Fall Newsletter 2023

The Federal Reserve began raising the Fed Funds Rate in March 2022 and has steadily raised rates from .25% in February 2022 to 5.5% in August 2023. The Inflation Rate has dropped, and there is hope that an end to the Fed’s rate is near. The Yield Spread between the 10-Year Treasury Note and the 2-Year Treasury Note has been an imperfect indication of Fed Policy. Over the last several decades, an inverted or near-flat spread between these two rates has preceded the end of Fed tightening. The Yield on the 2-Year Note has exceeded the 10-Year Rate for over a year. Both the Personal Consumption Index (PCI) and the Consumer Price Index (CPI) have been declining. However, the September CPI figure released on Wednesday, September 13, 2023, increased to 3.7% above industry estimates of 3.6%.

However, most Economists expect the Fed to not raise rates again in September, but many still believe that they may raise again before year end. I believe that unless inflation continues to rise in 2024, it is unlikely that the Fed would continue to increase rates in an election year. However, most also believe that rates will remain elevated through most of 2024 and may begin to fall late next year. How far they fall is yet to be determined. It will depend primarily on the magnitude of any recession that could take place created by the Fed’s interest rate pressures.We need to keep in mind that recessions are a normal part of every economic cycle.

The Fed provides accommodations to the Economy by lowering interest rates to incentivize investment and borrowing to grow the Economy; then when inflation rises due to shortages of goods and services caused by the growth in demand and spending, the Fed raises rates to curtail borrowing by increasing the cost to borrow. This reduces demand and, as a result, supplies build, and prices begin to fall. Demand is also reduced because the Consumer can no longer spend because their costs for housing and other consumer spending outpaces their income. One sign of the Consumer running out of spending capacity is the rise in credit card balances, which is taking place now.

This economic cycle has proven to be different because one of the reasons that higher interest rates are having trouble limiting the growth in inflation is because the Federal Government has pumped an unprecedented amount of money into the Economy through various stimulus programs that have increased the National Debt substantially and allowed spending to continue despite supply shortages. The supply shortages were also impacted by stimulus dollars intended to relieve the Pandemic, but also caused many workers to leave the workforce and not return. We are beginning to see this end, but the damage is still being felt.

Meanwhile, I am happy to report that although Bank Earnings are lower due to the higher cost of funds that are funding existing lower-yielding fixed-rate loans and investments, our Loan Portfolio remains rock solid, and our Loan Customer Base is doing well. We have very strong Capital, and our Reserves are strong as well. We remain ready, willing and able to continue helping our customers grow and protect your deposit dollars.

As always, thank you for trusting us to be your bank of choice. If you have any questions or concerns, reach out to us at any time.

We’ll Be Here For Whatever Comes Next

At Commerce Bank of Wyoming, we understand the importance of planning for your “next” financial milestones. As your reliable and community-oriented partner, we’re committed to guiding you through life’s big moments and empowering you to make the best financial decisions. Let us be there for you every step of the way.

We pride ourselves on offering a wide range of products and services designed to help you achieve your financial goals. From personal banking solutions to business financing options, you can count on Commerce Bank of Wyoming to support you through life’s “next big” moments. Our team of experts is always ready to answer your questions and provide personalized advice tailored to your financial needs.

We continuously strive to provide the resources and tools you need to make informed financial decisions. By visiting our website or local branch, you’ll find a wealth of information geared towards helping you navigate your financial journey with confidence.

Don’t leave your “next” financial steps to chance. Trust in Commerce Bank of Wyoming’s expertise and commitment to your financial well-being. Together, we can help you achieve the future you’ve always envisioned. Visit our website or local branch today and take the first step towards your “next big” financial milestone.

Have You Set Up Alerts?

Alerts from NebraskaLand Bank let you know the moment something important happens in your account by instantly sending a message via text, email, or your Online Banking message center. With account alerts, you’ll always know exactly what’s happening with your money, and you can watch for suspicious activity. It’s a free service for our customers. Learn how to set up alerts here!