Wednesday, March 7, 2018
MANAGING DIRECTOR: Scott Carrithers   PORTFOLIO SALES AND SERVICE: Steve Panknin • George Morris • Jeff Goble • Chris Thompson • Sean Doherty Kevin Doyle • Lonnie Harris •  Mark Tranckino • Robert Schuyler • Tom Toburen • Josh Kiefer  Nicole Burczyk • Kelley Frye • Natalie Regan • Aaron Stoffer • Chuck Honeywell

US Treasury Market
Date	1 mo	3 mo	6 mo	1 yr	2 yr	3 yr	5 yr	7 yr	10 yr	20 yr	30 yr
2/28/18	1.50	1.65	1.86	2.07	2.25	2.42	2.65	2.80	2.87	3.02	3.13
3/1/18	1.50	1.63	1.85	2.05	2.22	2.36	2.58	2.74	2.81	2.97	3.09
3/2/18	1.50	1.65	1.86	2.06	2.25	2.40	2.63	2.79	2.86	3.02	3.14
3/5/18	1.53	1.70	1.86	2.06	2.24	2.41	2.65	2.81	2.88	3.04	3.16
3/6/18	1.56	1.68	1.87	2.06	2.25	2.42	2.65	2.81	2.88	3.03	3.14

                                                                                      Source: U.S. Department of the Treasury, as of 3/6/18  

Pass Through Pools +50 on the Year

Only two months into 2018 and we have seen a significant move in all areas of the bond market, but the MBS sector has been extremely consistent with its move higher in yields across the curve.  The new year has given us about a 50 basis point pick up in yield on new issue and seasoned 10YR and 15YR pools.  This shift has pushed our investors to do one of two things:

1. Buy more of the same, at a lower price.  Investors have enjoyed buying the same types of pools but with a PAR handle or even a discount.  There is then no need for amortizing premiums so they just sit back and watch the cashflow roll in.
    
2. Step up in coupon.  3-3.5% coupon pools have been favored on 10YR and 15YR pools, giving the investor the opportunity to do so with only a small premium.  Still a need to amortize the premium but the higher coupon makes these pools more marketable in the event there is a need to liquidate.

Stepping up in coupon or extending to a pool with seasoned 15YR collateral could be worth investigating.  Here is a summary of available options:



Depending on which strategy makes sense for your bank’s portfolio, this significant move in prices and yields presents a good buying opportunity on a plain vanilla pass through.  Please call for current pricing.

This information is intended for institutional investors only. The material provided in this document/presentation is for informational purposes only and is intended solely for private use. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instruments.

•Not FDIC Insured •No Bank Guarantee •May Lose Value