In the past several weeks the market has seen large downward movements in both taxable and tax-exempt interest rates. Nevertheless, the treasury yield curve continues to remain inverted – particularly on the front end – and it continues to be a good time for issuers to benefit from reinvesting bond proceeds and locking in higher short-term investment rates
A significantly inverted treasury yield curve with elevated short-term rates continues to persist in the market. As a result, many issuers and conduit borrowers are finding the opportunity to earn positive arbitrage on their bond proceeds
The Federal Reserve held interest rates constant at this month’s FOMC meeting, yet we continue to see a significantly inverted treasury yield curve with elevated short-term rates. The one-year treasury rate has increased over 100 basis points in the past 6 months. As a result, issuers can benefit from reinvesting bond proceeds and lock-in higher short-term investment rates
Fitch Ratings downgraded the United States’ long-term debt from AAA to AA+ on August 1st. This is the first rating downgrade the United States has faced in over a decade since S&P downgraded its credit rating from AAA to AA+ in August 2011. Both Moody’s and Kroll continue to hold a ‘AAA’ level rating equivalent for the United States
The Federal Reserve raised interest rates again this week by 0.25%, bringing borrowing costs to their highest levels in over 22 years. While it’s possible that rates could be increased again in the next Fed meeting in September, the current market census (according to the Bloomberg Weighted Average Fed Target Upper Bound economic forecast shown below) is that this rate hike may be the last increase in the near future
President Biden signed the Fiscal Responsibility Act of 2023 bill this weekend, suspending the debt limit through January 1, 2025. As a result, the sale of State and Local Government Securities (SLGS) resumed yesterday, June 5th, as of 12pm ET
The government took the “extraordinary measure” of suspending the selling of State and Local Government Securities (SLGS) effective on May 2, 2023 at 10:00a.m. ET
The Federal Reserve raised interest rates again last month by 0.25% and we continue to see a significantly inverted treasury yield curve. As a result, issuers can benefit from reinvesting bond proceeds and lock-in higher short-term investment rates
At Blue Rose, we’re seeing many issuers are evaluating the trade-off between risk and return associated with Guaranteed Investment Contracts (“GICs”) for the investment of bond proceeds. While both a repurchase agreement (“repo”) and GIC can offer the certainty of a fixed rate of return, capital preservation, and intended liquidity, a GIC can result in a much higher yield
As expected, the U.S. government’s debt limit was reached today. Treasury Secretary Janet Yellen identified this situation in a letter to Congress last week
