| Wednesday, February 7, 2024 |
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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 |
| 01/31/24 | 5.36 | 5.36 | 5.49 | 4.71 | 4.20 | 3.98 | 3.83 | 3.87 | 3.91 | 4.26 | 4.16 |
| 02/01/24 | 5.37 | 5.36 | 5.18 | 4.68 | 4.20 | 3.97 | 3.81 | 3.84 | 3.88 | 4.21 | 4.11 |
| 02/02/24 | 5.35 | 5.37 | 5.24 | 4.80 | 4.36 | 4.14 | 3.98 | 4.00 | 4.02 | 4.33 | 4.22 |
| 02/05/24 | 5.38 | 5.37 | 5.26 | 4.86 | 4.47 | 4.26 | 4.12 | 4.14 | 4.15 | 4.45 | 4.33 |
| 02/06/24 | 5.37 | 5.37 | 5.22 | 4.81 | 4.40 | 4.19 | 4.04 | 4.08 | 4.10 | 4.40 | 4.30 |
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 02/06/2024.
Don’t Waste This Cycle
We are all feeling the squeeze of this most recent rate cycle as the Fed moved the target rate to 550 basis points in a short 15 months. The Fed’s tightening cycle has done just that, tightened. Liquidity has tightened and margins have compressed for many. This tightening has led the surge for an increased interest expense for many banks. Additionally, while new loan rates have moved higher along with market rates, the legacy assets on the books have kept the overall yield on assets from climbing enough to offset the change in cost of funds. However, we continue to see a more reactive approach versus proactive approach to balance sheet management. While it is important to react to factors in our market, we also must look at a few proactive measurers to position the balance sheet for the next rate cycle.
The graph below that comes from the St. Louis Fed, FRED, system highlights the last four rate cycle peaks. What we see in this graph is that the 10-year Treasury and 2-year Treasury rates start falling before the Fed Funds rate. Additionally, rates tend to start falling before the recession bands. Lastly, we see that the bottom of the rate cycle has lasted longer than the top of the rate cycle.
By focusing on these points, this information tells us that we should be more proactive in managing our balance sheets, especially the assets, at the top of the rate cycle to be able to wade through the lows of the cycle. Additionally, we should look to lock our asset yields in for a bit longer than we would normally in other parts of the cycle.
The good news is that we have started seeing more banks take a proactive approach to locking in future income now by repositioning assets. If you have considered taking a similar approach to increase monthly after-tax income and increase shareholder value, then this may be the right time to consider executing in this rate cycle.
Reach out to your CCB representative to discuss your options and run scenarios specific to your bank. Don’t waste this cycle.
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