Insights from Catalyst

Markets are moving fast, and circumstances are changing on a daily basis. COVID-19, aka coronavirus, has brought global markets to an inflection point. At the time of this writing, the Federal Reserve has cut interest rates by 50 basis points in an unprecedented emergency move, “act[ing] as necessary to sustain the expansion.”

Over the last few years, Catalyst Corporate has positioned itself around a strong commitment to driving innovation that benefits our membership, as well as the entire credit union industry. In 2019, Catalyst Corporate set out on its mission, enacting both internal and external efforts. Some of the results were surprising.

Over the last several years, you may have invested in agency bullets to create an investment ladder to meet your credit union’s possible need for cash in the future. Bullets from the agencies, Fannie Mae (FNMA) and Freddie Mac (FHLMC), were widely available and offered more yield than Treasuries. However, you may have recently noticed that bullets are harder to find, and sometimes their yield is barely above, or even below, the yield on Treasuries.

This new year, you may have resolved to make a change in your life. Maybe you’ve even gone so far as pledging to become a “new you” in 2020. But someone may have already claimed that “new you,” stealing your credentials and using them to create a new identity. Identity theft is a growing problem, resulting in millions of dollars in damage around the world. And now, there is a modern twist to this old and costly problem: synthetic identity fraud.

Since the announcement that the London Interbank Offered Rate (LIBOR) would be phased out at the end of 2021, many new developments have occurred. The main development has been the Alternative Reference Rate Committee (ARRC) replacing the U.S. dollar LIBOR with the Secured Overnight Financing Rate (SOFR). Other developments have included increased SOFR-based issuances, standardized fallback language and the development of a SOFR term structure.