Deposit Funding Compass Week of January 11, 2024

Americans paid more for housing and driving in December as inflation increased and the CPI registered 3.4%. On an annual basis, the so-called core measure increased 3.9%.  Early reactions show the rates market interpreting this as a challenge the Federal Reserve will cut interest rates as imminently as previously thought. The odds for a cut at the Jan 31st meeting have dropped to 0% while futures still have a 50% probability for March.

Banks across the country are active in the brokered funding market to start 2024.  This time last week the count on active new Issue CDs was around 100, this morning there are firmly over 300 open new issue CD offerings.  Supply, coupled with a softer rates market, is ultimately going to manifest in marginally higher funding levels for the near term.  While we feel issuers can still remain aggressive, buyers are indicating they’re going to be looking for a positive spread to US treasuries across most parts of the curve.
 
We have a variety of callable structures that are proving to be very beneficial to a bank’s liability portfolio in that longer term funding can be captured while not having to sacrifice the benefits of short term funding (retained call option). These structures can be customized in order to fit balance sheet needs. We are displaying just a few of today’s opportunities. Feel free to inquire with the desk if there are any desired final durations and lockout periods that you would like to see rate quotes on. 

Additional Resources

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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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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