Wonders never cease in the bank treasury world, what with earthquakes in the metro NYC area to eclipses of the sun, but surely the sudden flattening of the yield curve this month, which is now half as inverted as it was last month, must stir the imagination of even the most experienced bank treasurer. This month’s newsletter pulls back the curtain on key talking points in the bank treasury world, explaining why a neutral balance sheet is not risk-free, why neutral, risk-free interest rates may not exist, why bank treasurers should never count on liquidity to be there when they need it, and why regulators trying to prevent liquidity problems in the banking system with pre-positioned collateral at the discount window may make bank treasury even more complicated than it already is.

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Music by Phantom Sun.