Wednesday, July 17, 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 |
| 07/10/24 | 5.33 | 5.37 | 5.29 | 5.00 | 4.62 | 4.39 | 4.24 | 4.24 | 4.29 | 4.58 | 4.48 |
| 07/11/24 | 5.32 | 5.34 | 5.21 | 4.90 | 4.52 | 4.28 | 4.14 | 4.16 | 4.21 | 4.52 | 4.42 |
| 07/12/24 | 5.34 | 5.34 | 5.19 | 4.86 | 4.45 | 4.23 | 4.10 | 4.13 | 4.18 | 4.50 | 4.40 |
| 07/15/24 | 5.37 | 5.33 | 5.18 | 4.85 | 4.46 | 4.24 | 4.13 | 4.17 | 4.23 | 4.56 | 4.46 |
| 07/16/24 | 5.36 | 5.34 | 5.18 | 4.84 | 4.42 | 4.19 | 4.08 | 4.10 | 4.16 | 4.48 | 4.37 |
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 07/16/2024.
5.57% Locked Out For 5YRs...Then 7.14% Thereafter (TEY)
Well, we received mixed readings from the CPI and PPI prints last week as Producer Prices for the month of June came in a little hotter than expected and Consumer Price a little weaker than expected. Chair Powell however, seems confident that their monetary policy is doing exactly what they want it to do and anticipates the next move they make to be lower. Not sure, he could telegraph that any more than he did. Couple that with the inverted curve and it is hard to believe any other outcome is even possible.
All things considered, we believe investors should be locking in at the higher end of the rate cycle right now. One of our favorite ways to do that in the tax free muni market is with an intermediate call kicker (or cushion) structure with a very defensive coupon.
Below is an example of this structure which captures an incredible yield to a ~5YR call followed by a very defensive 5% tax free Coupon. Please don’t hesitate to reach out with interest or question.
Thank you very much for your time!
If you are a S-corp and use ~30% tax rate you are looking at a 5.57% yield (+143 BPS Spread to Treasury) to just under a 5YR call and if not called you will own the 5% tax free or 7.14% TEY Coupon @ PAR having amortized the premium.
Even if you are a C-corp, you are looking at 4.94% TEY at a 21% Tax Rate (+80 BPS Spread to Treasury) to the ~5YR call and 6.33% TEY thereafter.
Drexel School District R-IV, MO
Sink Fund:
335M PAR will sink 3/1/42
350M PAR will sink 3/1/43
365M PAR will sink 3/1/44
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