| Wednesday, November 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 |
| 11/01/23 | 5.39 | 5.46 | 5.53 | 5.37 | 4.95 | 4.76 | 4.65 | 4.73 | 4.74 | 5.11 | 4.93 |
| 11/02/23 | 5.38 | 5.43 | 5.52 | 5.38 | 4.99 | 4.78 | 4.64 | 4.68 | 4.66 | 4.99 | 4.80 |
| 11/03/23 | 5.38 | 5.41 | 5.47 | 5.28 | 4.84 | 4.64 | 4.50 | 4.56 | 4.57 | 4.94 | 4.77 |
| 11/06/23 | 5.39 | 5.42 | 5.48 | 5.33 | 4.94 | 4.73 | 4.59 | 4.64 | 4.64 | 4.99 | 4.81 |
| 11/07/23 | 5.39 | 5.43 | 5.49 | 5.33 | 4.92 | 4.69 | 4.54 | 4.58 | 4.57 | 4.91 | 4.73 |
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 11/07/2023.
Despite the Recent Bond Rally, Good Investment Opportunities are Still Available
Since October 19th, the bond market has rallied as the 10yr TSY rate has dropped from 5.00% to 4.55%, a 45 basis point (bp) decrease in yield. 5% on the 10yr TSY represents the highest yield seen on this issue since 2007. It is still unclear as of this writing if the bond market topped out three weeks ago or if investors will get another chance to invest at those levels. Whether the bond market peaked or not, though, there are still good opportunities to get yields close to or higher than 6% in our current market.
For those looking to extend duration, we believe now is still an opportune time. Bank-qualified, general obligation municipal bonds rated AA- and higher are currently available at attractive yields. After-tax yields on these issues range from 4.00% to 4.50% for 2036 to 2043 maturities. This translates to TEY yields for a sub-S corp. of 5.71% to 6.43%, resulting in spreads to TSY well over 100 bps. Agency MBS 30yr passthroughs with 6.00% coupons also have yields higher than 6% with 99 handle dollar prices and spreads to TSY over 100 bps as well.
For those with medium duration targets, hybrid SOFR ARMs remain attractive. Base yields on these range from 5.80% to 5.90% and yields to just the first reset are currently 5.55% to 5.80%. Durations on these range from 3.5 to 5.0 years.
Not ready to extend duration just yet but still want a 6.00% plus yield? FNMA Floating Rate DUS bonds or SARMs (Structured Adjustable-Rate Mortgages) are worth considering. These structures are capless, monthly reset floaters that reset at SOFR plus a spread and have 4-to-6-year final maturities. Current yields on these range from 5.95% to 6.10%. These also trade at discount dollar prices so there is upside to returns if these prepay which we have seen recently with a few of these issues.
For more information, please contact your Country Club Bank sales representative.
Thank You.
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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