Sector Update

October 19, 2020

The treasury curve was slightly flatter last week as Treasury yields declined. Shorter maturities declined by 1-2 bps and longer maturities declined by 3-4 bps. The 2-10 spread closed last week 1 bp lower at 61 bps. From a larger picture standpoint though, the 2-10 spread looks to have pushed out of the range it has occupied for most of the Pandemic. As the election nears, polls indicate a greater chance of Democrats taking both the White House and the Senate. Naturally, markets have taken notice. The greater likelihood of additional stimulus measures and associated increases in borrowings is likely pushing the curve steeper. It is only fair to mention a quicker-than-anticipated economic recovery would likely produce the same results too.

This Morning

Stocks, gauged by S&P 500 Index, extended their winning streak to 3-weeks on slight gains. So far this morning, equities are leaning weak but largely unchanged. Treasury yields are slightly higher and marginally steeper. The 2-10s is 1 bp higher from the Friday close, currently at 61 bps.

Sector 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 (October) | Monthly, 5th business day

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

Vining Sparks: Year-End Balance Sheet Management

“As the end of 2020 approaches and preparations for next year begin, we have updated our annual Year-End Checklist to reflect these unique challenges to help with your planning process. Additionally, we have developed several balance sheet and portfolio management strategies for your consideration.”

Vining Sparks: Loan Trading: Auto Market Analysis

“We continue to review a large number of auto portfolios for customers across the country – both from a rate setting and underwriting standpoint. Over the last 9 years, we have built a database that contains over 2mm auto loans, totaling more than $50 billion in balance.”

Vining Sparks: Coronavirus Chartbooks

PDF/Mobile: Coronavirus Chartbook (PDF)

Regulatory Links

FDIC: 10/14 3rd Quarter 2020 Call Reports (FIL-97-20)

SBA: 10/8 SBA and Treasury Announce Simpler PPP Forgiveness for Loans of $50,000 or Less

Fannie Mae: 9/30 Fannie Mae Extends Timeframe for Single-Family MBS Delinquent Loan Buyout Policy

Ginnie Mae: 9/24 Notification regarding Loans after Deferment Loss Mitigation

FHFA: 9/24 Extends Buying Loans in Forbearance & COVID-Related Loan Processing Flexibilities

Ginnie Mae: 9/21 Ginnie Mae Announces Pooling Restrictions for LIBOR-based Adjustable-rate Mortgages

FDIC: 9/18 Results of Summary of Deposits Annual Survey

Federal Reserve: 9/16 Federal Reserve issues FOMC statement

LIBOR Transition Links

ARRC 9/30: August – September ARRC Newsletter

ARRC 8/27: Recommended Hardwired Fallback Language for Bilateral Business Loans

ARRC 8/18: Transition Resource Guide for ARM and Private Student Loans

ARRC 8/7: ARRC Releases the SOFR Starter Kit

ARRC: Link to all ARRC Announcements

ARRC: Link to all ARRC Publications

ARRC: Link to ARRC Fallback Contract Language

Fannie Mae: LIBOR Transition Webpage

Freddie Mac: LIBOR Transition Webpage

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