| Friday, January 12, 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 |
| 01/05/24 | 5.37 | 5.37 | 5.25 | 4.83 | 4.38 | 4.16 | 4.00 | 4.03 | 4.04 | 4.35 | 4.20 |
| 01/08/24 | 5.38 | 5.38 | 5.25 | 4.82 | 4.37 | 4.14 | 3.98 | 4.01 | 4.03 | 4.33 | 4.19 |
| 01/09/24 | 5.37 | 5.38 | 5.23 | 4.82 | 4.36 | 4.13 | 3.96 | 3.99 | 4.01 | 4.31 | 4.17 |
| 01/10/24 | 5.37 | 5.38 | 5.25 | 4.82 | 4.36 | 4.10 | 3.97 | 4.00 | 4.02 | 4.34 | 4.20 |
| 01/11/24 | 5.37 | 5.37 | 5.22 | 4.74 | 4.25 | 4.00 | 3.88 | 3.93 | 3.97 | 4.30 | 4.17 |
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 01/11/2024.
Opportunity Knocks
Total municipal new issuance of $408 billion in 2023 was slightly higher than 2022, but still down nearly 25% from the record years of 2020 and 2021. This lighter supply combined with the belief that rate cuts are coming this year resulted in a dramatic rally in the municipal market beginning late last October. Since November 1 of last year, muni yields have dropped approximately 100 basis points in two years and 125 basis point in ten years while Treasuries have fallen just 66 and 73 basis points respectively. Particularly within 1 - 10 year maturities, ratios of municipal yields to Treasuries are now well below historical averages.
Now that we are in the new year, we see this as a prime opportunity to free up cash by selling short municipals or increasing revenue by selling shorter maturities and extending into longer duration products where the yield pick-up is substantial. Typically, the first few months of the year are the ideal time to execute swaps as you can recoup your loss within the calendar year. Since greater supply is anticipated in 2024, there is a reasonable probability that the current aggressive bidding in the secondary market may ease, and the relative “richness” of munis will fade.
One segment of the market where we are currently seeing relatively good value is in taxable municipals, particularly in the state of Oklahoma where most issuers do not get rated because there is generally ample demand from Oklahoma banks. Yesterday we were the successful competitive bidder for a taxable general obligation issue with maturities from 2026-2029. These bonds are federally taxable but exempt from Oklahoma state tax and offer yields that are considerably better than the taxable equivalent yield of similar tax-exempts. Details are provided in the offering flyer below. Please let us know if you’d like to discuss further.
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