September 2010 E-News Bulletin

Franklin Financial Network September 2010 eBulletin
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Welcome to the Franklin Financial Network September 2010 eBulletin!

Dear Friends,
As an “amateur” economist, I have always been fascinated with interest rates. Historically, interest rates have helped us understand much about our country’s economic health, and movements in interest rates offer insight into the future direction of economic growth.
The current economic cycle has been an interesting study in the level and direction of interest rates. Rates are at a historic low, yet there is no economic theory that would justify rates at such a low level. Government interventions have forced market conditions to keep rates low, especially on short-maturity instruments.
  April 5, 2010 September 13, 2010
90-day Treasury 0.17% 0.13%
1-year Treasury 0.42% 0.24%
10-year Treasury 3.97% 2.82%
30-year Treasury 4.81% 3.89%
Now, most interest rate “gurus” are forecasting that interest rates will not move back up until the latter half of 2011, but they do expect a significant rate move at that time. A “consensus” forecast would put the 30-year Treasury yield near 5.00% in the early part of 2012, an increase of 111 basis points over current rates.
This can become an intriguing academic discussion. However, the discussion goes beyond academics because interest rates are the cost of money. And every customer at Franklin Synergy Bank has been or will be impacted by interest rates over this economic recovery cycle.
What should you do as a depositor, homeowner, investor, or busi