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Basis Points: Reinvest Market Update

Markets reacted strongly in the past week following the July non-farm payroll report coming out lower than expected, along with an increase in the unemployment rate.
As a result, treasury rates fell rapidly. In the past week, treasury rates decreased ~26-32 basis points in the 1-3 year range and 6-15 basis points in the 5-30 year range. According to the CME’s FedWatch, as of August 8 there was a 43.5% chance the Federal Reserve will reduce rates by 25 bps and a 56.5% chance of a 50 bps cut in September. If this occurs, we can expect to see more volatility and a continuation of falling short-term rates.
 
As we have discussed in previous articles this year, we encourage borrowers and issuers coming to market with tax-exempt new money issuances or with unspent tax-exempt bond proceeds to take advantage of the inverted yield curve and consider their options for locking in a fixed-rate product for their reinvestment.  
US Treasury Yield Curve Comparison
Federal Funds Rate

Below we show current reinvestment rate indications. For a more tailored indication to your specific fund(s) or to discuss the risks and benefits associated with these structures, please reach out to Georgina Walleshauser or your Blue Rose advisor.  

Average Life
GIC
Repo
Portfolio
1-year
4.65%
3.83%
4.40%
2-year
4.25%
3.53%
3.95%
3-year
4.03%
3.80%

Georgina Walleshauser, Vice President | 952-746-6036  

 

In her role of Vice President, Georgina Walleshauser manages a number of the firm’s clients, providing them with advice on and ensuring a smooth closing for all types of debt and derivative product transactions, capital planning solutions, and detailed credit assessments. Ms. Walleshauser serves as an advisor to public and private higher education, non-profit and governmental institutions. She specializes in analyzing and assessing reinvestment strategies for clients, leading most of Blue Rose’s reinvestment transactions. Ms. Walleshauser has vast expertise in providing modeling, analytics, market data, and research in support of the delivery of capital planning, debt and derivatives advisory, and reinvestment services to our clients. She joined Blue Rose in 2017 as a Junior Quantitative Analyst.

 

Media Contact:  

 

Laura Klingelhutz, Marketing Coordinator

952-208-5710

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Blue Rose Capital Advisors is an independent financial advisory firm that does not engage in underwriting activities. We are registered with the Securities and Exchange Commission (SEC) and Municipal Securities Rulemaking Board (MSRB) as a Municipal Advisor. Because we have not engaged in underwriting activities in our history, we generally qualify as an Independent Registered Municipal Advisor (IRMA).

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