| Friday, December 15, 2023 |
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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 |
| 12/08/23 | 5.35 | 5.38 | 5.38 | 5.12 | 4.72 | 4.45 | 4.24 | 4.26 | 4.22 | 4.48 | 4.30 |
| 12/11/23 | 5.38 | 5.39 | 5.39 | 5.12 | 4.71 | 4.45 | 4.24 | 4.27 | 4.23 | 4.50 | 4.32 |
| 12/12/23 | 5.37 | 5.38 | 5.36 | 5.13 | 4.73 | 4.42 | 4.22 | 4.24 | 4.20 | 4.48 | 4.30 |
| 12/13/23 | 5.35 | 5.38 | 5.31 | 4.90 | 4.42 | 4.14 | 3.97 | 4.01 | 4.01 | 4.33 | 4.17 |
| 12/14/23 | 5.33 | 5.38 | 5.31 | 4.91 | 4.38 | 4.09 | 3.90 | 3.93 | 3.92 | 4.20 | 4.03 |
The data in the table above is static as of the time it was pulled, so rates may have changed. Treat all data in this table and PMR as indications only and availability is always subject to change. This information was pulled manually from sources we believe to be reliable. New source, as of 12/12/2022, Bloomberg, L.L.P. As of: close of business 12/14/2023.
A Market Christmas Carol
Jay Powell and the FOMC left the Fed funds rate unchanged and didn’t make any significant changes to the statement on Wednesday. However, there has been a huge rally in the bond market and keeping in the Christmas spirit it seems appropriate to talk about the ghosts of Christmas past, present and future to better understand.
We have heard a lot from the Fed this year about holding the funds rate “higher for longer”. What has that looked like in the past? The “past” graph below shows 4 plateaus in which the Fed held rates steady for 17, 8, 14 and 7 months respectively. The last hike in this recent cycle was in July. After five months of steady rates, this will put March of 2024 at 8 months and in line with two of the four plateaus mentioned earlier.
The “present” graph shows the 2-year Treasury which has steadily moved lower since the October 18th high and when thoughts that the Fed might be done began to take shape. The “future” graph is the newest dot plot illustrating the Feds expectations for future rates. The median dots in 2024 dropped to 4.625% from 5.125% and to 3.625% from 3.875% in 2025. The expectation for 2026 remained at a much lower 2.875%.
We believe all three of these graphs not only reflect sentiment stating the Fed is done hiking rates, but also illustrate that the expectation of cuts could come as quick as the first quarter of next year.
The Past
Source: Bloomberg
The Present
Source: Bloomberg
The Future
Source: Bloomberg
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.
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