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Tuesday, November 27, 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 |
| 11/19/18 | 2.23 | 2.38 | 2.52 | 2.66 | 2.79 | 2.82 | 2.87 | 2.97 | 3.06 | 3.22 | 3.32 |
| 11/20/18 | 2.23 | 2.39 | 2.51 | 2.67 | 2.79 | 2.83 | 2.88 | 2.97 | 3.06 | 3.22 | 3.31 |
| 11/21/18 | 2.25 | 2.41 | 2.52 | 2.67 | 2.81 | 2.84 | 2.89 | 2.98 | 3.06 | 3.22 | 3.31 |
| 11/23/18 | 2.25 | 2.41 | 2.52 | 2.67 | 2.81 | 2.83 | 2.88 | 2.97 | 3.05 | 3.21 | 3.31 |
| 11/26/18 | 2.24 | 2.41 | 2.54 | 2.70 | 2.84 | 2.86 | 2.90 | 2.98 | 3.07 | 3.22 | 3.32 |
Source: U.S. Department of the Treasury, as of 11/26/2018
Tax Loss Strategy
The environment for Tax Loss planning is more favorable this year than in many years past. If you are planning on taking tax losses this year, plan EARLY. Especially if the plan is to sell Tax Free securities and reinvest in Taxable bonds. While many institutions may not fully understand the need for how much in losses they should plan on (accountants are notorious for last minute calculations) we would advise you to make a plan, and execute ½ of that as early as possible. Then if you need to take more losses later you will not have to put your entire strategy at risk.
Many institutions are looking to reduce the amount of tax free securities in their portfolios (especially if they are a “C” corp.) and replace those with more favorable and higher yielding taxable securities. Some consideration should be given to the FNMA DUS program (or the KFRED program from FHLMC) or taxable municipal bonds. With the flatness of the yield curve, and the recent economic data suggesting some slowdown in both GDP and inflation, being a little longer on the curve and adding duration to the portfolio may pay big dividends down the road. The DUS and Taxable Municipal securities can add significant yield pick-up while maintaining the higher quality credits needed in the investment portfolio.
Here are a couple of examples of the prices and yields available:
FNMA DUS BOND:
Many institutions are looking to reduce the amount of tax free securities in their portfolios (especially if they are a “C” corp.) and replace those with more favorable and higher yielding taxable securities. Some consideration should be given to the FNMA DUS program (or the KFRED program from FHLMC) or taxable municipal bonds. With the flatness of the yield curve, and the recent economic data suggesting some slowdown in both GDP and inflation, being a little longer on the curve and adding duration to the portfolio may pay big dividends down the road. The DUS and Taxable Municipal securities can add significant yield pick-up while maintaining the higher quality credits needed in the investment portfolio.
Here are a couple of examples of the prices and yields available:
FNMA DUS BOND:
Source: Bloomberg 11/26/18
TAXABLE MUNICIPAL BOND:
Note: This bond has traded but please contact us for a similar offering.
TAXABLE MUNICIPAL BOND:
| Issuer: | Waterloo IA Urban Renewal Series C |
| Tax / Type: | Federally Taxable |
| Rating | Aa2 Rated |
| Coupon: | 2.70% |
| Maturity: | 06/01/2029 |
| Call Date: | 06/01/2025 |
| Purchase Price: | 91.194 |
| Yield: | 3.72% Yield to Maturity & 4.264% Yield to the Call |
Source: Bloomberg 11/26/18
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