incurred loss to CECL accounting. Over 20 years, bank treasurers have seen it all, from the GFC to the regional bank crisis last year, from the repo panic in September 2019 to the mini panic over the recent month-end. We have been there when the yield curve was positively sloped and inverted. This is where bank treasurers go to read all about it.

The forwards might already have priced in the 50-basis point cut this month, but for many bank treasurers, the move by the FOMC this month was a surprise and a bit unsettling, worried that the voting members might see something terrible on the horizon that they do not see.

A worse-than-expected nonfarm payrolls (NFP) print at the beginning of this month set off a short-lived market panic in the equity and bond markets that continued into the following week.

The banking industry reported another solid quarter of earnings, which met and, in some respects, exceeded analyst estimates. Storm clouds on the horizon remain muted.

This month’s newsletter covers speculation on the timing of the first rate cut, the positives and negatives of an inverted yield curve and higher for longer, the effect of QT on reserves and bank deposits now that the balance of the RRP appears to have hit a floor, and why rate cuts will not necessarily lead to lower deposit rates.

This month's newsletter is dedicated to the memory of Gerry Corrigan, the sixth president of the New York Fed from 1985 to 1993, known as the Fed's plumber, the go-to guy Paul Volcker and Alan Greenspan turned to in a financial crisis. He would have made a great bank treasurer, not only because of his training as an economist but because he understood the mechanics of an economic system and how to fix problems when they arose, a valued skillset for bank treasurers.

Wonders never cease in the bank treasury world, what with earthquakes in the metro NYC area to eclipses of the sun, but surely the sudden flattening of the yield curve this month, which is now half as inverted as it was last month, must stir the imagination of even the most experienced bank treasurer. This month’s newsletter pulls back the curtain on why a neutral balance sheet is not risk-free…

On the first anniversary of the crisis last March, this month’s newsletter looks at lessons learned. One of those lessons is to beware of lessons learned, especially when they are based on “flawed, post-mortem reviews.”

This month’s newsletter discusses how bank treasurers restructured their underwater bond portfolios last quarter when the 10-year rallied in November and December. It also explains why bank treasurers, most of whom believe they have more to fear from the Fed cutting rates by 300 basis points than raising them, are more hedged for higher rates going into 2024 than they were going into 2023.

There are a lot of strange things going on in the bank treasury world, and as always, bank treasurers know to prepare for anything. You have a yield curve that is inverted for the longest time in decades, and where the marginal cost to fund a loan makes it difficult to lend profitably.