CU Funding Compass Week of October 4, 2023

Private US companies added the fewest number of jobs since the start of 2021 in September and pay growth slowed, pointing to a weakening in labor demand in several industries. Private payrolls rose 89k last month after climbing 180k in August. The rout in bond prices took a pause this morning on the heels of that ADP report spurring bets that the US central credit union can refrain from tightening policy. Ten-year Treasury yields slipped below 4.8%, after jumping 30 basis points this week as markets dialed back expectations for a rate hike this year. Traders are pricing a less than one-in-five chance of an increase in November, down from one-in-three previously. Yesterday amidst a slew of hawkish comments from Fed officials conviction grew that US interest rates could rise further from current 22-year highs, 30-year yields touched 5% for the first time since 2007.

Share Certificate issuance remains elevated and hasn’t seen the typical respite following a quarter end. Both the sharp increase in treasury yields and credit unions competing to attract depositors have pushed funding levels gradually higher this week. We don’t feel the same sense of urgency from issuers that accompanied the end of the quarter and expect liquidity to remain strong in the face of congestion.

We see value in shorter tenor callables such as the 12mo where the cost is pricing the same as a bullet (non-callable).

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CU Funding Compass Week of May 22, 2024

Treasury yields rise as investors digest Fed speaker comments. Several Fed officials urged patience when it comes to rate cuts as inflation remains above the central banks 2% target range. Fed Governor Christopher Wallace said he would like to see more good data on the inflation front before lowering rates. Share Certificate issuance has increased…
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Deposit Funding Compass Week of May 22, 2024

Treasury yields rise as investors digest Fed speaker comments. Several Fed officials urged patience when it comes to rate cuts as inflation remains above the central banks 2% target range. Fed Governor Christopher Wallace said he would like to see more good data on the inflation front before lowering rates. CD issuance has increased roughly…
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Deposit Funding Compass Week of May 16, 2024

A measure of underlying US inflation cooled in April for the first time in six months, a small step in the right direction for Federal Reserve officials looking to start cutting interest rates this year. The core consumer price index, which excludes food and energy costs, increased 0.3% from March, according to government data out…
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CU Funding Compass Week of May 8, 2024

Economic data is taking a bit of a breather this week after the onslaught of last week, culminating in what can be described as “bad news is good news” with the weak jobs report.  Yields retreated from this year’s high water mark under the hope that a softening labor market could still spur the Fed…
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Deposit Funding Compass Week of May 8, 2024

Economic data is taking a bit of a breather this week after the onslaught of last week, culminating in what can be described as “bad news is good news” with the weak jobs report.  Yields retreated from this year’s high water mark under the hope that a softening labor market could still spur the Fed…
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Deposit Funding Compass Week of May 2, 2024

In a widely expected move, the U.S. central bank kept its benchmark short-term borrowing rate in a targeted range between 5.25%-5.50%. The federal funds rate has been at that level since July 2023, when the Fed last hiked and took the range to its highest level in more than two decades. The rate-setting Federal Open…
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Deposit Funding Compass Week of April 24, 2024

Treasuries hold small losses during US morning ahead of record $70 billion 5-year note sale at 1pm EST. Much of this week’s focus will be on data, particularly GDP tomorrow, along with PCE on Friday. If the PCE report on Friday comes in hot we expect to see a reaction in our market, with rates…
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Deposit Funding Compass Week of April 17, 2024

Federal Reserve Chair Jerome Powell is making waves for his contemporaries around the world as the prospect of higher-for-longer US interest rates reduces room for policy easing elsewhere. Powell on Tuesday signaled the Fed will wait longer than previously anticipated to cut borrowing costs following a series of surprisingly high inflation readings — marking a…
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CU Funding Compass Week of April 17, 2024

Federal Reserve Chair Jerome Powell is making waves for his contemporaries around the world as the prospect of higher-for-longer US interest rates reduces room for policy easing elsewhere. Powell on Tuesday signaled the Fed will wait longer than previously anticipated to cut borrowing costs following a series of surprisingly high inflation readings — marking a…
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Deposit Funding Compass Week of April 10, 2024

US inflation topped forecasts for a third straight month (Core CPI + 0.4% MoM), ushering a fresh wave of price pressures that will likely delay any Federal Reserve interest-rate cuts until later in the year. Treasury yields and the dollar jumped while S&P 500 index futures tumbled. The 10yr UST yield traded through the psychological…
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