Credit Market Report

June 14, 2018

2-year Treasury yield hits more than 3-week high as Fed lifts rates Treasury yields rose Wednesday after the Federal Reserve raised its key interest rate and dropped language that rates would remain below its long-term rate in its June policy statement.

Influencing Factors:

  • As expected, the Fed raised the fed-funds rate by a quarter percentage point to a range of 1.75% to 2.00%, marking its second increase in 2018 and its seventh since the commencement of a path of normalization for the central bank since 2015.
  • The central bank took away longstanding language that rates would remain below its expected long-term rate in its policy statement, which investors construed as a potentially hawkish sign. The dot plot, a plot of projections for future interest-rate increases by policy makers, now reflects two additional rate hikes this year. The median forecast for the Fed-fund rates by the end of the year now stands at 2.4%, compared with the March forecast of 2.1%.
  • Investors also said the announcement to have a press conference after every Fed meeting represents a shift to winnow away forward guidance. With every meeting now potentially becoming a turning point for monetary policy, the move would give extra flexibility for the central bank to change course when it sees fit.

Fixed Rate Indices

Maturity Coupon Yield Change
2-year... 04/20 1 2/8% 2.578%   ( + )
5-year... 04/23 1 6/8% 2.840%   ( + )
7-year 04/25 2 0/8% 2.940%

  ( + )

10-year 05/28 2 3/8% 2.979%   ( + )
30-year 05/48 3 % 3.103%   ( + )
Treasury Rates are as of 06-13-18 as reported by The Wall Street Journal.

Prime Rate

Prime... 5.00%
Last effective change 06-13-2018

Floating Rate Indices

30-day LIBOR..... 2.07325%
90-day LIBOR..... 2.34063%
6-month LIBOR... 2.50013%
1-year LIBOR...... 2.76688%

London Interbank Offered Rates are as of 06-13-18 as reported by The Wall Street Journal.

Spread Markets

Maturity Spreads Rate
2-year SWAP.... 23.50 bps 2.8130%
5-year SWAP.... 11.20 bps 2.9520%
7-year SWAP.... 3.80 bps 2.9780%
10-year SWAP... 3.80 bps 3.0170%

SWAP Rates are as of 06-13-18 as reported by the Wall Street Journal.