Weekly Market Update


Thursday, May 11, 2017

The Federal Reserve voted against raising its key interest rate, citing concerns with the pace of economic growth in the first quarter of 2017. In keeping with market expectations, the Federal Open Market Committee unanimously agreed to keep its benchmark rate range at 0.75% to 1%. In its statement, the Fed noted the March decline in inflation, excluding energy and food, but said that overall inflation "has been running close" to the central bank's 2% target. In projections released in March, Fed officials indicated two more hikes are on the way, and Wednesday's statement reaffirmed their commitment to raise rates gradually. The President of the Federal Reserve Bank of Cleveland, Loretta Mester, warned against "falling behind" on needed interest-rate hikes and the risk of a recession if we "delay too long in taking the next normalization step." The Fed's next meeting will take place June 13-14 in Washington. Traders in the fed funds futures market are anticipating a 65% chance of a rate hike at the next meeting.

In Other News

  • Harvard is seeking to liquidate $2.5 billion in assets according to Axios. The media outlet notes that the institution will sell about $1 billion of private equity/venture capital positions plus approximately $1.6 billion of real estate holdings. Harvard has hired Cogent Partners to execute the sale in the secondary market.
  • A measure called Assembly Joint Resolution 5, if passed, would empower the Nevada Legislature to oversee the Board of Regents and the state higher education system. The bill addresses concerns that the current system lacks accountability. Provided the resolution passes a series of assembly votes in the next two years, it would require voter approval in 2020 to come into effect.
  • An Obama administration task force overseeing the for-profit college sector, led by the Education Department, has reportedly been dissolved. As a result, for-profit and student loan regulation is expected to gradually shift to the states.
  • 2U, an education tech company that partners with colleges such as Northwestern and Yale to deliver degree programs and credit-bearing courses online, announced it is acquiring Cape Town and London based education company GetSmarter for approximately $103 million. The high price signals 2U's belief in the value of expanding into noncredit higher education and into international markets.
  • In recent years, the Department of Education has approved more than 850,000 requests to forgive student debt under the Public Service Loan Forgiveness (PSLF) program. Many higher education groups, however, are concerned that the program may be too expensive to continue.
  • A meeting on Monday brought together biomedical industry leaders and White House officials to discuss the importance of government support for early-stage university research and the necessity of funding the National Institute of Health (NIH).

Rating Agency Update

  • Moody's assigned Aaa to Yale University's Series 2017A Revenue Bonds. The outlook is stable.
  • Moody's assigned A1 to University of South Alabama's Series 2017 University Facilities Revenue Bonds. The outlook is stable.
  • S&P assigned A to Southern New Hampshire University's Series 2017 Revenue Bonds. The outlook is stable.
  • S&P assigned AAA to Yale University's Series 2017A and 2017B Bonds. The outlook is stable.
  • S&P assigned AA- to New York University's Series 2017A Tax-Exempt and 2017B Taxable Revenue Bonds. The outlook is stable.