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 April 3, 2024

Bond Market participants are projecting fewer rate cuts than the Feds median forecast for the first time this year. Fed fund futures are forecasting about 65 basis points of rate reductions in 2024, compared to the 75 basis points signaled by the median estimate of projections released following the Fed’s meeting. The benchmark 10-year note…
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CU Funding Compass Week of April 3, 2024

Bond Market participants are projecting fewer rate cuts than the Feds median forecast for the first time this year. Fed fund futures are forecasting about 65 basis points of rate reductions in 2024, compared to the 75 basis points signaled by the median estimate of projections released following the Fed’s meeting. The benchmark 10-year note…
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Deposit Funding Compass Week of March 26, 2024

Open transactions for what was ultimately a rather muted quarter end have begun to close and issuance for early April has assumed a moderate pace.  Treasuries steadily march to the upside with sentiment regarding a June rate cut beginning to shift from what was once a foregone conclusion to increasingly unlikely. What this means for…
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CU Funding Compass Week of March 26, 2024

Open transactions for what was ultimately a rather muted quarter end have begun to close and issuance for early April has assumed a moderate pace.  Treasuries steadily march to the upside with sentiment regarding a June rate cut beginning to shift from what was once a foregone conclusion to increasingly unlikely. What this means for…
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CU Funding Compass Week of March 21, 2024

Traders were prepared for the FOMC to push back against their optimism over interest-rate cuts,  and when they didn’t, buy signals flashed across Wall Street.  Global stocks and bonds extended gains on Thursday after Fed policymakers kept rates on hold and continued to pencil in three quarter-point cuts this year. While Powell emphasized the US central bank was…
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Deposit Funding Compass Week of March 21, 2024

Traders were prepared for the FOMC to push back against their optimism over interest-rate cuts,  and when they didn’t, buy signals flashed across Wall Street.  Global stocks and bonds extended gains on Thursday after Fed policymakers kept rates on hold and continued to pencil in three quarter-point cuts this year. While Powell emphasized the US central bank was…
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Deposit Funding Compass Week of March 14, 2024

Prices paid to US producers rose in February by the most in six months, driven by higher fuel and food costs that add to evidence inflation remains elevated.  The report showed a rise of 1.6% from a year earlier, the largest annual advance since September.  The February reading of the PCE, the Fed’s preferred inflation…
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Deposit Funding Compass Week of March 6, 2024

Fed Chair Jerome Powell reiterated to lawmakers that the US central bank is in no rush to cut interest rates until policymakers are convinced they have won their battle over inflation. In prepared testimony to a House panel Wednesday, the Fed chief said it will likely be appropriate to begin lower borrowing costs “at some…
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CU Funding Compass Week of March 6, 2024

Fed Chair Jerome Powell reiterated to lawmakers that the US central bank is in no rush to cut interest rates until policymakers are convinced they have won their battle over inflation. In prepared testimony to a House panel Wednesday, the Fed chief said it will likely be appropriate to begin lower borrowing costs “at some…
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Deposit Funding Compass Week of February 29, 2024

The US economy expanded at a slightly slower rate at the end of last year as a downward revision to inventories masked stronger household spending and investment. GDP rose at a revised 3.2% annualized pace in the fourth quarter, compared with a prior estimate of 3.3%. Consumer spending advanced at a 3% rate. Inflation was revised higher. The Federal Reserve’s…
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