Sector Update

February 22, 2022

A few points to start your week

Today – Equities broadly off, curve pushing flatter led by short-end

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 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 unchanged last week, 21 bps flatter YTD through this morning

Curve Shape – 2s10s moves 3 bps wider last week, 37 bps flatter YTD through this morning

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 (February) | Monthly, 10th business day

WSJ: Rising Rates Hit Munis

“Investors have pulled a net $6.7 billion from municipal-bond funds so far this year, according to Refinitiv Lipper, the most sustained outflows since March and April 2020, when early-pandemic shutdowns left investors panicked that cities and towns would struggle to pay bills.”

Vining Sparks: Strategic Insight: HTM and Other Alternatives

The recent increase in interest rates and discussion of the Fed paring back its QE measures has caused many depository institutions to focus on their exposure to earnings and capital from rising interest rates. There are three primary areas where exposure to rising rates is most easily quantifiable: in net interest income simulations, in economic value of equity (EVE) simulations, and in projected price volatility for the investment portfolio. For institutions beginning to encounter exposure to higher rates, there are several strategic options available to reduce interest rate risk.

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: Coronavirus Chartbook and Coronavirus State Charts

The information included herein has been obtained from sources deemed reliable, but it is not in any way guaranteed, and it, together with any opinions expressed, is subject to change at any time. Any and all details offered in this publication are preliminary and are therefore subject to change at any time. This has been prepared for general information purposes only and does not consider the specific investment objectives, financial situation and particular needs of any individual or institution. This information is, by its very nature, incomplete and specifically lacks information critical to making final investment decisions. Investors should seek financial advice as to the appropriateness of investing in any securities or investment strategies mentioned or recommended. The accuracy of the financial projections is dependent on the occurrence of future events which cannot be assured; therefore, the actual results achieved during the projection period may vary from the projections. The firm may have positions, long or short, in any or all securities mentioned. Member FINRA/SIPC.
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