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Tuesday, October 2, 2018 |
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MANAGING DIRECTOR: |
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US Treasury Market |
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| Date | 1 mo | 3 mo | 6 mo | 1 yr | 2 yr | 3 yr | 5 yr | 7 yr | 10 yr | 20 yr | 30 yr |
| 9/25/18 | 2.12 | 2.21 | 2.38 | 2.59 | 2.83 | 2.91 | 2.99 | 3.06 | 3.10 | 3.17 | 3.23 |
| 9/26/18 | 2.11 | 2.20 | 2.37 | 2.58 | 2.83 | 2.89 | 2.96 | 3.02 | 3.06 | 3.14 | 3.19 |
| 9/27/18 | 2.10 | 2.18 | 2.37 | 2.58 | 2.83 | 2.89 | 2.96 | 3.02 | 3.06 | 3.13 | 3.19 |
| 9/28/18 | 2.12 | 2.19 | 2.36 | 2.59 | 2.81 | 2.88 | 2.94 | 3.01 | 3.05 | 3.13 | 3.19 |
| 10/1/18 | 2.13 | 2.23 | 2.40 | 2.60 | 2.82 | 2.90 | 2.96 | 3.04 | 3.09 | 3.18 | 3.24 |
Source: U.S. Department of the Treasury, as of 10/01/2018
Why Not Get Ahead of It …?
The statement from last Wednesday’s Federal Open Market Committee (FOMC) meeting, along with the quarterly Dot Plot from policy makers, indicate short term interest rates will most likely continue increasing.
According to the policy statement, “the labor market has continued to strengthen and economic activity has been rising at a strong rate.” Barring some unforeseen development, the median estimate for the overnight rate is projected to be 3.00% to 3.25% by 12/31/19 and expected to continue rising in 2020 and 2021.
Source: Bloomberg 10/02/18
While the “median” projections represent the “most likely” scenario, some policy makers are projecting rates will rise faster and farther than the median estimates. It is possible the economy surprises to the upside, resulting in an unexpected uptick in inflation and higher than expected interest rates, although the opposite is also a possibility. But the most likely scenario for 2019 is another 100 bps increase in the overnight target rate.
So, why not get ahead of it, by locking-in today’s lower cost of deposits, via Brokered CDs? Although the cost of deposits has increased significantly in the last 3 years, the current cost may be considerably lower than the cost in the future.
Please note the Indicative CD Pricing below, represents the “all-in” cost of issuance:
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