Wednesday, September 20, 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 |
| 09/13/23 | 5.39 | 5.43 | 5.53 | 5.42 | 4.90 | 4.65 | 4.30 | 4.34 | 4.16 | 4.45 | 4.26 |
| 09/14/23 | 5.39 | 5.47 | 5.53 | 5.43 | 5.01 | 4.69 | 4.42 | 4.38 | 4.29 | 4.56 | 4.38 |
| 09/15/23 | 5.37 | 5.46 | 5.51 | 5.43 | 5.04 | 4.72 | 4.47 | 4.42 | 4.33 | 4.60 | 4.42 |
| 09/18/23 | 5.40 | 5.46 | 5.52 | 5.43 | 5.06 | 4.73 | 4.45 | 4.40 | 4.30 | 4.57 | 4.39 |
| 09/19/23 | 5.39 | 5.45 | 5.51 | 5.45 | 5.09 | 4.78 | 4.51 | 4.46 | 4.36 | 4.61 | 4.43 |
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 09/19/2023
Liquidity Isn’t Just Your Problem
The Fed is meeting later today to decide the direction of its benchmark lending rate. Will they tighten further, or will they let the economy fit in the pants it currently has on? What exactly are they tightening? It isn’t really pants. The Fed controls money supply and they tighten money supply by raising rates, or shrinking their balance sheet. When they tighten money supply the amount of dollars available to be used for liquidity is less. In the chart below, you can see an extremely large spike in the money supply in 2020 coming from actions taken during the pandemic. This spike flooded your balance sheet with funds above and beyond a reasonable supply of liquidity likely more than any other time in history.
The recent drastic increase in interest rates has caused the money supply not just to slow, but has caused it to go negative. This significant shift should change the outlook of our balance sheets. We should be very cautious about growing our balance sheets at “competitive” rates while trying to attract new deposits with rate teaser offerings. Given that the Fed is shrinking money supply, the deposits that are leaving your bank are not necessarily moving to the bank down the street. When you couple the shrinking money supply with the historic increase in credit card debt, it is likely only a matter of time until this house of cards comes tumbling down.
The recent drastic increase in interest rates has caused the money supply not just to slow, but has caused it to go negative. This significant shift should change the outlook of our balance sheets. We should be very cautious about growing our balance sheets at “competitive” rates while trying to attract new deposits with rate teaser offerings. Given that the Fed is shrinking money supply, the deposits that are leaving your bank are not necessarily moving to the bank down the street. When you couple the shrinking money supply with the historic increase in credit card debt, it is likely only a matter of time until this house of cards comes tumbling down.
If you would like to discuss your options for raising liquidity, or just want to talk about what we are seeing with other banks, please call us at 800-288-5489.
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