| Wednesday, April 05, 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 |
| 03/29/23 | 4.17 | 4.75 | 4.85 | 4.54 | 4.10 | 3.90 | 3.68 | 3.65 | 3.57 | 3.91 | 3.76 |
| 03/30/23 | 4.57 | 4.82 | 4.88 | 4.62 | 4.12 | 3.90 | 3.69 | 3.62 | 3.55 | 3.88 | 3.74 |
| 03/31/23 | 4.58 | 4.74 | 4.88 | 4.61 | 4.02 | 3.78 | 3.57 | 3.53 | 3.47 | 3.79 | 3.65 |
| 04/03/23 | 4.63 | 4.75 | 4.86 | 4.58 | 3.96 | 3.72 | 3.50 | 3.47 | 3.41 | 3.76 | 3.63 |
| 04/04/23 | 4.55 | 4.81 | 4.73 | 4.47 | 3.84 | 3.60 | 3.39 | 3.38 | 3.34 | 3.72 | 3.59 |
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 04/04/2023
An Option for any Rate Outlook- ARMS
Even if your bias is for lower future rates, there is a lot of volatility and uncertainty in the market. It is always prudent to take a balanced approach to portfolio management by adding products to the portfolio that will perform well in various rate scenarios.
A great option in the current environment is adjustable rate mortgages (ARMS). While we frequently discuss ARMS in this publication, it is worth highlighting again --- as you can now purchase ARMS at a discount. Here are a few highlights of ARMS in the current market and a current offering:
- Discounted Price: ARMS are particularly attractive at a discounted price. When you purchase bonds at a discount, should you experience accelerated prepayments your yield will be higher.
- Lower Refi Incentive: Should rates move lower, ARMS traditionally have slower prepayments than fixed rate pools. This is due to the fact that the underlying mortgage holders have less incentive to refinance.
- Increased Cashflow: If rates move higher, accelerated cashflows would be expected as you approach the reset date. In the below example the reset is 99 months. However, there are a range of offerings available with varying structures.
- Relative value: In the current market these outperform many fixed rate pools with a similar average life.
Offering: 99 MTR – Deep Discount Seasoned 10yr ARM
- 5% cap / initial reset
- Large pool (100 loans / 40mm pool size)
CPR
Source: Bloomberg
CPB
Source: Bloomberg
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