Sector Update |  |
February 14, 2022
- A few points to start your week
-
- Yields took off Thursday on the short end last week after a higher than expected January CPI read
- Amplified by comments from Fed President Bullard calling for 100 bps of increases by July 1st
- 2-year increased by 21 bps on Thursday, its largest daily move since 2009
- On Friday, yields declined after reports of Russia potentially invading Ukraine were made public
- See this morning’s Market Today for a quick recap of last week
- Interest Rate Products asks have you thrown away 70 bps since the start of the year?
- MBS activity strongest in 15- and 30-year, 30-year spreads relatively wide (see chart below)
- SOFR based Agency ARMs now available at discounts
- Mark your calendars for upcoming webinars, registration open for next in series (see below)
Individual Sector Updates – Click to Access
Agency Market | Agency MBS | Agency ARM | Agency CMO | Municipal Market | SBA Market | Interest Rate Products
Today – Yields 6-8 bps higher, curve slightly flatter, equities mixed
Longer-duration mortgage spreads move significantly higher
Equities off to a tough, and volatile, start to the year
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
2/24 Credit Union: Positioning the Investment Portfolio for Performance
3/8 Bank: Balance Sheet Strategies in an Expected Tightening Cycle
3/10 Credit Union: Balance Sheet Strategies in an Expected Tightening Cycle
Treasury yields soar, pushing yields above/towards pre-pandemic highs
Yield on 10- and 5-year maturities remain through pre-pandemic levels
Yield on 3-year moves above pre-pandemic levels, 2-year on the cusp
Curve Shape – 2s5s moves 11 bps flatter last week, 20 bps flatter YTD
Curve Shape – 2s10s moves 17 bps flatter last week, 37 bps flatter YTD
What We’re Reading
Market Today | Daily
Weekly Recap | Weekly, Friday
Monthly Review (January) | Monthly, 1st business day
Brokered Deposit Rate Indications | Weekly, Monday
Investment Alternatives Matrix | Weekly, Tuesday
MBS Prepay Commentary (February) | Monthly, 5th business day
SBA Prepay Commentary (January) | Monthly, 10th business day
WSJ: Inflation by Another Name
“Companies are finding all kinds of ways to make consumers pay for rising costs. Often that is not reflected in the posted price. The Labor Department’s consumer-price index, which measures how much consumers pay for goods and services, rose to 7.5% in January compared with the same month a year earlier—the biggest rise since February 1982.”
CNBC: Watch all the commercials from the 2022 Super Bowl
Vining Sparks: Loan Trading: Consumer Lending
It is important to stay abreast of market changes in rates and potential credit concerns that may be creeping in that could impact production and performance. We welcome the opportunity to assist you in evaluating your portfolio for areas of opportunity or provide additional color on this dynamic market.
Vining Sparks Interest Rate Products: Margin Compression: Causes and Solutions
In this article, we examine why the industry is facing margin compression, challenge some of the more prevalent assumptions about banks’ risks profiles and highlight our best ideas for dealing with the current environment.
Vining Sparks: Coronavirus Chartbook and Coronavirus State Charts