Credit Market Report

 April 26, 2017

Treasury yields hover near 2-week highs ahead of Trump tax plan: Treasury yields showed little change as investors look ahead to President Donald Trump’s plans for a corporate tax cut which could give a further boost to stocks and other assets perceived as risky and, in turn, curtailing appetite for havens like government bonds.

Influencing Factors:

  • Investors are waiting for Trump to roll out his tax package on Wednesday. Sources within the new administration have suggested he will lower the corporate tax rate from 35% for the top payer to 15%. Though corporations blame the onerous tax regime for crimping growth and discouraging the repatriation of profits, many do not pay the full headline tax rate through deductions and credits.
  • “The “tax code rally” doesn’t have the same ring to it, however, an aggressive cut to the tax rate could be a key driver for stocks going forward, as long as the plan is not watered down by Congress in the legislative phase,” said Kathleen Brooks, research director at City Index, in a note.
  • But bond markets have displayed a distrust of Trump’s ability to reach across the aisle and carry out major fiscal reforms. Though Treasury yields have risen over the last few days, they are still a far cry away from 2.60%, their highest levels during the early days of Trump’s presidency.

Fixed Rate Indices

Maturity Coupon Yield Change
2-year... 03/19 1 2/8% 1.275%    ( + )
5-year... 03/22 1 7/8% 1.852%    ( + )
7-year 03/24 2 1/8% 2.135%

   ( + ) 

10-year 02/27 2 2/8% 2.330%    ( + )
30-year 02/47 3 0/8% 2.983%    ( + )
Treasury Rates are as of 04-25-2017 as reported by The Wall Street Journal.

Prime Rate

Prime... 4.00%
Last effective change 3-16-2017

Floating Rate Indices

30-day LIBOR..... 0.99222%
90-day LIBOR..... 1.17039%
6-month LIBOR... 1.42361%
1-year LIBOR...... 1.77483%

London Interbank Offered Rates are as of 04-25-2017 as reported by The Wall Street Journal.

Spread Markets

Maturity Spreads Rate
2-year SWAP.... 32.10 bps 1.5960%
5-year SWAP.... 11.50 bps 1.9670%
7-year SWAP....  -1.30 bps 2.1220%
10-year SWAP... -4.50 bps 2.2850%

SWAP Rates are as of 04-25-2017 as reported by ©