Hosted by: James Hotchkiss Director, Member Strategy and ... · Federal Home Loan Bank of Chicago | Member owned. Member focused. 5 Producer Price Index (PPI) Final Demand July: 0.6%

Hosted by:James HotchkissDirector, Member Strategy and Solutions

Date:August 13, 2020

Contacts

Federal Home Loan Bank of Chicago | Member owned. Member focused. 2

James HotchkissDirector, Member Strategy and [email protected]: @econ_james_

Jessica NickAssociate Director, Member Strategy and [email protected]

Discussion Topics


• Weekly Interest Rate Comparisons

• Economic Data Releases

• Targeted Impact Fund: Program Highlights and Eligibility, Application and Timing,

and Have Your Questions Answered Live!

• Preview of the Coming Week

• Q and A

Weekly Interest Rate MovementsFor the Week Ending 08/13/2020


U.S. Treasury Yields

8/13/20 8/6/20

3mo 0.10% 0.10%

2yr 0.16% 0.11%

5yr 0.30% 0.20%

10yr 0.69% 0.52%

FHLBank Chicago Advance Rates

8/13/20 8/6/20

3mo 0.28% 0.28%

2yr 0.40% 0.35%

5yr 0.63% 0.55%

10yr 1.25% 1.09%

Source: U.S. Treasury, FHLBank Chicago

U.S. Economic Data ReleasesFor the Week Ending 08/13/2020


Producer Price Index (PPI) Final DemandJuly: 0.6% vs. June: -0.2%

• Rose 0.6% in July, beating expectations of a 0.3% increase. This is the largest increase since October 2018. The increase is attributable to 0.5% rise in prices for final demand services while the prices for final demand goods jumped 0.8%. Overall, the final demand index has fallen 0.4% over the last 12 months.

Core PPI Final DemandJuly: -0.3% vs. June: -0.3%

• Excluding food and energy, prices fell 0.3% in July. The core index edged higher at 0.1% over the last 12 months.

Source: Bureau of Labor Statistics



Consumer Price Index (CPI)July: 0.6% vs. June: 0.6%

• Rose 0.6% in July, beating expectations of only 0.3% growth. Thegasoline index continued to rise (+5.6%) after increasingly by 12.3% in June, while the energy index also increased 2.5%. The food index declined by 0.4% this month, with the food at home index also falling 1.1%. On a year-over-year basis, CPI is up 1.0%.

Core CPIJuly: 0.6% vs. June: 0.2%

• Excluding food and energy, the index rose 0.6% in July, the largest increase since January 1991. The index for motor vehicles insurance rose sharply again this month, increasing 9.3%. The indices for used cars and communications saw the next largest growth, rising 2.3% and 1.9%, respectively. On a year-over-year basis, core CPI increased 1.6%.

Source: Bureau of Labor Statistics


Federal Home Loan Bank of Chicago | Member owned. Member focused.

Non-Farm PayrollsJuly: 1.8M vs. June: 4.8M

• Payrolls increased by 1.8M, significantly better than consensus expectations of an increase of 1.5M. The improvements in the labor market reflected the continuous resumption of economic activity that had been due to pandemic and the efforts to contain it.

Unemployment RateJuly: 10.2% vs. June: 11.1%

• The unemployment rate decreased by 0.9% to 10.2% in July. The number of unemployed persons fell by 1.4M to 16.3M. Despite declines over the past three months, these measure are up 6.7% and 10.6M, respectively, since February.

Source: Department of Labor

7



Initial Jobless ClaimsAugust 8: 963K vs. August 1: 1,191K

• Decreased by 228K to 963K in the week ending August 8. The previous week was upwardly revised by 5K to 1,191K. As a result, the 4-week moving average decreased by 86.25K to 1,3252.75K.

Continuing ClaimsAugust 1: 15,486K vs. July 25: 16,090K

• Decreased by 604K to 15,486K in the week ending August 1. The prior week was downwardly revised by 17K to 16,090K. As a result, the 4-week moving average decreased by 454.5K to 16,169.5K. The insured unemployment rate decreased by 0.4% to 10.6%.

Source: Department of Labor

8


Announcing the Targeted Impact Fund

The Targeted Impact Fund is a $14M grant program designed to achieve the following objectives:• Assist members in supporting relief for communities hardest hit by COVID-19• Support members in addressing racial equity disparities in their communities

Key Features• Accessible to all member and associate member institutions • Base grant amount per member: up to $15,000 • Members may receive up to $5,000 in additional grant funds for committing to

match some or all of the base grant dollars • $5,000 minimum contribution to each grant beneficiary • Grant beneficiaries must be located in Illinois or Wisconsin and aligned with

specified program priorities• Non-competitive program with application/funding process similar to COVID-

19 Relief Grant



Determining Grant Amount and Total Proceeds for Beneficiaries

Base Grant + Member Match + Match Bonus = Total Proceeds for Beneficiaries

Example with no member match:



Determining Grant Amount and Total Proceeds for Beneficiaries

Base Grant + Member Match + Match Bonus = Total Proceeds for Beneficiaries

Example with member match:



Beneficiaries must align with at least one of the categories below:

1) Minority and Women Business Enterprise (MBE and WBE) Development and/or Rebuilding Support for MBE and WBE small businesses to develop, grow, and/or rebuild.

2) Advancement of Black and Latino CommunitiesSupport for organizations that promote a more fair and inclusive society for Black and Latino communities. Organizations may provide services supporting career development/job training, education, recreation, childcare, healthcare/wellness, etc. for populations that include Black and Latino beneficiaries, or otherwise serve a mission of promoting equity and racial justice.

