Thursday, October 24, 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 |
| 10/17/19 | 1.74 | 1.66 | 1.63 | 1.59 | 1.60 | 1.57 | 1.57 | 1.66 | 1.76 | 2.05 | 2.24 |
| 10/18/19 | 1.75 | 1.66 | 1.63 | 1.58 | 1.58 | 1.56 | 1.56 | 1.66 | 1.76 | 2.06 | 2.25 |
| 10/21/19 | 1.76 | 1.67 | 1.65 | 1.59 | 1.62 | 1.59 | 1.61 | 1.70 | 1.80 | 2.10 | 2.28 |
| 10/22/19 | 1.75 | 1.65 | 1.64 | 1.59 | 1.60 | 1.59 | 1.60 | 1.68 | 1.78 | 2.07 | 2.26 |
| 10/23/19 | 1.74 | 1.65 | 1.64 | 1.58 | 1.58 | 1.58 | 1.58 | 1.67 | 1.77 | 2.06 | 2.25 |
Taxable Municipals – A Good Option
In a recent Portfolio Management Report we stated that the spread, or yield pick-up, into government agency bonds has shrunk dramatically to a small advantage vs. U.S. Treasuries. Many bullet offerings have less than 5 bps in yield pick-up.
A “bullet” bond, a non-callable bond with good yield has been hard to find. One bullet we recommend that does not receive a lot of attention on Wall Street are taxable municipal bonds.
The graph below shows the yields of U.S. Treasuries, U.S. agencies and AAA rated taxable G.O. (general obligation) municipal bonds. The value in the taxable muni’s is highlighted in the 5 year and 10 year range where the yields increase considerably. The AAA rated taxable munis in the 5 year range is +45 bp above the Treasury curve and +74 bp in the 10 year range. The screen below shows the full yield curves of each sector.
In a recent Portfolio Management Report we stated that the spread, or yield pick-up, into government agency bonds has shrunk dramatically to a small advantage vs. U.S. Treasuries. Many bullet offerings have less than 5 bps in yield pick-up.
A “bullet” bond, a non-callable bond with good yield has been hard to find. One bullet we recommend that does not receive a lot of attention on Wall Street are taxable municipal bonds.
The graph below shows the yields of U.S. Treasuries, U.S. agencies and AAA rated taxable G.O. (general obligation) municipal bonds. The value in the taxable muni’s is highlighted in the 5 year and 10 year range where the yields increase considerably. The AAA rated taxable munis in the 5 year range is +45 bp above the Treasury curve and +74 bp in the 10 year range. The screen below shows the full yield curves of each sector.
Please contact your CCB Capital Markets Group representative for details on the current availability of taxable municipal bonds for your portfolio.
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