CU Funding Compass Week of November 8, 2023

The bond market is betting on a “dovish pivot” for the seventh time since the Fed embarked on its current tightening cycle. Treasury yields turned sharply lower as bonds rallied in the wake of last week’s FOMC meeting, at which Chair Powell hinted that the current rate-hike cycle may be near an end. Markets now expect 92 basis points of rate cuts next year, compared with Fed officials’ estimate of a half a point of easing for 2024. Last week saw the biggest weekly decline in the 10-year real yield of 2023 so far. Treasury auction cycle resumes with $40b 10-year note sale at 1pm, following good reception for 3-year note Tuesday.

Share Certificate levels sometimes lacking the dynamism or depth of market of assets like treasuries tend to take a bit longer to calibrate to dramatic shifts in level, occasionally overshooting to the downside before settling into a range. Our willingness to be first to market with freshly adjusted levels can often yield value for clients as supply tends to be light following abrupt rally’s and spreads compress before market activity increases and rates start to widen again. This week’s run are indications of just that, aggressively adjusted rates reflecting last week’s move in treasuries. Some levels may be more speculative in nature as its unclear where the dust will settle with regard to volume of issuance as year-end approaches but there is potential for considerable savings if credit unions are willing to take a flexible approach and see what buyers are willing to tolerate.

Please see today’s opportunities. Feel free to email or call the Share Certificate desk with any orders. Availability of term and dollar volume could be limited based on supply and changes in the market. Orders will be taken on a first come, first served basis.