3) Community Empowerment Services for Populations Hardest-Hit by COVID-19Support for social services that benefit populations hardest hit by COVID-19, including but not limited to Black, Latino, Native American, elderly, and rural communities.

4) Affordable Housing SustainabilitySupport for entities providing and/or promoting affordable housing for vulnerable populations. Such entities include programs that provide rental assistance to low- to moderate-income households, housing counseling agencies, homeless services organizations, fair housing agencies, and affordable housing projects in need of operating support.



Beneficiaries must be idenitified at the time of application



Application and Funding ProcessApplication:• Visit the COVID-19 Resource Center. The application is located within the drop-down labeled,

“Targeted Impact Fund Application.”• To submit the application, click button on bottom of form, or email to [email protected]• Members will receive confirmation via email that their application has been received.

There will be three funding dates: • Applications received between August 17 and September 2 by 3:00 p.m. will be funded on

September 4.• Applications received between September 3 and September 16 by 3:00 p.m. will be funded on

September 18.• Application received between September 17 and September 30 by 3:00 p.m. will be funded on

October 2.

Funding Process:• Grant funds will be credited to the members’ FHLBank Chicago DID account. • Members will receive a funding confirmation email the day grant funds are deposited in their DID

account.• Each FHLBank Chicago member is responsible for funding their selected beneficiaries.

mailto:[email protected]


This and That

Source: TD Ameritrade

A survey of younger millennials by TDAmeritrade found that 39% of Americans aged 24 to 29 have moved back home, or are in the process of moving back home, with their parents since the beginning of March 2020.

An additional 15% of young millennials’ parents are paying some rental costs, while another 15% said their parents are currently covering all rental expenses.

In total, 69% of those surveyed are relying on their parents for some or all of their housing or housing expenses.

Despite the reliance on their parents for expense assistance, a substantial 82% of those surveyed said they do not want to rely on their parents for financial support.


This week ends with all eyes focused on the economic indicator report on Retail Sales.

The focus next week will be on Wednesday’s release of the FOMC Meeting Minutes.

Throughout the week economic indicators will be released for the NAHB Housing Market, Housing Starts, and Existing Home Sales.

Economic Data Release CalendarAugust 2020

16

3 4 5 6 7

10 11 12 13 14

17 18 19 20 21

24 25 26 27 28

31 Notes:

Richmond Fed Outlook

Dallas Fed Outlook

New-Home Sales Pending Home Sales Consumer Confidence Kansas City Fed Outlook

Chicago Fed Nat'l Activity FHFA House Price Index MBA Mortgage Applications Jobless Claims Personal Income S&P Case-Shiller HPI Durable Goods GDP Consumer Sentiments

FOMC Minutes Philadelphia Fed Outlook

NAHB Housing Market I d

Housing Starts MBA Mortgage Applications Jobless Claims Exisiting Home Sales

Atlanta Fed Outlook Buisness Inventories Consumer Sentiments

JOLTS Small Buisness Optimism MBA Mortgage Applications Jobless Claims Retail Sales Producer Price Index Consumer Price Index Industrial Production

ISM Manufacturing Index Motor Vehicle Sales ADP Employment Reports Wholesale Trade ISM Nonmanufacturing Consumer Credit

August 2020Monday Tuesday Wednesday Thursday Friday

Construction Spending Factory Orders MBA Mortgage Applications Jobless Claims Employment


Certain information included in this presentation speaks only as of a particular date or dates included in this presentation. The information in the presentation may have become out of date. The Federal Home Loan Bank of Chicago (FHLBC) does not undertake an obligation, and disclaims any duty, to update any of the information in this presentation. “Mortgage PartnershipFinance®”, “MPF®”, “MPF Xtra®”, “Downpayment Plus®”, “DPP®”, “Downpayment Plus Advantage®”, “DPP Advantage®”, and “Community First®” are registered trademarks of the Federal Home Loan Bank of Chicago . The “MPF Mortgage Partnership Finance” logo is a trademark of the Federal Home Loan Bank of Chicago.

The data, scenarios and valuations provided to you in this presentation are for information purposes only and are provided as anaccommodation and without charge and are not intended for further distribution. The data, scenarios and valuations are estimates only and may not represent the actual or indicative terms at which new (or economically equivalent) transactions couldbe entered into or the actual or indicative terms at which existing (or economically equivalent) transactions could be prepaid, terminated, liquidated, assigned or unwound. The scenarios and valuations were derived using proprietary pricing models and estimates and assumptions about relevant future market conditions and other matters, all of which are subject to change without notice. The scenarios and valuations were prepared without specific information about your institution’s balance sheet composition, hedging strategies or financial assumptions and plans, any of which may affect the relevance of these valuations toyour own analysis.

The Federal Home Loan Bank of Chicago makes no representations or warranties about the accuracy or suitability of any information in this presentation, and no representation of non-infringement. This presentation is not intended to constitute legal, accounting, investment or financial advice or the rendering of legal, accounting, consulting, or other professional services of any kind. You should consult with your accountants, counsel, financial representatives, consultants and/or other advisors regardingthe extent these scenarios and valuations may be useful to you and with respect to any legal, tax, business and/or financial matters or questions. This presentation may contain forward-looking statements which are based upon the FHLBC’s current expectations and speak only as of the date hereof. These forward-looking statements involve risks and uncertainties including, but not limited to, the risk factors set forth in the FHLBC’s periodic filings with the Securities and Exchange Commission, which are available on its website at www.fhlbc.com

17

http://www.fhlbc.com/

Documents

Hosted by: James Hotchkiss Director, Member Strategy and ... · Federal Home Loan Bank of Chicago | Member owned. Member focused. 5 Producer Price Index (PPI) Final Demand July: 0.6%