Sector Update

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.


Upcoming Webinars – (1 hour CPE available)

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

For more information, please contact your account representative or email info@viningsparks.com


Today

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


WSJ: Americans Are Spending, Not Borrowing. That’s a Problem for Banks.

“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


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