Click Here to Print

Wednesday,  August  29, 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 • Gus Koppen

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
8/22/18 1.95 2.09 2.24 2.43 2.60 2.65 2.70 2.77 2.82 2.91 2.99
8/23/18 1.94 2.08 2.23 2.43 2.61 2.66 2.72 2.78 2.82 2.90 2.97
8/24/18 1.95 2.09 2.25 2.44 2.63 2.68 2.72 2.78 2.82 2.89 2.97
8/27/18 1.96 2.12 2.25 2.47 2.67 2.70 2.74 2.81 2.85 2.92 3.00
8/28/18 1.96 2.13 2.28 2.47 2.67 2.73 2.77 2.84 2.88 2.96 3.03
                                                                                                                                       Source: U.S. Department of the Treasury, as of 08/28/2018
 

"AN ARM REVIEW"

Part of our presentation at our annual Fall Forum earlier this week dealt with the defensive nature of Adjustable Rate Mortgages, (ARM’s). Few securities have held their value better during this recent run up in interest rates better than ARM’s. Also, because of the relative flatness of the curve, ARM’s give comparable current yields to most fixed-rate MBS options. This was not the case for most of the last decade. Below is a new production pool that we own and offer 3,000,000 of. Highlights include:

5/1 Fannie Mae ARM:
The below offering has a 3.65 coupon that will reset in 5 years and each year thereafter.  It is offered at a lower premium, and yield is well above similar maturity pools.   This should cash flow very quickly into rising rates. 


Source:  Bloomberg 08/28/18

This ARM is tied to 12 MO Libor and 12MO Libor is currently the highest it has been since November 2008.

 
Source:  Bloomberg 08/28/18

If rates go down, you also have some protection, because the margin is 1.62%. So even if Libor was at its 2014 lows of ~.52 you would still have a coupon above 2%. 


Source:  Bloomberg 08/28/18

Please feel free to call us with questions or interest and thanks to all of you who attended this year’s Forum. 


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