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Wednesday, August 6, 2025
 

MANAGING DIRECTOR:
Scott Carrithers
 
PORTFOLIO SALES AND SERVICE:
Chris Thompson • Sean Doherty • Mark Tranckino • Brian Schaff
Natalie Regan • Aaron Stoffer • David Farris • Jeff Macy 
Josh Kiefer • Todd Czinege • Trey Valentine • Cody Kreutziger

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
07/30/25 4.35 4.34 4.28 4.13 3.94 3.89 3.97 4.15 4.37 4.90 4.90
07/31/25 4.36 4.34 4.28 4.10 3.96 3.90 3.97 4.16 4.38 4.90 4.90
08/01/25 4.33 4.28 4.11 3.86 3.68 3.66 3.76 3.96 4.22 4.79 4.82
08/04/25 4.37 4.25 4.10 3.83 3.68 3.64 3.74 3.94 4.19 4.77 4.79
08/05/25 4.36 4.24 4.12 3.91 3.73 3.69 3.78 3.97 4.21 4.76 4.78

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 08/05/2025.
                                                                                                                                                                                      


Structure vs. Yield

For many fixed income investors one of the greatest challenges in securitized products is trying to identify the best “relative value” when credit risk, prepayments, extension/contraction and principal lockout are considered.  Wading through the analytics we tend to favor structure over yield.  Our typical client base finds success in maximizing returns with Agency Commercial Mortgage Backed Securities (CMBS).  “DUS” and “PC” bonds are highly regarded CMBS candidates which behave very similar to US Agency bullets (ie: non callables).  They often have a short final maturity/balloon feature which erases extension risk in a rising rate scenario.  Conversely, as protection against falling rates, they typically include call protection with yield maintenance provisions (prepay penalties).  These features combine for a solid structure which bank investors (in particular) find very appealing as it comes to managing cashflow and maximizing returns. 

Currently, the 5yr sector is offering excellent value on the front end of the curve.  DUS/PC are a yield pick-up alternative versus taxable municipals and bullet agency bonds (additional spread of 15-30bps). And for investors willing to allow a wider principal payback window there are even greater yield spreads. However, we tend to favor tighter window structures for the better convexity profile, call protection and total return potential (especially so for bonds acquired at discount $Px).  If rates stay low or decline further, we would also expect these bonds to outperform due to the incremental positive convexity (positive convexity = more price gain for a rate drop than price loss for a similar rate rise).  

The bonds illustrated below are notable examples DUS/PC candidates (note the total return table too).




Please reach out to your Country Club Bank Capital Markets representative to see if Agency DUS/PC bonds are a good fit for your portfolio needs. 



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