Tuesday, February 6, 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

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
1/30/18	1.49	1.44	1.66	1.88	2.13	2.27	2.51	2.65	2.73	2.86	2.98
1/31/18	1.43	1.46	1.66	1.90	2.14	2.29	2.52	2.66	2.72	2.83	2.95
2/1/18	1.41	1.48	1.64	1.89	2.16	2.33	2.56	2.72	2.78	2.90	3.01
2/2/18	1.40	1.48	1.65	1.88	2.15	2.33	2.58	2.76	2.84	2.97	3.08
2/5/18	1.40	1.51	1.67	1.85	2.08	2.25	2.50	2.68	2.77	2.92	3.04

                                                                                      Source: U.S. Department of the Treasury, as of 2/05/18  

Taxable Municipal Bonds Should Be On Your Radar

For portfolios focused on taxable income, a sector which has exhibited good value in years past is more recently garnering attention: Taxable Municipal Bonds.  Typically, portfolios which seek taxable income will acquire various stripes of fully taxable US government bonds, including – bullets, callables and Mortgage Backed Securities.  But in recent weeks, taxable muni bonds have become comparatively attractive as yield spreads on US agencies/MBS have contracted.   However, yields on taxable munis have maintained spreads and, thereby, appear to be an increasing value.

Here’s an example: 

AA rated Houston, Texas G.O. 3.625% due 3/1/29, callable 3/1/28 101.051 3.50%ytc/3.51%ytm

The 3.50% YTC in 2028 is the basis of trade (worst possible yield) and achieves a 65 bps spread to the ten year U.S. Treasury which is more generous than recent US agency bullet offerings priced at only 31 bps spread vs the Tresury curve.  So the taxable muni delivers DOUBLE the yield spread.  If the credit were questionable, perhaps this would be justified.  But a full city G.O. from the 4^th largest city in America appears to be a reasonable and safe credit.  Come and get it.

Please contact your CCB representative for current offerings on taxable municipal bonds.

                                                                                                                                                                                                                                  

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