Sector Update

April 18, 2022

A few points to start your week

See this morning’s Market Today for a quick recap of last week
Through Wednesday, yields declined substantially on the front end of the curve, gave back on Thursday though
Overall, curve continued to steepen last week as short yields fell and long yields increased
Both economic data and “Fedspeak” continue to point toward a 50bps increase at their May 4^th meeting
YTD changes in Treasury yields: 2-Year +173 | 3-Year +171 | 5-Year +150 | 10-Year +132 (charts below)
On the back of higher yields, spreads also look attractive in many sectors looking back 12-months (see Spread Snapshot)

Individual Sector Updates – Click to Access

Today – Markets moving slow and relatively unchanged, equities and yields are mixed, curve shape +/- 1 bp from Friday

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)

1/11: 1st Quarter Economic Outlook Webinar ( slides | webinar replay )

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 )

4/12 Bank: Interest Rate Swaps, Not Just for Hedging

4/14 Credit Union: Interest Rate Swaps, Not Just for Hedging

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, curve remained “un-inverted” and moved steeper last week

Yield on 2- and 3-year declined slightly last week and are level this morning

Yield on 5- and 10-year increased last week and are fairly level this morning so far

Curve Shape – 2s5s currently at 31 bps, very flat for this point in a rate cycle

Curve Shape – 2s10s further steepened last week, currently at 37 bps, very flat for this point in a rate cycle

Mortgage rates continue their climb, 30-Year at 5% for first time in years

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: Hot Economy, Rising Inflation: The Fed Has Never Successfully Fixed a Problem Like This

” For now, Fed officials are in agreement they should seek to raise rates quickly to a level that no longer provides stimulus. They have signaled they are likely to approve a half-percentage-point increase at their meeting next month, and possibly again in June. The Fed hasn’t raised rates in such a large increment since 2000.”