CU Funding Compass Week of October 25, 2023

With the Federal Reserve shrinking its portfolio of government securities, Treasuries experienced their worst sell off on longer terms in nearly four decades. With 10-year yields surging past 5% for the first time in 2007 this week the Fed may come under pressure, as ever-increasing borrowing costs bring with it the risk of a harder landing for the economy. Treasury yields retraced about half of their declines from multiyear highs reached earlier in the week amid expectations that auction size increases will be announced next week. The selloff pushed the yield on five-year notes to as high as 4.99% last week.

The deposit market continues to see high demand from buyers across the yield curve, as the flattening of that curve has increased in attractiveness of mid to longer terms. If you are considering bringing on additional deposits, we would encourage acting sooner than later as there is an expectation the costs of funds could continue to move higher in the coming months. In particular, callable Share Certificates offer long term stability while retaining short term flexibility. If you have any interest in or questions about the current deposit market, please feel free to reach out to us at any time.