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 high Treasury yields can climb. It’s been a turbulent year for Treasuries, with the policy-sensitive two-year yield surging above 5% in April as investors, anticipating indefinitely elevated Fed rates, dumped bonds. They’ve since dropped back under 4.75%, after inflation and retail sales data suggested the world’s biggest economy may finally be cooling enough to warrant lower borrowing costs. Traders are positioning for the Fed to make at least one rate cut this year, with one fully priced in for November, based on swaps. That’s despite comments by Fed officials Tuesday that more evidence of slowing inflation was needed in order to cut rates.

As June draws to a close we are still able to provide funding for month/quarter end, though time is of the essence as this point. We continue to see a lack of issuance in longer term tenors (1 year and out), for both bullets and callable term funding. We see considerable value in issuing callable Share Certificates, as it provides both better pricing as well as long term stability when compared to short term bullets.

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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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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Deposit Funding Compass Week of May 31, 2024

Inflation rose roughly as expected in April, with markets paying close attention to when interest rates might start coming down, according to a measure released Friday that is followed closely by the Federal Reserve. The core reading for the personal consumption expenditures price index, which excludes food and energy costs, rose 0.2% in April. That…
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