Independent Banker - November 2022 - 34

PORTFOLIO PORTFOLIO MANAGEMENT
Inversion investing
Upside-down yield curve offers some possibilities.
By Jim Reber, ICBA Securities
ome rumors are true: There
is an historical relationship
between the phenomenon known
as an inverted yield curve and a
subsequent recession. This isn't any
idle talk among Fed watchers and
other pundits this time around, nor
is it peripheral to the management
of financial institutions, including
community banks.
Being the Master of the Obvious,
I'll point out the treasury yield
curve has been inverted since July,
often by as much as 40 basis points
(0.40%). This presents dilemmas,
and opportunities, for bond portfolio
managers. And for those keeping
score, every curve inversion in the
past four decades has been followed
by a recession within a year.
It occurs to me that the
conversations my associates at Stifel
and I have had recently with our
customers have followed a pattern,
driven by the interest rate cycle.
Rates fall and the curve steepens,
and bankers need reminding how
to lock in yield and harvest gains.
Rates rise and the curve flattens,
and bankers want to know how to
manage their unrealized losses. And
then, the curve inverts, and it seems
that everything we learned about
risk/reward has gone haywire. So we
will devote the rest of this column
to discussing why curves invert and
where value may appear in the various
investment sectors that matter to
community banks.
The what and why of inversions
When the Fed determines it's time to
begin raising rates, the most visible
tool at its disposal is to increase the
effective fed funds rate. Whenever
the overnight rate increases, so do
other shorter-term yields, which
most analysts take to mean two
years and less. Longer-term buyers,
which include, but aren't limited
S
34 Q ICBA Independent Banker Q November 2022

Independent Banker - November 2022

Table of Contents for the Digital Edition of Independent Banker - November 2022

Table of Contents
Independent Banker - November 2022 - Intro
Independent Banker - November 2022 - Cover1
Independent Banker - November 2022 - Cover2
Independent Banker - November 2022 - Table of Contents
Independent Banker - November 2022 - 2
Independent Banker - November 2022 - 3
Independent Banker - November 2022 - 4
Independent Banker - November 2022 - 5
Independent Banker - November 2022 - 6
Independent Banker - November 2022 - 7
Independent Banker - November 2022 - 8
Independent Banker - November 2022 - 9
Independent Banker - November 2022 - 10
Independent Banker - November 2022 - 11
Independent Banker - November 2022 - 12
Independent Banker - November 2022 - 13
Independent Banker - November 2022 - 14
Independent Banker - November 2022 - 15
Independent Banker - November 2022 - 16
Independent Banker - November 2022 - 17
Independent Banker - November 2022 - 18
Independent Banker - November 2022 - 19
Independent Banker - November 2022 - 20
Independent Banker - November 2022 - 21
Independent Banker - November 2022 - 22
Independent Banker - November 2022 - 23
Independent Banker - November 2022 - 24
Independent Banker - November 2022 - 25
Independent Banker - November 2022 - 26
Independent Banker - November 2022 - 27
Independent Banker - November 2022 - 28
Independent Banker - November 2022 - 29
Independent Banker - November 2022 - 30
Independent Banker - November 2022 - 31
Independent Banker - November 2022 - 32
Independent Banker - November 2022 - 33
Independent Banker - November 2022 - 34
Independent Banker - November 2022 - 35
Independent Banker - November 2022 - 36
Independent Banker - November 2022 - 37
Independent Banker - November 2022 - 38
Independent Banker - November 2022 - 39
Independent Banker - November 2022 - 40
Independent Banker - November 2022 - 41
