| Tuesday, August 6, 2019 |
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| 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 |
| 07/29/19 | 2.12 | 2.12 | 2.10 | 1.98 | 1.85 | 1.81 | 1.84 | 1.93 | 2.06 | 2.37 | 2.59 |
| 07/31/19 | 2.01 | 2.08 | 2.10 | 2.00 | 1.89 | 1.84 | 1.84 | 1.92 | 2.02 | 2.31 | 2.53 |
| 08/01/19 | 2.11 | 2.07 | 2.04 | 1.88 | 1.72 | 1.67 | 1.68 | 1.77 | 1.90 | 2.21 | 2.44 |
| 08/02/19 | 2.11 | 2.06 | 2.02 | 1.85 | 1.72 | 1.67 | 1.66 | 1.75 | 1.86 | 2.16 | 2.39 |
| 08/05/19 | 2.07 | 2.05 | 1.99 | 1.78 | 1.59 | 1.55 | 1.55 | 1.63 | 1.75 | 2.07 | 2.30 |
MBS CURVE STILL STEEP
We have seen a dramatic shift in treasury yields since last week Wednesday, with markets attributing the bond rally to trade concerns. The below graph with over 25bps decline on 2-10yr treasuries maps the difference in treasury yields from last Wednesday (blue) to today (black). For reference, the 10yr yield this morning is 1.75 and it touched 1.71 yesterday afternoon.
Source: Bloomberg
While we have seen a significant decline in yield across all markets and have an extremely inverted yield curve, investors can still find opportunities in curves that are not flat. The MBS curve is one such curve still offering steepness and opportunities for investors willing to extend.
If you are looking for an opportunity to maintain portfolio yield, we urge you to consider MBS products where spreads have widened recently. For example, the below pool offers 79 basis points spread to treasury, with a 4.7 average life. This security is currently yielding 2.35% and offered at a low premium of 102-22. To earn 2.34% on a treasury, an investor would have to purchase a 30+-year security.
If you are looking for an opportunity to maintain portfolio yield, we urge you to consider MBS products where spreads have widened recently. For example, the below pool offers 79 basis points spread to treasury, with a 4.7 average life. This security is currently yielding 2.35% and offered at a low premium of 102-22. To earn 2.34% on a treasury, an investor would have to purchase a 30+-year security.
Source: Bloomberg
For additional offerings and updated pricing please contact your sales representative
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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