Wednesday, February 8, 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 |
| 02/01/23 | 4.51 | 4.65 | 4.81 | 4.64 | 4.10 | 3.78 | 3.51 | 3.47 | 3.42 | 3.68 | 3.56 |
| 02/02/23 | 4.43 | 4.62 | 4.77 | 4.63 | 4.10 | 3.77 | 3.48 | 3.44 | 3.39 | 3.66 | 3.54 |
| 02/03/23 | 4.52 | 4.65 | 4.83 | 4.76 | 4.29 | 3.95 | 3.66 | 3.59 | 3.52 | 3.75 | 3.61 |
| 02/06/23 | 4.55 | 4.64 | 4.84 | 4.86 | 4.47 | 4.14 | 3.82 | 3.74 | 3.64 | 3.82 | 3.67 |
| 02/07/23 | 4.55 | 4.67 | 4.88 | 4.85 | 4.46 | 4.12 | 3.83 | 3.77 | 3.68 | 3.87 | 3.71 |
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 02/07/2023
Focus on the Macro, Not the Micro
There have been a plethora of Fed speakers on the wire over the past week expressing their views on the economy and the ultimate Fed tightening rate and, in doing so, have created a great deal of volatility in the treasury market. The two-year treasury increased by 37 basis points from Friday’s open to Monday’s close, rising from 4.10% to 4.47%. This is indeed a huge move in yield but a little perspective is called for here. This level is still considerably lower than the November peak at 4.80% - the highest level we have seen since July 2007. And whether the Fed stops tightening at 5.00%, 5.25% or 5.50%, it’s all somewhere in the zip code of the end stages after having already tightened from 0.25% to 4.75% over the past year.What IS important looking forward is the shape of the yield curve. The treasury curve is still steeply inverted, as it has been since July of last year, with the 6-month T-Bill yielding 123 basis points more than the 10-year Note. Historically, the current treasury curve is telling us that yields will be heading lower. It’s also telling us it’s a good time to add securities and to extend duration with them. For a more detailed review of the topic, you can access the December 7, 2022 PMR found on this link.
The Yield Curve is Speaking… Are You Listening?
The treasury curve is not the only curve, however, that speaks to us. The municipal bond curve shown below (For AA+, AA and AA- credits) is telling us a few things as well.
In another measure of value, the municipal market commonly views muni yields at 80% of the corresponding treasury yield as “cheap” and where relative value is best afforded. As the chart below confirms, maturities in the 15–20-year range on the curve exceed this 80% benchmark (85%-86%) while still falling on the “hump” of the curve maturity-wise.
Country Club Bank Capital Markets Group currently has a well-stocked inventory of Kansas, Missouri, Iowa and other general market names with maturities and yields that fit today’s PMR discussion. Give us a call to see if they’re a fit for your portfolio as well.
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