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Wednesday, July 31, 2024
 

MANAGING DIRECTOR:
Scott Carrithers
 
PORTFOLIO SALES AND SERVICE:
Chris Thompson • Sean Doherty • Kevin Doyle • Mark Tranckino
Natalie Regan • Aaron Stoffer • David Farris • Lonnie Harris • Brian Schaff • Jeff Macy
Josh Kiefer • Tom Toburen •  Todd Czinege

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
07/24/24 5.37 5.31 5.16 4.84 4.43 4.26 4.17 4.21 4.28 4.63 4.54
07/25/24 5.38 5.30 5.16 4.84 4.43 4.24 4.13 4.17 4.24 4.57 4.48
07/26/24 5.36 5.30 5.15 4.81 4.38 4.20 4.08 4.12 4.20 4.54 4.45
07/29/24 5.38 5.29 5.15 4.82 4.40 4.21 4.08 4.10 4.18 4.52 4.43
07/30/24 5.38 5.29 5.11 4.80 4.36 4.17 4.03 4.06 4.14 4.49 4.40

   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 07/30/2024.
                                                                                                                                                                                        


DUS: Long(er) Duration with Prepayment Penalties
 
Weakening trends in employment and inflation data point to potential rate cuts in the coming months. A winning strategy is to lock in yield now while at the top end of the interest rate cycle.

One of our favorite ways to do this is with Fannie Mae DUS & Freddie Mac PC bonds. These similar products typically have a fixed rate coupon (>75% of total issuance), made up of one loan, and have a relatively small pool size ($1mm to $50mm).

We believe these securities are an excellent way to extend portfolio duration. Prepayment penalties, typically yield maintenance, lowers prepayment risk. For this reason, DUS/PC bonds are often compared to agency bullet structures. If you are looking to add a bond with these features, please take a look at the two options below:

24mm OF- Spark Charlottesville- Charlottesville, VA- DSCR 1.25

                                     Source: Bloomberg, L.P. / Indications only, subject to change and availability without notice

                                      Source: Bloomberg, L.P. / Indications only, subject to change and availability without notice
 
Reasons We Like:
  • Good spread compared to seasoned pools
  • Prepayment Penalties (Yield Maintenance)
  • Predictable Cash Flows
  • Agency Bullet-like structure
 



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