Tuesday, June 12, 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
6/05/18	1.82	1.94	2.13	2.32	2.49	2.62	2.76	2.87	2.92	2.99	3.07
6/06/18	1.81	1.95	2.13	2.32	2.52	2.65	2.81	2.93	2.97	3.05	3.13
6/07/18	1.78	1.94	2.12	2.31	2.50	2.63	2.77	2.88	2.93	3.00	3.08
6/08/18	1.78	1.93	2.12	2.30	2.50	2.63	2.77	2.88	2.93	3.00	3.08
6/11/18	1.82	1.94	2.11	2.32	2.52	2.66	2.80	2.91	2.96	3.02	3.10

                                                                                      Source: U.S. Department of the Treasury, as of 06/11/2018 

 

                                                FDIC Insured CDs Revisited
 
Although FDIC insured CDs have been discussed in the Portfolio Managers Report before, both from an issuance/liquidity standpoint as well as from an investment portfolio product perspective, now is a good time to revisit the value of this product as we are in a market that is providing premium yield spreads over other investment alternatives of similar quality and duration.

With names such as Sallie Mae Bank, Ally Bank, American Express National Bank, Wells Fargo Bank, Citibank, BMW Bank of North America, Discover Bank and others, the three year non-callable maturity is crowded with issues at the 3.00% yield level.  With a Treasury yielding 2.65% in three years and a bullet agency at 2.71%, these CD names offer spreads of 35 and 29 basis points respectively.

Many of these names are offered in the five year maturity as well at yields of 3.25% - 3.30% and offer spreads of 45 - 50 basis points to the five year treasury (2.80%) and 37 - 42 basis points to a non-callable agency (2.88%).

With spread compression continuing to plague portfolio managers, the CD product is a viable alternative to provide alpha without sacrificing quality or duration.  They trade with assigned CUSIP numbers, are DTC eligible and are safe-kept and trade just like a bond.

If this is a product that you feel could work for your portfolio, please give us a call.

 

 

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