April 19, 2021
This week’s Sector Update publication is abbreviated due to our Bond Academy Virtual Conference Series. It’s not too late to sign up for remaining sessions, please see more information below.
For the second week in a row, we saw Treasury yields decline even with largely positive economic news. The big question last week, especially Thursday, was “what’s going on with yields?”. There is no shortage of explanations, most of them technical rather than fundamental. I’ve previously written about the bond market struggling to square the obvious increases in economic activity, huge amounts of stimulus, and the potential for inflation with the message the Federal Reserve is consistently giving about removing accommodation. Perhaps, the market is acquiescing to the Fed’s belief that inflation will be transitory and that more sustainable inflation will be harder to achieve.
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Bank 5/11: Loan Trading
Credit Union 5/13: Loan Trading
Bond Academy – April 19-22, 8 Session Virtual Conference Series
We are excited to introduce our virtual Bond Academy, an 8-part series designed to provide depository portfolio managers with the basic knowledge needed to help plan and create effective investment portfolios.
Bank: 4/19 – 4/22: Two sessions daily at 10:00 am and 1:30 pm Monday through Thursday
Credit Union: 4/19 – 4/22: Two sessions daily at 11:30 am and 3:00 pm Monday through Thursday
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Treasury yields are slightly higher from Friday’s close. Broad U.S. equity indices are largely off this morning after the Dow and S&P ended last week both hitting record closes on Thursday and Friday.
Long and intermediate yields decline, short yields unchanged
10-Year down to 30 bps from where it started 2020, 5-year off by 85 bps
Yield Curve Shape – 2s-5s and 2s-10s still steep, even after recent pullbacks
What We’re Reading
Market Today | Daily
Weekly Recap | Weekly, Friday
Brokered Deposit Rate Indications | Weekly, Monday
Investment Alternatives Matrix | Weekly, Tuesday
MBS Prepay Commentary (April) | Monthly, 5th business day
SBA Prepay Commentary (April) | Monthly, 10th business day
“In fact, the impressive size of banks’ reserve releases is indicative of how strong their customers’ balance sheets are. That is good news for credit costs, but it is also suggestive of how long it will be before spending will pick up enough to send customers back to the well for more debt that will ultimately sustain banks’ earnings over time.”
Vining Sparks: Coronavirus Chartbook