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Wednesday, July 10 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
07/02/24 5.36 5.37 5.31 5.08 4.74 4.55 4.39 4.40 4.43 4.71 4.60
07/03/24 5.35 5.39 5.30 5.05 4.71 4.49 4.33 4.32 4.36 4.64 4.53
07/05/24 5.35 5.38 5.28 5.00 4.61 4.40 4.23 4.23 4.28 4.58 4.48
07/08/24 5.36 5.38 5.29 5.00 4.63 4.42 4.24 4.24 4.28 4.57 4.47
07/09/24 5.33 5.36 5.29 5.04 4.63 4.41 4.24 4.25 4.30 4.59 4.49

   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 07/09/2024.
                                                                                                                                                                                        


Floaters
 

In a period of higher rates, bank depositors often look for higher yielding alternatives, such as Treasuries and Money-Market funds. This can create volatility on a bank’s balance sheet from a liability standpoint. One of the best ways for banks to offset this rise and fall of deposits, from the investment side of the balance sheet, is by investing in floating rate product. A specific example would be MBS/CMO floaters. Mortgage-Backed Securities (MBS) remain historically wide from a spread standpoint, offering what we believe to be very attractive yields. However, as we near the top of the rate cycle, banks can use collateralized mortgage obligation (CMO) floaters to receive attractive yields while lowering their interest rate, or curve risk, without adding duration. Floaters do carry cap risk; however, they often carry much less exposure from a duration and convexity standpoint. Duration is typically as long as the reset period. CMO floaters usually reset monthly, so expected duration is low. The cap provides positive duration. 

If you currently have MBS pools in your portfolio, adding floating-rate MBS offers a great barbell strategy. This combination can complement each other to perform well in both up and down rate scenarios. Prepayments can offset depending on the underlying collateral. Also, floaters can offset monthly mark-to-market moves from fixed rate volatility. If you have MBS pools in your investment portfolio now, or if you’re looking to add yield, low duration and low volatility while taking a little guess work out of curve exposure, take a look at the bond below:

Please reach out to your Country Club Bank representative to see if CMO Floaters, or other floating-rate alternatives, are a good fit for your portfolio. It’s a great way to book higher yields and lower your interest rate exposure amidst some uncertainty that surrounds us in our market today! 



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