| Wednesday, May 10, 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 |
| 05/03/23 | 4.45 | 5.21 | 4.97 | 4.66 | 3.81 | 3.51 | 3.30 | 3.32 | 3.34 | 3.76 | 3.68 |
| 05/04/23 | 4.46 | 5.22 | 4.99 | 4.64 | 3.79 | 3.52 | 3.33 | 3.35 | 3.38 | 3.81 | 3.73 |
| 05/05/23 | 5.39 | 5.22 | 5.07 | 4.75 | 3.92 | 3.64 | 3.41 | 3.41 | 3.44 | 3.84 | 3.75 |
| 05/08/23 | 5.36 | 5.21 | 5.05 | 4.81 | 4.00 | 3.72 | 3.49 | 3.49 | 3.51 | 3.91 | 3.82 |
| 05/09/23 | 5.46 | 5.21 | 5.14 | 4.84 | 4.02 | 3.73 | 3.50 | 3.50 | 3.52 | 3.93 | 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, L.L.P. As of: close of business 05/09/2023
Early Signs of Tightening Credit
The Federal Reserve’s Loan Officer Opinion Survey (SLOOS) is attracting the attention of the financial markets and media this week. Coinciding with increased chatter surrounding credit conditions, Monday’s release of this quarterly survey indicated a shift towards tighter lending standards in the participating banks.
A full breakdown on the results of the survey is outside the scope of this Portfolio Manager’s Report, but the entire SLOOS can be found on the Fed’s website if readers would like to dive into the detail. Generally, we believe the results indicate the economy is inching toward an environment of tighter credit. Evidence of this comes in the way of banks simply not wanting to grow the loan portfolio. These banks find themselves repricing the maturing loans at the current market’s higher rates, but are pulling back on new lending in anticipation of challenging future economic conditions.
If your bank is in a similar position as described above, and you have liquidity, then now could be a good time to add high quality bonds to the investment portfolio. Opportunities still exist and yields are still higher than they’ve been in the previous decade. With an expectation of lower rates in the future, conventional wisdom tells bond managers to extend duration in fixed rate bonds. Examples include longer dated Treasury notes, agency bullets or discounted callables, and municipals with longer call dates (like the Iowa bond below). However, 15yr 5.5% pools have traded at remarkably attractive spreads and well above historical averages.
Please reach out to your Country Club Bank Capital Markets Group representative if you have interest in the bonds highlighted below or want to discuss a strategy on getting invested in the current market.
A full breakdown on the results of the survey is outside the scope of this Portfolio Manager’s Report, but the entire SLOOS can be found on the Fed’s website if readers would like to dive into the detail. Generally, we believe the results indicate the economy is inching toward an environment of tighter credit. Evidence of this comes in the way of banks simply not wanting to grow the loan portfolio. These banks find themselves repricing the maturing loans at the current market’s higher rates, but are pulling back on new lending in anticipation of challenging future economic conditions.
If your bank is in a similar position as described above, and you have liquidity, then now could be a good time to add high quality bonds to the investment portfolio. Opportunities still exist and yields are still higher than they’ve been in the previous decade. With an expectation of lower rates in the future, conventional wisdom tells bond managers to extend duration in fixed rate bonds. Examples include longer dated Treasury notes, agency bullets or discounted callables, and municipals with longer call dates (like the Iowa bond below). However, 15yr 5.5% pools have traded at remarkably attractive spreads and well above historical averages.
Please reach out to your Country Club Bank Capital Markets Group representative if you have interest in the bonds highlighted below or want to discuss a strategy on getting invested in the current market.
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