Wednesday, September 15, 2021 |
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MANAGING DIRECTOR: Scott Carrithers PORTFOLIO SALES AND SERVICE: George Morris • Chris Thompson • Sean Doherty • Kevin Doyle • Mark Tranckino Jeff Goble • Nicole Burczyk • Natalie Regan • Aaron Stoffer • David Farris • Lonnie Harris Brian Schaff • Josh Kiefer • Robert Schuyler • Tom Toburen • Aaron Hemphill • Jared Willhoft |
| 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 |
| 09/08/21 | 0.05 | 0.05 | 0.06 | 0.08 | 0.22 | 0.43 | 0.81 | 1.11 | 1.35 | 1.88 | 1.95 |
| 09/09/21 | 0.07 | 0.04 | 0.05 | 0.07 | 0.23 | 0.43 | 0.79 | 1.08 | 1.30 | 1.83 | 1.90 |
| 09/10/21 | 0.06 | 0.05 | 0.06 | 0.08 | 0.23 | 0.45 | 0.82 | 1.12 | 1.35 | 1.86 | 1.94 |
| 09/13/21 | 0.06 | 0.06 | 0.06 | 0.07 | 0.21 | 0.44 | 0.81 | 1.11 | 1.33 | 1.83 | 1.91 |
| 09/14/21 | 0.05 | 0.04 | 0.05 | 0.07 | 0.21 | 0.43 | 0.79 | 1.07 | 1.28 | 1.78 | 1.85 |
Get A Head Start On A Good Thing
We’re on the doorstep of the 4th quarter. Time to think about finishing 2021 strong and getting 2022 off to a good start. Your bond portfolio can help in this regard. Since Jan 2020 the 10yr US Treasury has varied from its then high yield high of 1.875% to a yield low of 0.50% (Aug 2020). At the present yield of 1.27%, the 10yr sits very near the middle of the trading range, and there are both unrealized gains and losses to be profitably harvested.
If earnings have been good this year, it may be the right time to book bond losses and build for the future. The idea is to sell lower-yielding bonds at a loss which is partially underwritten by the IRS and clean up some areas of the portfolio to either reduce interest rate risk or to reallocate into better performing/higher yielding assets. Doing so pushes the resulting higher income (increased book yield) to forward years and richer tomorrows.
But if today’s earnings need improvement (a friendly “cart path bounce”) consider realizing bond gains. These can be used to meet budget goals, replenish diminished reserve accounts, or to restructure the portfolio for more durable long-term income. Or, since the year is already sub-par, consider taking more losses, reinvest in higher yielding assets and push income into forward years.
Either way, this is a good time to begin year-end portfolio pruning. The next 90 days will provide ample opportunities to bid securities you are looking to sell. The holiday season will be in full bloom before you blink. And as the year draws to a close the marketplace of dealers grows reluctant to significantly add to inventories, so bids become commensurately weak. Beat the rush and get an early start on this. Your CCB rep is eager to help.
If earnings have been good this year, it may be the right time to book bond losses and build for the future. The idea is to sell lower-yielding bonds at a loss which is partially underwritten by the IRS and clean up some areas of the portfolio to either reduce interest rate risk or to reallocate into better performing/higher yielding assets. Doing so pushes the resulting higher income (increased book yield) to forward years and richer tomorrows.
But if today’s earnings need improvement (a friendly “cart path bounce”) consider realizing bond gains. These can be used to meet budget goals, replenish diminished reserve accounts, or to restructure the portfolio for more durable long-term income. Or, since the year is already sub-par, consider taking more losses, reinvest in higher yielding assets and push income into forward years.
Either way, this is a good time to begin year-end portfolio pruning. The next 90 days will provide ample opportunities to bid securities you are looking to sell. The holiday season will be in full bloom before you blink. And as the year draws to a close the marketplace of dealers grows reluctant to significantly add to inventories, so bids become commensurately weak. Beat the rush and get an early start on this. Your CCB rep is eager to help.
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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