Matt O’Connor: Okay. Thank you.
John Stern: Thanks, Matt.
Andrew Cecere: Thanks, Matt.
Operator: Your next question comes from the line of Saul Martinez with HSBC. Your line is open.
Saul Martinez: Hi. Thanks. Good morning.
Andrew Cecere: Good morning.
Saul Martinez: I guess another one on NII. Your guidance does some modest reacceleration of NII in the back end. I think the second half NII is at the midpoint, 2% higher than the first half. But what’s embedded in — can you be more specific about what’s embedded in the through-the-cycle deposit beta assumption. And John, you mentioned non-interest bearing could continue to move down a little bit from 17%. How far could — what’s your best guess now as to how much more deposit migration and where that ultimately could land at and what’s sort of embedded in the guidance for those measures?
John Stern: Sure, Saul. It’s John. So on the beta side specifically, that has continued to slow. I think we’re only up one points or two points here this quarter and it was three points, the prior quarter. So it clearly has slowed. And as I mentioned, deposit rates in the commercial side are very flat. They have not changed. Retail bounces around a little bit, but we’re going to be competitive and follow the market there, of course. But all-in, it’s — if you’re higher for longer, it’s going to — it may creep up a point here or two, but we feel like the low 50s is probably the right place for that to be as we kind of look forward.
Saul Martinez: Okay. And in terms of non-interest bearing, the total liability or total deposits, where it is?
John Stern: Yes. I think that — I think, yes, as I mentioned a little bit on the non-interest bearing side, we’re at about 17%. It’s — customers are being more efficient and things like that. It could go down a couple of points as we stay, a little bit lower at this higher for longer type period.
Saul Martinez: Okay. Great. And I guess a follow-up on just a clarification on the deposit surge, your response to an earlier question on the deposit surge. Forgive me if I missed this, but the $15 billion to $20 billion surge, that’s a normal surge in non-interest bearing deposits. But I guess the question is, what sort of the incremental to the normal surge — what was incremental this quarter to what you normally see? I’m just trying to get a base on which to forecast non-interest bearing deposits going forward?
John Stern: Sure. So in terms of the surge, the surge in absolute terms was like it was about $20 billion or so. It’s probably $10 or so billion above and beyond what we typically see for this type of the quarter.
Saul Martinez: Okay. All right. That’s helpful. Thank you.
John Stern: Thanks.
Operator: Your next question comes from Mike Mayo with Wells Fargo. Your line is now open.
Mike Mayo: Hi. Just kind of still a cleanup on NII. Just in very simple terms, if you’re neutral to rates, why the guide lower for NII? I just want to make sure I have that rate. Did something happen that you didn’t expect or you weren’t fully neutral before this quarter?
John Stern: Yes. Sure. Mike, it’s John. So the — yes, we are neutral, to answer your question, to shocks to interest rates. I think what we’re explaining is the behavioral aspect of it, which sometimes can be a little more challenging to judge at that point in time. And so, again, it’s a little bit — the pace of rotation is a little bit — it’s slowing down just not as much as what we had anticipated. So, again, rate shocks moving up and down, we continue to feel very good from a neutral standpoint. It’s just that behavioral aspect that we’ve been talking about here.
Mike Mayo: And do you have a number for fixed asset repricing, say, through the end of next year, because I think that’s what’s driving your higher guide for the second half of this year and into next year. So you’ve talked about $3 billion of securities. But by the end of next year, how much do you have in fixed assets that should be priced? Do you have like one grand number for that?
John Stern: Well, I think the way I would think about it is about half of our loan book is fixed rate component, the other half is floating rate component and spreads are widening. So you can — you can see some of the floating rate components perhaps improve over time. We’re seeing decent growth in payments — or excuse me, credit card. And so some of the mix is also working at play here. And so commercial loans are coming on. They are coming out at wider spreads. So that’s kind of how I think about that from a big picture perspective.
Mike Mayo: And then last one, loan spreads, I mean, for a while there, it looks like we’re heading to the recession and loan spreads were not widening. Now it looks like we’re not having a recession and you have tight spreads in the capital markets and loan spreads are widening. Just why are loan spreads widening now? I guess that would be an incremental positive.
John Stern: Yes. So I think it’s just different markets. So I think some of the drag you’re seeing in the commercial volume side is capital markets. Spreads have been — and the access has been very good. We saw that reflected in our fixed income capital market fees and things of that variety and so, but I think that has taken away volume to a certain extent. In other areas where access to capital markets is as pronounced, I would say there has been decent opportunity for spreads there.
Mike Mayo: All right. Thank you.
John Stern: Thanks, Mike.
Operator: Your next question comes from the line of Ebrahim Poonawala with Bank of America. Your line is open.
Ebrahim Poonawala: Thank you. Hey, John, just a quick follow-up to make sure we get this right. The surge deposits that came in, I think you mentioned you expect about $15 billion to leave. Am I — is all of that going out of non-interest bearing, so the $91 billion number, does that go into the mid-70s as we think about the second quarter?
