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March 19, 2014
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Monday | April 14, 2014

Looking Back...

  • The falling equity market sparked a bid to treasuries last week, pushing yields lower across the curve. Yields moved back to the lower end of their recent ranges with the 10-yr closing the week at 2.62%. On the week, 5-, 10-, and 30-yr yields moved lower by 10, 8, and 9 bps, respectively.
  • According to the minutes from the March 18th-19th meeting of the FOMC, "Several participants noted that the increase in the median projection overstated the shift in the projections." The short-end and belly of the curve moved lower as the market re-adjusted its expectations for the timing and size of the first rate hike. It is worth noting that the minutes made no mention of the "six month" timetable after the end of QE for an increase in rates, further discounting Yellen's press conference comments.
  • There has been a great deal of interest surrounding the possibility of new stimulus measures from the European Central Bank ("ECB"), such as an implementation of a quantitative easing program. This speculation drove Eurozone rates lower; the German 10-yr yield dropped below 1.50% for the first time since June 2013 and the Spanish 5-yr yield briefly dropped below the 5-yr UST yield. The initiation of a bond buying program by the ECB, signaling continuing weakness throughout the Eurozone, may trigger a move lower in US rates.

Looking Ahead...

  • The Treasury market will close early at 2pm on Thursday and will remain closed Friday ahead of the Easter Holiday.
  • Economic data will be light on the holiday-shortened week, headlined by March Retail Sales which rose 1.1% m/m versus expectation for a 0.9% increase. Housing data will also be abundant, as market participants look for a rebound in Housing Starts and Building Permits after the slow winter months. Rising home prices and construction activity have proved to be critical to the recent economic recovery and remain a bellwether for further spending and confidence.
  • The Fed's Beige Book, containing economic data to be used at the Fed's April 30th meeting, will be released Wednesday. While the March Employment Report came in slightly below expectations, Fed members have since opined that March's 192k increase was a good step in the right direction for the employment situation.

The information represented herein was obtained from various sources, which we believe to be reliable.  Neither the information presented nor opinions expressed constitutes an offer to buy or sell any security. And it is not intended to guide the investor on which securities to buy, or when to buy or sell.


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<$500K $500K-$10M >$10M
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Fix/Call K195 (1.5 NC 3) 0.37%
Fix/Call K196 (2 NC 3) 0.51%