Wednesday, June 13, 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
6/06/18	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
6/12/18	1.81	1.92	2.10	2.31	2.54	2.67	2.81	2.91	2.96	3.02	3.09

                                                                                      Source: U.S. Department of the Treasury, as of 06/12/2018 

 

                                                    Driving Portfolio Income

With the FOMC poised to raise the overnight rate to the 1.75% - 2.00% range with an announcement later this afternoon, all eyes are justifiably focused on the short end of the market. As the FED continues to methodically pursue a tightening strategy, short rates rise, the curve flattens and cash is king to reinvest as the short end of the yield curve cheapens.

Although the bulk of one’s portfolio should be positioned for rising rates, it’s not imperative that all liquidity be deployed just on shorter maturities.  In fact, with inflation currently remaining muted, the longer end of the yield curve has remained anchored in the 3.00% range on the ten year Treasury note…give or take 25 basis points.  The strength in this part of the curve calls for, in our opinion, a continual reinvest of some portfolio assets in the 10 to 15 year range in high quality bank qualified municipal bonds.  Longer bank qualified municipals drive a portfolio’s income and are a key component of nearly every higher performing bank investment portfolio.

Country Club Bank Capital Markets Group currently owns and offers a strip of S&P AA+ rated Polk County, MO Reorganized School District # R-II (Bolivar Board of Education) in maturities of 10,15 and 20 years.  They are general obligation bonds and bank qualified as shown below:


$310,000 PAR   3.50%   Due   3-1-2028   Callable 3-1-2023 @ 2.55% (92% of Treasury)
3.15% TEY (C Corp) 3.54% TEY (S Corp)                   
3.00% Yield to Maturity (102% of Treasury)
3.76% TEY (C Corp) 4.22% TEY (S Corp)
 
$450,000 PAR   4.00%   Due 3-1-2033   Callable 3-1-2023 @ 2.70% (97% of Treasury)
3.34% TEY (C Corp) 3.75% TEY (S Corp)
3.50% Yield to Maturity (117% of Treasury)
4.40% TEY (C Corp) 4.94% (S Corp)
 
$580,000 PAR 4.50% Due 3-1-2038   Callable 3-1-2023 @ 3.00% (108% of Treasury)
3.72% TEY (C Corp)   4.18% TEY (S Corp)
4.02% Yield to Maturity (133% of Treasury)
5.06% TEY (C Corp)   5.68% TEY (S Corp)

As always, offerings are subject to availability and change in price.  All taxable equivalent yields are approximations.

                                               

 

 

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