Independent Banker - November 2022 - 42
Independent Banker - November 2022 - 43
Independent Banker - November 2022 - 44
Independent Banker - November 2022 - 45
Independent Banker - November 2022 - 46
Independent Banker - November 2022 - 47
Independent Banker - November 2022 - 48
Independent Banker - November 2022 - 49
Independent Banker - November 2022 - 50
Independent Banker - November 2022 - 51
Independent Banker - November 2022 - 52
Independent Banker - November 2022 - 53
Independent Banker - November 2022 - 54
Independent Banker - November 2022 - 55
Independent Banker - November 2022 - 56
Independent Banker - November 2022 - 57
Independent Banker - November 2022 - 58
Independent Banker - November 2022 - 59
Independent Banker - November 2022 - 60
Independent Banker - November 2022 - 61
Independent Banker - November 2022 - 62
Independent Banker - November 2022 - 63
Independent Banker - November 2022 - 64
Independent Banker - November 2022 - 65
Independent Banker - November 2022 - 66
Independent Banker - November 2022 - 67
Independent Banker - November 2022 - 68
Independent Banker - November 2022 - 69
Independent Banker - November 2022 - 70
Independent Banker - November 2022 - 71
Independent Banker - November 2022 - 72
Independent Banker - November 2022 - 73
Independent Banker - November 2022 - 74
Independent Banker - November 2022 - 75
Independent Banker - November 2022 - 76
Independent Banker - November 2022 - 77
Independent Banker - November 2022 - 78
Independent Banker - November 2022 - 79
Independent Banker - November 2022 - 80
Independent Banker - November 2022 - 81
Independent Banker - November 2022 - 82
Independent Banker - November 2022 - 83
Independent Banker - November 2022 - 84
Independent Banker - November 2022 - 85
Independent Banker - November 2022 - 86
Independent Banker - November 2022 - 87
Independent Banker - November 2022 - 88
Independent Banker - November 2022 - 89
Independent Banker - November 2022 - 90
Independent Banker - November 2022 - 91
Independent Banker - November 2022 - 92
Independent Banker - November 2022 - Cover3
Independent Banker - November 2022 - Cover4
https://www.nxtbook.com/mspc/independentbanker/january2025
https://www.nxtbook.com/mspc/independentbanker/december2024
https://www.nxtbook.com/mspc/independentbanker/november2024
https://www.nxtbook.com/mspc/independentbanker/october2024
https://www.nxtbook.com/mspc/independentbanker/september2024
https://www.nxtbook.com/mspc/independentbanker/august2024
https://www.nxtbook.com/mspc/independentbanker/july2024
https://www.nxtbook.com/mspc/independentbanker/june2024
https://www.nxtbook.com/mspc/independentbanker/may2024
https://www.nxtbook.com/mspc/independentbanker/april2024
https://www.nxtbook.com/mspc/independentbanker/march2024
https://www.nxtbook.com/mspc/independentbanker/february2024
https://www.nxtbook.com/mspc/independentbanker/january2024
https://www.nxtbook.com/mspc/independentbanker/december2023
https://www.nxtbook.com/mspc/independentbanker/november2023
https://www.nxtbook.com/mspc/independentbanker/october2023
https://www.nxtbook.com/mspc/independentbanker/september2023
https://www.nxtbook.com/mspc/independentbanker/august2023
https://www.nxtbook.com/mspc/independentbanker/july2023
https://www.nxtbook.com/mspc/independentbanker/june2023
https://www.nxtbook.com/mspc/independentbanker/may2023
https://www.nxtbook.com/mspc/independentbanker/april2023
https://www.nxtbook.com/mspc/independentbanker/march2023
https://www.nxtbook.com/mspc/independentbanker/february2023
https://www.nxtbook.com/mspc/independentbanker/january2023
https://www.nxtbook.com/mspc/independentbanker/december2022
https://www.nxtbook.com/mspc/independentbanker/november2022
https://www.nxtbook.com/mspc/independentbanker/october2022
https://www.nxtbook.com/mspc/independentbanker/september2022
