| Friday, March 24, 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 |
| 03/17/23 | 3.80 | 4.40 | 4.65 | 4.19 | 3.84 | 3.72 | 3.50 | 3.50 | 3.43 | 3.79 | 3.63 |
| 03/20/23 | 4.22 | 4.59 | 4.79 | 4.36 | 3.98 | 3.82 | 3.59 | 3.57 | 3.49 | 3.84 | 3.66 |
| 03/21/23 | 3.95 | 4.67 | 4.91 | 4.59 | 4.17 | 3.98 | 3.75 | 3.70 | 3.61 | 3.91 | 3.73 |
| 03/22/23 | 3.97 | 4.70 | 4.84 | 4.49 | 3.93 | 3.72 | 3.51 | 3.49 | 3.43 | 3.80 | 3.65 |
| 03/23/23 | 3.86 | 4.64 | 4.74 | 4.35 | 3.83 | 3.62 | 3.44 | 3.44 | 3.42 | 3.84 | 3.70 |
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, LP. As of: close of business 03/23/2023
No Time to Ignore the Market
After a tumultuous past two weeks, it was somewhat of a relief on Wednesday to get the Fed’s announcement behind us. Market participants were not surprised by the unanimous decision to increase the fed funds rate by 25 basis points to a range of 4.75% to 5.00%. This was the ninth increase since the first upward move one year ago and the most aggressive one-year rate hike since the 1980’s. Weighing the recent turmoil in the banking system with ongoing stubborn inflation, the move was viewed as a compromise considering the larger increase that had been signaled earlier this month.
Chair Powell stressed that the banking system is sound, but Treasury Secretary Janet Yellen rattled markets by testifying that the government isn’t considering providing “blanket” deposit insurance to the banking system. So, the quandary and question remains: Will a worsening credit crunch in the financial system impact the economy to the point that further rate hikes may not be needed? The updated Fed dot plots peak rate remains unchanged at 5.1% (versus the anticipated 5.60% prior to the recent banking unrest), suggesting that Fed participants believe they are closer to pausing or easing than previously thought. Swap pricing now shows traders see the Fed doing, at most, one more quarter-point hike in May before pivoting to a more dovish policy.
Understandably, while all banks are intently focused on deposits and liquidity and balance sheets, fixed income markets cannot be ignored. If we are indeed nearing the end of this cycle, the time may be ripe to take advantage of pockets of value. We continue to see municipal bonds in the intermediate range yielding at least 100% of Treasury yields (historically “cheap”), equating to a taxable-equivalent spread for an S-Corp of at least 150 basis points over Treasury yields. Consider the following highly rated Missouri bank qualified offerings:
*Assumes 29.6% tax bracket and 100 basis points cost of funds
Indications only, detail subject to change and availability
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