Credit Market Report

February 22, 2018

30-year Treasury bond yield hits highest since 2015 as Fed highlights inflation risk: Treasury yields rose Wednesday after the Federal Reserve released the minutes from its January monetary-policy meeting.

Influencing Factors:

  • The Fed’s minutes from the two-day January meeting were read as hawkish by market participants as senior Fed officials said the outlook for stronger growth this year suggested “further” rate hikes were in the cards. Central bankers raised the risk of inflation heading higher, giving long-dated yields the room to run higher. Price pressures tend to be bearish for bonds as they can erode the value of fixed-interest payments.
  • Investors have been on edge about rising interest rates since the jobs report for January showed that wages rose at the fastest pace since 2009, and a recent reading of consumer prices, the consumer-price index, showed a rise of 2.1% over a 12 month period ending in January.
  • “I think that to me this is a hand off from the doves to the hawks. The key phrase here in the minutes was that the Fed thinks the risk of inflation was creeping higher,” said Tom di Galoma, managing director of Treasurys trading at Seaport Global Securities.

Fixed Rate Indices

Maturity Coupon Yield Change
2-year... 02/20 1 2/8% 2.270%   ( + )
5-year... 01/23 1 6/8% 2.677%   ( + )
7-year 01/25 2% 2.860%

  ( + )

10-year 02/28 2 3/8% 2.943%   ( + )
30-year 02/48 3 % 3.223%   ( + )
Treasury Rates are as of 02-21-18 as reported by The Wall Street Journal.

Prime Rate

Prime... 4.50%
Last effective change 12-14-2017

Floating Rate Indices

30-day LIBOR..... 1.60251%
90-day LIBOR..... 1.91975%
6-month LIBOR... 2.14550%
1-year LIBOR...... 2.42563%

London Interbank Offered Rates are as of 02-21-18 as reported by The Wall Street Journal.

Spread Markets

Maturity Spreads Rate
2-year SWAP.... 23.90 bps 2.5090%
5-year SWAP.... 8.90 bps 2.7660%
7-year SWAP.... -2.30 bps 2.8370%
10-year SWAP... -2.80 bps 2.9150%

SWAP Rates are as of 02-21-18 as reported by the Wall Street Journal.