CU Funding Compass Week of January 5, 2024

Juxtapose data points have somewhat confused traders this morning as a sharp sell off in rates following the non-farm payroll report has been tapered by a dismal ISM release. US job growth picked up in December(+216k) and wage gains exceeded expectations, diminishing prospects for an imminent Federal Reserve interest-rate cut initially. Expectations for a March cut were reduced to about 50/50 following the NFP release then crept back up to approx. 60% when ISM showed the US service sector came close to stagnating at the end of 2023. Their overall gauge of services decreased 2.1 points, the most since March, to 50.6 in December, the biggest contraction in more than three years. Supply abounded this week in the brokered Share Certificate market as credit unions looked to capitalize on lower interest rates and a market nursing a new year hangover with regard to issuance. The result, over 150 new Share Certificates printed between Tues and Weds alone which may have essentially weeded out the more aggressive or speculative levels that buyers were willing to accept with the drought of new deal flow the last couple weeks of 2023.
 
Today’s opportunities still represent an appreciable degree of speculation as coupons are still well below like-term Treasury yields, though many have been recalibrated from prior weeks to express more accurately where we feel buyers will express interest while maintaining as much relative value to benchmark levels as possible. 

Additional Resources

Deposit Funding Compass Week of July 11, 2024

This morning saw CPI prints come in lower than expected, with inflation falling 0.1% in June and bringing the year-over-year rate near it’s lowest in more than 3 years, supporting the case of those calling for lower rates. Chairman Powell reiterated Wednesday recent price readings have shown “modest further progress,” and “more good data” would…
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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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Deposit Funding Compass Week of June 26, 2024

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 26, 2024

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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