https://www.nxtbook.com/mspc/independentbanker/august2022
https://www.nxtbook.com/mspc/independentbanker/july2022
https://www.nxtbook.com/mspc/independentbanker/june2022
https://www.nxtbook.com/mspc/independentbanker/may2022
https://www.nxtbook.com/mspc/independentbanker/april2022
https://www.nxtbook.com/mspc/independentbanker/march2022
https://www.nxtbook.com/mspc/independentbanker/february2022
https://www.nxtbook.com/mspc/independentbanker/january2022
https://www.nxtbook.com/mspc/independentbanker/december2021
https://www.nxtbook.com/mspc/independentbanker/november2021
https://www.nxtbook.com/mspc/independentbanker/october2021
https://www.nxtbook.com/mspc/independentbanker/september2021
https://www.nxtbook.com/mspc/independentbanker/august2021
https://www.nxtbook.com/mspc/independentbanker/july2021
https://www.nxtbook.com/mspc/independentbanker/june2021
https://www.nxtbook.com/mspc/independentbanker/may2021
https://www.nxtbook.com/mspc/independentbanker/april2021
https://www.nxtbook.com/mspc/independentbanker/march2021
https://www.nxtbook.com/mspc/independentbanker/february2021
https://www.nxtbook.com/mspc/independentbanker/january2021
https://www.nxtbook.com/mspc/independentbanker/december2020
https://www.nxtbook.com/mspc/independentbanker/november2020
https://www.nxtbook.com/mspc/independentbanker/october2020
https://www.nxtbook.com/mspc/independentbanker/september2020
https://www.nxtbook.com/mspc/independentbanker/august2020
https://www.nxtbook.com/mspc/independentbanker/july2020
https://www.nxtbook.com/mspc/independentbanker/june2020
https://www.nxtbook.com/mspc/independentbanker/may2020
https://www.nxtbook.com/mspc/independentbanker/april2020
https://www.nxtbook.com/mspc/independentbanker/march2020
https://www.nxtbook.com/mspc/independentbanker/february2020
https://www.nxtbook.com/mspc/independentbanker/january2020
https://www.nxtbook.com/mspc/independentbanker/december2019
https://www.nxtbook.com/mspc/independentbanker/november2019
https://www.nxtbook.com/mspc/independentbanker/october2019
https://www.nxtbook.com/mspc/independentbanker/september2019
https://www.nxtbook.com/mspc/independentbanker/august2019
https://www.nxtbook.com/mspc/independentbanker/july2019
https://www.nxtbook.com/mspc/independentbanker/june2019
https://www.nxtbook.com/mspc/independentbanker/may2019
https://www.nxtbook.com/mspc/independentbanker/april2019
https://www.nxtbook.com/mspc/independentbanker/march2019
https://www.nxtbook.com/mspc/independentbanker/february2019
https://www.nxtbook.com/mspc/independentbanker/january2019
https://www.nxtbook.com/mspc/independentbanker/december2018
https://www.nxtbook.com/mspc/independentbanker/november2018
https://www.nxtbook.com/mspc/independentbanker/october2018
https://www.nxtbook.com/mspc/independentbanker/september2018
https://www.nxtbook.com/mspc/independentbanker/august2018
https://www.nxtbook.com/mspc/independentbanker/july2018
https://www.nxtbook.com/mspc/independentbanker/june2018
https://www.nxtbook.com/mspc/independentbanker/may2018
https://www.nxtbook.com/mspc/independentbanker/april2018
https://www.nxtbook.com/mspc/independentbanker/march2018
https://www.nxtbook.com/mspc/independentbanker/february2018
https://www.nxtbook.com/mspc/independentbanker/january2018
https://www.nxtbook.com/mspc/independentbanker/december2017
https://www.nxtbook.com/mspc/independentbanker/november2017
https://www.nxtbook.com/mspc/independentbanker/october2017
https://www.nxtbook.com/mspc/independentbanker/september2017
https://www.nxtbook.com/mspc/independentbanker/august2017
https://www.nxtbook.com/mspc/independentbanker/july2017
https://www.nxtbook.com/mspc/independentbanker/june2017
https://www.nxtbook.com/mspc/independentbanker/may2017
https://www.nxtbook.com/mspc/independentbanker/april2017
https://www.nxtbookmedia.com