| Thursday, December 28, 2017 | ||||||||
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MANAGING DIRECTOR: |
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US Treasury Market |
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| Date | 1 mo | 3 mo | 6 mo | 1 yr | 2 yr | 3 yr | 5 yr | 7 yr | 10 yr | 20 yr | 30 yr |
| 12/19/17 | 1.25 | 1.37 | 1.51 | 1.71 | 1.87 | 1.97 | 2.23 | 2.37 | 2.46 | 2.66 | 2.82 |
| 12/20/17 | 1.22 | 1.38 | 1.51 | 1.72 | 1.87 | 1.98 | 2.24 | 2.40 | 2.49 | 2.71 | 2.88 |
| 12/21/17 | 1.21 | 1.35 | 1.54 | 1.73 | 1.89 | 2.01 | 2.26 | 2.39 | 2.48 | 2.68 | 2.84 |
| 12/22/17 | 1.15 | 1.33 | 1.54 | 1.73 | 1.91 | 2.01 | 2.26 | 2.40 | 2.48 | 2.68 | 2.83 |
| 12/26/17 | 1.24 | 1.47 | 1.52 | 1.75 | 1.92 | 2.02 | 2.25 | 2.38 | 2.47 | 2.66 | 2.82 |
| 12/27/17 | 1.18 | 1.44 | 1.53 | 1.75 | 1.89 | 1.99 | 2.22 | 2.34 | 2.42 | 2.59 | 2.75 |
Source: U.S. Department of the Treasury, as of 12/27/17
Another Year Down
Aside from today, only another half trading session remains for the year. It has been a tale of two cities as equities had its best year since 2013 returning nearly 20% making new highs on the back of a growing economy. While bonds have shown mixed returns with the long end and the curve shrugging off the economic advancement and instead warning of potential danger ahead.
The debate will continue as to which story is right, whether the economy will continue to drive equities higher and support the Fed’s path to normalization or whether the lack of inflation and geopolitical instability will bear its teeth causing an end to this economic expansion.
Trading during this holiday shortened week so far has seen month/year end rebalancing that tends to richen the long end of the curve as investors reinvest roll off and extend further out the curve. However, this should be short lived once investors are back from the holidays and new supply once again hits the market.
Tax reform affects will continue to show while institutions weigh the new options now available to them: converting from a pass-through entity to a corporate structure, buyback shares, hire employees, raise wages, etc. All of these should be a positive for equity performance and could raise yields overall; however, the potential risks could be for the curve to continue to flatten and credit spreads to continue to narrow as investors feel more comfortable moving out the curve and/or into riskier products. The only thing to keep in mind is whether it will be worth it.
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.
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