The Rising Interest Rates, Inflation, Recession Risks — What do These Mean For Business Today?
by Pete Zeiser
Any time rates are high and there’s potential for an economic slowdown, many of our clients ask, “What do we do now?”
This is the time to plan and prepare. Now is the time when you and a trusted advisor should be making a plan to navigate the unpredictable and potentially volatile economic conditions ahead. At Midwest BankCentre, we are telling clients it is imperative to take a disciplined, longer-term view and shore up balance sheets now. This will allow clients to maintain flexibility when opportunities arise.
What does an inverted yield curve mean? What can I do to prepare?
Treasury yields are a strong indicator of the future. An inverted yield curve is when interest rates on long-term bonds fall lower than those of short-term bonds. Most believe that an inverted yield curve forecasts an economic slowdown. Currently, yields are inverted even on the short end, where 3-month treasuries have a higher yield than 1-year treasuries. This generally means the market expects rates to start dropping within the year. Although that may be seen as a positive by some, it generally indicates that demand is expected to slow as well.
When things slow down, relationships become more important than ever. You want a Banker who understands the complexities of your industry and the local economy. It is important to have a solid partner who is willing to work through difficult times with you.
Businesses will also be well served to closely monitor their inventory, backlogs and liquidity positions. You’ll want to have the flexibility to quickly shift resources, if needed.
Answers provided by Pete Zeiser, President - Chesterfield Commercial at Midwest BankCentre. He can be reached at 314-633-6762 or pzeiser@midwestbankcentre.com.