Sector Update

April 11, 2022

A few points to start your week

See this morning’s Market Today for a quick recap of last week
Yields increased sharply last week, curve steepened and “un-inverted” at 2s-10s
If March pricing gave you pause closing out the month and quarter, for perspective
- YTD 3-year Treasury is +177 bps of which 88 bps occurred in March
- YTD 5-year Treasury is +150 bps of which 74 bps occurred in March
- Intermediate Treasurys (3.9 Eff Dur) had lowest monthly return in over 30 years
On the back of higher yields, spreads also look attractive in many sectors looking back 12-months (see Spread Snapshot)
- With the steep rise in intermediate yields, activity was largely focused in this area last week

Individual Sector Updates – Click to Access

Intermediate Treasurys, in March, posted worst single month return in over thirty years

Today – Equities largely negative, curve slightly steeper, oil down 3.7%

Five-Year Lookback: Loans/Deposits Ratio

Five-Year Lookback: Net Loans/Assets

Upcoming Webinars – (1 hour CPE available, registration opens 2 weeks prior to each webinar)

2/22 Bank: Positioning the Investment Portfolio for Performance ( slides | webinar replay )

2/24 Credit Union: Positioning the Investment Portfolio for Performance ( slides | webinar replay )

3/8 Bank: Balance Sheet Strategies in an Expected Tightening Cycle ( slides | webinar replay )

3/10 Credit Union: Balance Sheet Strategies in an Expected Tightening Cycle ( slides | webinar replay )

4/7: 2nd Quarter Economic Outlook Webinar ( slides | webinar replay )

4/12 Bank: Interest Rate Swaps, Not Just for Hedging (open for registration)

4/14 Credit Union: Interest Rate Swaps, Not Just for Hedging (open for registration)

5/10 Bank: Balance Sheet Management and Your Loan Portfolio

5/12 Credit Union: Loan Participation Market Overview

Treasury yields higher, curve flatter to begin 2022, 2-, 3-, and 5-year “un-inverted” last week as curve turned steeper

Yield on 2- and 3-year approaching a 200 bps move higher in 2022

Yield on 5-year +153 bps and 10-Year +124 bps Year-to-Date

Curve Shape – 2s5s currently at 26 bps, very flat for this point in a rate cycle

Curve Shape – 2s10s “un-inverted” last week, currently at 23 bps, very flat for this point in a rate cycle

Mortgage rates continue their climb

Majority of active coupons trading at a discount

What We’re Reading

Market Today | Daily

Weekly Recap | Weekly, Friday

Monthly Review (February) | Monthly, 1^st business day

Brokered Deposit Rate Indications | Weekly, Monday

Investment Alternatives Matrix | Weekly, Tuesday

MBS Prepay Commentary (April) | Monthly, 5^th business day

SBA Prepay Commentary (March) | Monthly, 10^th business day

WSJ: Bank Deposits Could Drop for First Time Since World War II

“The industry has $8.5 trillion more in deposits than loans, according to Barclays analysts. While loan demand is expected to increase, and the banks need deposits to fund the lending, that is more than enough.”