Baker Market Update – wk220610

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More volatility in the bond market this week as Treasury yields edged higher and the curve flattened. The 2Yr T-Note increased over 30 basis points since Monday and currently yields 2.97%. Farther out, the 10Yr currently sits at 3.13% this morning which is around 15 basis points higher from last Friday’s close. The 30Yr long […]

Baker Market Update – wk220513

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“No one here thinks that it will be easy” warned Federal Reserve Chairman Jerome Powell on Thursday as he discussed the notion of a soft landing when it comes to the US economy. He was confirmed in the Senate (80-19 vote) and will continue to lead the central bank’s campaign in fighting public enemy number […]

Interest Rate Risk in 2022: Assumption Junction

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In March this year, the Federal Reserve lifted interest rates for the first time since 2018. Today, both the bond market and FOMC have set the stage for an aggressive rate path given current inflation challenges. Given this outlook, there will be a renewed focus from regulators relating to interest rate and liquidity risk. If […]

Baker Market Update – wk220414

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It was a week of steepening for the yield curve. Two- and five-year Treasury yields drifted lower approximately ten basis points (2.40% and 2.69%) while the 10-year dropped four basis points (2.74%) and the long bond (30yr 2.85%) drifted higher five basis points as of Thursday morning. With the recent drop in shorter term yields […]

Baker Market Update – wk220128

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It was another volatile week in the markets. Stocks are set to close with their fourth weekly loss and bond yields have bounced around as they digest the Fed’s plans to raise the Fed Funds Rate in March and reduce the $7 trillion balance sheet. Looking at the Treasury market, we are continuing to see […]

Baker Market Update – wk211231

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Happy New Years to all as we wrap up the final trading week of the year. Looking at bonds this morning, the 30yr US Treasury is trading at a yield of 1.91%, along with 10yr at 1.51% and the 2Yr is 0.72%. Of recent note is the flattening of the yield curve. A common measure, […]

Baker Market Update – wk211119

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The US Treasury market saw a rebound this week with yields drifting slightly lower across the curve. After some upward pressure from last week’s 30yr high on headline inflation print (CPI=6.2%) rates settled back down approximately 5 to 10 basis points as the market continues to digest recent economic data as well as the timing […]

Baker Market Update – wk211015

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After three weeks of drifting higher, treasury yields were largely unchanged given the shortened holiday week. UST maturities five years and longer all saw flat or slightly lower yields and were effectively range bound within 5 to 10 basis points. The two-year part of the curve edged higher five basis points is currently sitting at […]

Under Pressure – Net Interest Margins

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A long time ago there was an adage in the banking industry known as the “3-6-3 rule,” meaning the banker would gather deposits at three percent, lend them out at six percent, and be sure to arrive at the golf course by 3 o’clock in the afternoon. The implication with this old adage was that […]

Baker Market Update – wk210820

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Markets For a week with significant geopolitical turmoil and the continued threat of the Delta variant, the bond market was largely unchanged. Yields as across the curve remained range bound as the 10Yr started the week at 1.27% and is currently 1.24%. Both short- and long-term rates acted similar as the 2 Year sits at […]

Baker Market Update – wk210806

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Treasuries yields edged slightly higher across the curve this week as the 10-Year UST Note sits at 1.28% from 1.17%, Monday’s close. These levels may look familiar as the 10Yr yield has bounced between 1.2 and 1.4% over the last month of trading. Equity markets look to end the week higher as all of the […]

Muni Bonds and Rate Volatility

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Interest rates go up, prices go down. Ask any fixed income portfolio manager in the world what the first rule of investing in bonds is and you’ll hear the phrase above or something similar. And while the notion that bond prices decline as interest rates increase is not a matter of opinion but math, it […]

PPP Loans: Modeling the Madness

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By Dale Sheller and Matt Harris As summer winds down, the same goes for the Payroll Protection Program (PPP) as August 8 was the final day for application. This critical but controversial component of the $2 trillion CARES ACT passed in March this year created over $525 billion in loans with over five million applicants. […]