Wednesday, September 7, 2022 |
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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 |
| 08/30/22 | 2.43 | 2.97 | 3.31 | 3.48 | 3.46 | 3.47 | 3.27 | 3.22 | 3.11 | 3.49 | 3.23 |
| 08/31/22 | 2.40 | 2.96 | 3.32 | 3.50 | 3.45 | 3.46 | 3.30 | 3.25 | 3.15 | 3.53 | 3.27 |
| 09/01/22 | 2.53 | 2.97 | 3.34 | 3.51 | 3.51 | 3.54 | 3.39 | 3.36 | 3.26 | 3.64 | 3.37 |
| 09/02/22 | 2.49 | 2.94 | 3.33 | 3.47 | 3.40 | 3.44 | 3.30 | 3.29 | 3.20 | 3.61 | 3.35 |
| 09/06/22 | 2.44 | 3.04 | 3.40 | 3.61 | 3.50 | 3.55 | 3.43 | 3.41 | 3.33 | 3.74 | 3.49 |
Source: U.S. Department of the Treasury, as of 9/06/2022
Opportunity Abounds
As the Fed prepares to meet later this month, the economy is showing the effect of higher borrowing costs. Last week we received the August jobs report, and while the numbers were still strong, the cracks are beginning to appear. Unemployment rose for the first time since January. The overall number of jobs created also rose, but retreated from July’s rapid expansion. Indeed, the scales may be tipping as a result of the Fed’s war on inflation. At this point the signs are still subtle, but the deceleration across the board should raise some concern.
Now take a look at a recent yield curve:
The green line is the current UST actives curve, and the yellow line is where we started the year. Two differences stand out—the large increase in yields and the inversion out through 10 years. What many view as a worrisome indicator, we see as a potential opportunity, especially for banks battling liquidity needs. Selling out of short positions (even if it means taking a loss) can serve a couple of purposes:
- Generate immediate liquidity. Many banks are in a borrowed position and this creates an easy alternative to paying for more funding.
- Allows for extension in the portfolio if you choose to buy down the curve.
No one knows what the immediate future holds, but if/when rates come down from their decade-long highs, fortune could favor those with the foresight to take advantage of today’s current environment.
In the case your bank requires more liquidity, we also see opportunity in short brokered CD’s. From 3 months out to about 18 months, total cost of issuance is below current Treasury rates. We can help you every step of the way through our balanCD program. Please reach out to your CCB representative with any questions or comments.
In the case your bank requires more liquidity, we also see opportunity in short brokered CD’s. From 3 months out to about 18 months, total cost of issuance is below current Treasury rates. We can help you every step of the way through our balanCD program. Please reach out to your CCB representative with any questions or comments.
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