Weekly Market Update

YELLEN'S TESTIMONY TO THE SENATE BANKING COMMITTEE

Thursday, February 16, 2017

On Tuesday, Fed Chairwoman Janet Yellen served as an expert witness in a Senate Banking Committee panel hearing regarding deregulation. She maintained that regulations put into place post-financial crisis strengthened the U.S. economy, stabilized the financial system and did not unduly burden businesses seeking loans or banks' competitiveness with their foreign rivals. Republican committee members said that regulation had gone too far. The new chairman of the Senate Banking Committee, Mike Crapo of Idaho, asserted that an assessment was necessary in order to determine the effectiveness of current regulations. Chairwoman Yellen also presented a biannual report on monetary policy which highlighted the satisfaction of the Fed with the growth of the U.S. economy and the expectation that the benchmark rate would continue to increase, though she did not answer the panelists' timing questions.

In Other News

  • According to Bloomberg, next week's negotiated municipal supply is expected to be approximately $2.9 billion, of which approximately $452.8 million is attributable to higher education borrowers.
  • On January 9th, the New York Times reported the termination of a Stanford University attorney who was part of a pilot program to provide advice to students who were pursuing sexual assault complaints. The University stated that the attorney, Crystal Riggins, was not dismissed, but was not invited back at the conclusion of the pilot due to a "fatalistic attitude" regarding her clients' cases.
  • In an unconventional twist, colleges and universities have turned to media company BuzzFeed, known for its viral content and entertainment news. BuzzFeed has worked with a half dozen universities to create unique marketing materials such as "13 Things You Could Actually Buy If You Didn't Have Student Loan Debt" targeted towards younger audiences.
  • By beating University of South Carolina, the UConn women's basketball team has set another record for the longest NCAA winning streak -- 100 games -- beating the prior record of 90 games, which it also held. UConn last lost a game in November 2014.
  • Despite fears to the contrary, the October 2016 regulations requiring money market funds to float their NAVs, have not, so far, created large NAV swings.
  • Foreign investors are reducing their exposure to U.S. government securities due to uncertainty introduced by the Trump administration. In December, Japan, the largest holder of U.S. Treasuries, decreased its holdings by more than it had in nearly four years. Currently, foreign investors hold approximately $5.94 trillion, or 43% of total U.S. government debt, down from 56% as of 2008.

Rating Agency Update

  • Moody's assigned Aa1 to Princeton Theological Seminary Series 2017A. The outlook is stable.
  • Moody's downgraded Johnson & Wales University to A3. The outlook is stable.
  • Moody's assigned Baa2 to Suffolk University Series 2017. The outlook is stable.