Thursday, February 16, 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 |
| 02/09/23 | 4.60 | 4.74 | 4.92 | 4.87 | 4.49 | 4.16 | 3.86 | 3.79 | 3.67 | 3.89 | 3.74 |
| 02/10/23 | 4.56 | 4.76 | 4.92 | 4.88 | 4.52 | 4.20 | 3.92 | 3.85 | 3.74 | 3.95 | 3.82 |
| 02/13/23 | 4.60 | 4.77 | 4.94 | 4.91 | 4.52 | 4.20 | 3.91 | 3.82 | 3.70 | 3.91 | 3.78 |
| 02/14/23 | 4.56 | 4.75 | 5.01 | 4.97 | 4.62 | 4.32 | 4.00 | 3.89 | 3.75 | 3.92 | 3.78 |
| 02/15/23 | 4.56 | 4.77 | 4.99 | 4.96 | 4.63 | 4.35 | 4.04 | 3.94 | 3.81 | 3.99 | 3.84 |
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 02/15/2023
Read the Curve and Ride It
Year over year, 200-400 basis points (bps) has been added across the Treasury yield curve. Bond buying in a rising rate environment remains challenging. It feels as if when yields creep up, our conventional wisdom may be telling us to hold off on buying in the fixed income space. Bond buying in a falling rate environment is also challenging as investors often find it difficult to settle on when and where to make moves in the portfolio.
As the Fed continues to increase the Fed Funds target rate, yields on all treasury benchmarks longer than 3 years hit a high in the end of October last year. The belly of the curve (~2-10YRs) hit a new low in our trading range in mid-January but has since added 50-60bps of yield. The Fed recently indicated they will continue tightening which can increase yield on the front end of the curve. Most investors believe we won’t be setting new highs on the longer end of the curve anytime soon.
When looking at yields over the past 50 years, the general trend is lower. We are currently seeing yields much higher than the highs established in the last interest rate cycle. An example of this would be: the high on the 10YR USTN - 3.23% on 11/8/18 as shown in the chart below. This one example illustrates what we believe to be an excellent time to buy. Look to other sectors for even more yield while minding credit quality. We are of the opinion that Municipals are a great place to look to add duration in this market. Longer duration should be a focus or strategy if you anticipate lower rates in the near future.
Below are a few current bank qualified offerings we like offering nice spread over treasuries for both C-Corp and Sub-S tax rates along with financials on each credit. Let us know if you have interest in an offering shown or would like to discuss other ways to add yield and duration.
1MM Available: 4.50% Coupon Due 2/1/39 Callable 2/1/31 @ 3.30% YTC (TEY= 4.17% at 21%, 4.71% at 30%) /
3.80% YTM (TEY= 4.81% at 21%, 5.43% at 30%) Dollar Price: 108.324
1,040M Available: 4.50% Coupon Due 2/1/40 Callable 2/1/31 @ 3.35% YTC (TEY= 4.24% at 21%, 4.79% at 30%) /
3.86% YTM (TEY= 4.88% at 21%, 5.51% at 30%) Dollar Price: 107.962
1MM Available: 5.00% Coupon Due 2/1/42 Callable 2/1/31 @ 3.25% YTC (TEY= 4.11% at 21%, 4.64% at 30%) /
4.07% YTM (TEY= 5.15% at 21%, 5.82% at 30%) Dollar Price: 112.165
1MM Available: 5.00% Coupon Due 2/1/43 Callable 2/1/31 @ 3.30% YTC (TEY= 4.17% at 21%, 4.71% at 30%) /
4.13% YTM (TEY= 5.22% at 21%, 5.89% at 30%) Dollar Price: 111.793
Source: Bloomberg, L.P. 2/16/23
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