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 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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CU 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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Deposit Funding Compass Week of April 3, 2024

Bond Market participants are projecting fewer rate cuts than the Feds median forecast for the first time this year. Fed fund futures are forecasting about 65 basis points of rate reductions in 2024, compared to the 75 basis points signaled by the median estimate of projections released following the Fed’s meeting. The benchmark 10-year note…
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CU Funding Compass Week of April 3, 2024

Bond Market participants are projecting fewer rate cuts than the Feds median forecast for the first time this year. Fed fund futures are forecasting about 65 basis points of rate reductions in 2024, compared to the 75 basis points signaled by the median estimate of projections released following the Fed’s meeting. The benchmark 10-year note…
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Deposit Funding Compass Week of March 26, 2024

Open transactions for what was ultimately a rather muted quarter end have begun to close and issuance for early April has assumed a moderate pace.  Treasuries steadily march to the upside with sentiment regarding a June rate cut beginning to shift from what was once a foregone conclusion to increasingly unlikely. What this means for…
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CU Funding Compass Week of March 26, 2024

Open transactions for what was ultimately a rather muted quarter end have begun to close and issuance for early April has assumed a moderate pace.  Treasuries steadily march to the upside with sentiment regarding a June rate cut beginning to shift from what was once a foregone conclusion to increasingly unlikely. What this means for…
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CU Funding Compass Week of March 21, 2024

Traders were prepared for the FOMC to push back against their optimism over interest-rate cuts,  and when they didn’t, buy signals flashed across Wall Street.  Global stocks and bonds extended gains on Thursday after Fed policymakers kept rates on hold and continued to pencil in three quarter-point cuts this year. While Powell emphasized the US central bank was…
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Deposit Funding Compass Week of March 21, 2024

Traders were prepared for the FOMC to push back against their optimism over interest-rate cuts,  and when they didn’t, buy signals flashed across Wall Street.  Global stocks and bonds extended gains on Thursday after Fed policymakers kept rates on hold and continued to pencil in three quarter-point cuts this year. While Powell emphasized the US central bank was…
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Deposit Funding Compass Week of March 14, 2024

Prices paid to US producers rose in February by the most in six months, driven by higher fuel and food costs that add to evidence inflation remains elevated.  The report showed a rise of 1.6% from a year earlier, the largest annual advance since September.  The February reading of the PCE, the Fed’s preferred inflation…
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Deposit Funding Compass Week of March 6, 2024

Fed Chair Jerome Powell reiterated to lawmakers that the US central bank is in no rush to cut interest rates until policymakers are convinced they have won their battle over inflation. In prepared testimony to a House panel Wednesday, the Fed chief said it will likely be appropriate to begin lower borrowing costs “at some…
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