| Friday, June 30, 2023 |
||||||||
|---|---|---|---|---|---|---|---|---|
|
MANAGING DIRECTOR: |
||||||||
|
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 |
| 06/23/23 | 5.06 | 5.30 | 5.40 | 5.25 | 4.74 | 4.33 | 3.99 | 3.87 | 3.74 | 4.01 | 3.81 |
| 06/26/23 | 5.10 | 5.31 | 5.42 | 5.27 | 4.74 | 4.31 | 3.96 | 3.85 | 3.72 | 4.00 | 3.81 |
| 06/27/23 | 5.09 | 5.29 | 5.41 | 5.32 | 4.75 | 4.39 | 4.03 | 3.90 | 3.76 | 4.04 | 3.84 |
| 06/28/23 | 5.09 | 5.34 | 5.44 | 5.32 | 4.71 | 4.32 | 3.96 | 3.84 | 3.71 | 3.99 | 3.80 |
| 06/29/23 | 5.13 | 5.33 | 5.46 | 5.39 | 4.86 | 4.48 | 4.12 | 3.98 | 3.83 | 4.10 | 3.90 |
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 6/29/2023
A Trader’s Perspective
Liquidity continues to be a top-of-mind issue for community banks. As banks continue to explore possible funding sources, we have seen a noticeable pickup in short 2-year to 3-year final maturity callable CDs with a short initial lockout period of 3 months or 6 months. We usually like the idea of issuing callable CDs to add flexibility to a bank’s balance sheet (especially when it only costs 5-10 bps additional spread to a bullet or when issuing longer than a 3-year final). Currently we would urge you to scrutinize why you are looking at issuing these shorter (<3yr final) callable maturities.
If your intent is to call these CDs within 3-6 months, you are better served to issue a short 3 or 6-month CD or advance (see below cost of funds to call date for 2-3 year callable CDs). If it is highly likely you will hold onto these CDs until final maturity in 2-3 years, we would advocate issuing bullets which are trading considerably cheaper by 25-60 bps.
Cost of Funds to Call Dates
If your intent is to call these CDs within 3-6 months, you are better served to issue a short 3 or 6-month CD or advance (see below cost of funds to call date for 2-3 year callable CDs). If it is highly likely you will hold onto these CDs until final maturity in 2-3 years, we would advocate issuing bullets which are trading considerably cheaper by 25-60 bps.
Cost of Funds to Call Dates
Currently, fed funds futures are implying future rates to trend down to 4% by year end 2024, while the Fed’s own average forecast remains below 5% as well. We would strongly urge you to consider keeping advances / funding short so you can reprice these sources of liquidity when rates fall.
Fed Funds Futures
Fed Dot Plot
Source: Bloomberg, L.L.P.
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