Sector Update

July 1, 2019

We are publishing a broad market commentary this week due to the July 4th holiday. Individual sector updates will return next week. We wish everyone a happy and safe Independence Day.

Treasury yields closed out the second quarter of 2019 40-50 bps lower on maturities between 1-10 years. The second quarter was marked with increasing and greater uncertainty. You wouldn’t be able to tell judging by US equity markets though. For example, the S&P 500 posted its best first-half performance in 22 years (since 1997). We wrote at the end of the first quarter of headwinds to yields pushing back up. These headwinds included the lack of a trade deal with China, weakening global economic activity, meaningful changes in inflation expectations, and a “doveish” Fed. The second quarter provided no relief from these pressures and, by many estimates, deepened. In fact, sentiment has changed so much that markets have the odds of a Fed easing near 100% for the July 31st meeting. For reference, it was only 24% at the start of the quarter. The third quarter, much like the second, will likely be driven by these same factors.

Q2 2019 Spread Commentary

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 (June) | Monthly, 5th business day

SBA Prepay Commentary (June) | Monthly, 10th business day


WSJ: Treasury Yields Decline for Third Quarter in a Row

“The moves have come amid an escalating trade war between the U.S. and China that is pushing the world’s largest central banks—including the Federal Reserve—toward a looser monetary-policy stance as they fight to support flagging growth.”

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