| Wednesday, August 7, 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 |
| 07/31/19 | 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 |
| 08/06/19 | 2.05 | 2.05 | 2.00 | 1.80 | 1.60 | 1.54 | 1.53 | 1.62 | 1.73 | 2.03 | 2.25 |
Consider Issuing Callables to Control NIM
Yesterday we discussed the MBS yield curve being steeper than the treasury yield curve. Another product that tends to lag the treasury curve are CDS. Brokered CDS can be a great investment for community banks as most carry FDIC insurance and zero risk weighting.
However, brokered cds can also be a great source of funding for financial institutions. They allow you the control over your balance sheet and can help bankers more proactively manage NIM. If you think rates are moving lower, and concerned about locking in a high issuance cost, we would urge you to consider issuing a callable-brokered CD---where YOU have the option to call the security early should rates move lower.
For example, a bank could issue a callable CD for 2.25-2.40% all-in cost for a 4-6yr final maturity product.
Source: BalanCD, CMG
Please call your investment officer to discuss what brokered structure would best fit into your funding strategy.
However, brokered cds can also be a great source of funding for financial institutions. They allow you the control over your balance sheet and can help bankers more proactively manage NIM. If you think rates are moving lower, and concerned about locking in a high issuance cost, we would urge you to consider issuing a callable-brokered CD---where YOU have the option to call the security early should rates move lower.
For example, a bank could issue a callable CD for 2.25-2.40% all-in cost for a 4-6yr final maturity product.
Source: BalanCD, CMGPlease call your investment officer to discuss what brokered structure would best fit into your funding strategy.
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