Deposit Funding Compass Week of June 6, 2024

Bonds fell yesterday as traders weighed mixed economic data for clues on the Federal Reserve’s next steps. Earlier Wednesday, a private payrolls reading highlighted that hiring at US companies grew at the slowest pace since the start of the year. Traders are now gearing up for Friday’s monthly payrolls report, which is expected to show the US added 185,000 jobs in May while the unemployment rate held steady. With the Fed widely expected to stay on hold next week, the focus of the meeting will be the new Summary of Economic Projections. Back in March, Fed officials maintained their outlook for three rate cuts in 2024.

CD Market entrants remain elevated with approx. 250 live deals. Despite Treasury yields falling, CD rates are creeping higher as the search for liquidity becomes more competitive. Further out the curve, past 3yrs we are observing a range of up to 30bps between highest and lowest offerings. As a result, urgency and desired notional amount is dictating where banks need to price. We are still seeing considerable value in longer term callable structures when compared to shorter term bullets. Here is an example of what we are seeing:

10yr/1yr – 5.14% All-in, $1MM firm can work up to $2-10MM
vs.
1 year – 5.44% All-in, $1-25MM firm working up to $30-200MM

One additional structure in particular we would like to highlight this week is the following:

3 month – 5.53% All-in, $1-100MM firm working up to $125-300MM

If there are any additional terms or ideas you would like to see pricing on, please contact the CD desk.

Additional Resources

CU Funding Compass Week of June 20, 2024

The bond market has recently seen signs of improvement, with the benchmark 10-year Treasury note yield recently giving back a chunk of its 2024 gains. Investors are betting that cooling US prices will convince the Federal Reserve to cut interest rates sooner and by more than officials have signaled, effectively putting a lid on how…
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Deposit Funding Compass Week of June 20, 2024

The bond market has recently seen signs of improvement, with the benchmark 10-year Treasury note yield recently giving back a chunk of its 2024 gains. Investors are betting that cooling US prices will convince the Federal Reserve to cut interest rates sooner and by more than officials have signaled, effectively putting a lid on how high Treasury…
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Deposit Funding Compass Week of June 13, 2024

Policymakers kept rates steady at a more than two-decade high on Wednesday and dialed back their forecasts to pencil in just one quarter-point rate cut by year end, about half of what markets are pricing in. This morning’s PPI report had already delivered what traders were waiting for, the key measure of inflation cooled to…
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CU Funding Compass Week of June 13, 2024

Policymakers kept rates steady at a more than two-decade high on Wednesday and dialed back their forecasts to pencil in just one quarter-point rate cut by year end, about half of what markets are pricing in. This morning’s PPI report had already delivered what traders were waiting for, the key measure of inflation cooled to…
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CU Funding Compass Week of June 6, 2024

Bonds fell yesterday as traders weighed mixed economic data for clues on the Federal Reserve’s next steps. Earlier Wednesday, a private payrolls reading highlighted that hiring at US companies grew at the slowest pace since the start of the year. Traders are now gearing up for Friday’s monthly payrolls report, which is expected to show…
Read More...

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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