CU Funding Compass Week of August 16, 2023

Traders betting that interest rates in the US will remain higher than inflation far into the future drove 10-year real yields to a 14-year high Monday. The “real”, or inflation protected yield on 10-year Treasury debt climbed more than 6 basis points to 1.84% in late New York trading, the highest level since 2009. Nominal Treasury yields also climbed, with the 10-year rate briefly exceeding 4.21% for the first time since November, as traders pared expectations for Federal Reserve interest-rate cuts next year.

Share Certificate market participants have been active the first two weeks of August as spread compression has followed a slight downturn in issuance last month, and the aforementioned rise in treasury rates. More often than not we observe a lag in Share Certificate funding costs in relation to abrupt treasury moves and at least for this week “all in” Share Certificate rates are closer and in some cases cheaper than commensurate to US sovereign debt yields. Though this anomaly is often fleeting, for now there is relative value when compared to where funding spreads have been most of the year.

With the curve still largely inverted we have encourage issuers who are focused on short term tenors to take advantage of call optionality and offer longer dated maturities at the same or similar cost to constantly rolling a 3, 6, 9, or 12mo maturities. Please see today’s funding opportunities.

 

Additional Resources

Deposit Funding Compass Week of July 11, 2024

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Deposit Funding Compass Week of July 3, 2024

The 10-year yield took a leg down following economic releases Wednesday signaling that the labor market is cooling. ADP data showed fewer jobs were added than expected in June, while weekly claims for unemployment benefits came in higher than economists forecast. The latest numbers are a prelude to Friday’s closely watched nonfarm payroll report for…
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The US bond market has worked its way close to breakeven for the year, thanks to two straight months of gains that have left the benchmark Treasury index down just 0.15% for 2024. With traders focused on every data point, extending the current run will require sustained evidence of a slowing economy and softer inflation…
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The US bond market has worked its way close to breakeven for the year, thanks to two straight months of gains that have left the benchmark Treasury index down just 0.15% for 2024. With traders focused on every data point, extending the current run will require sustained evidence of a slowing economy and softer inflation…
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CU Funding Compass Week of June 20, 2024

The bond market has recently seen signs of improvement, with the benchmark 10-year Treasury note yield recently giving back a chunk of its 2024 gains. Investors are betting that cooling US prices will convince the Federal Reserve to cut interest rates sooner and by more than officials have signaled, effectively putting a lid on how…
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Deposit Funding Compass Week of June 20, 2024

The bond market has recently seen signs of improvement, with the benchmark 10-year Treasury note yield recently giving back a chunk of its 2024 gains. Investors are betting that cooling US prices will convince the Federal Reserve to cut interest rates sooner and by more than officials have signaled, effectively putting a lid on how high Treasury…
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Deposit Funding Compass Week of June 13, 2024

Policymakers kept rates steady at a more than two-decade high on Wednesday and dialed back their forecasts to pencil in just one quarter-point rate cut by year end, about half of what markets are pricing in. This morning’s PPI report had already delivered what traders were waiting for, the key measure of inflation cooled to…
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CU Funding Compass Week of June 13, 2024

Policymakers kept rates steady at a more than two-decade high on Wednesday and dialed back their forecasts to pencil in just one quarter-point rate cut by year end, about half of what markets are pricing in. This morning’s PPI report had already delivered what traders were waiting for, the key measure of inflation cooled to…
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CU Funding Compass Week of June 6, 2024

Bonds fell yesterday as traders weighed mixed economic data for clues on the Federal Reserve’s next steps. Earlier Wednesday, a private payrolls reading highlighted that hiring at US companies grew at the slowest pace since the start of the year. Traders are now gearing up for Friday’s monthly payrolls report, which is expected to show…
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Deposit Funding Compass Week of June 6, 2024

Bonds fell yesterday as traders weighed mixed economic data for clues on the Federal Reserve’s next steps. Earlier Wednesday, a private payrolls reading highlighted that hiring at US companies grew at the slowest pace since the start of the year. Traders are now gearing up for Friday’s monthly payrolls report, which is expected to show…
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