July 31st Aug 4th

DAY EVENT PERIOD SURVEY PRIOR NOTE

Tues PCE Core MoM June 0.1% 0.1% Lots of economic data on tap for the week, led off by PCE numbers on
Tues PCE Core YoY June 1.4% 1.4% Tuesday, which is the Feds preferred measure of inflation. Later in the
Fri Change in Nonfarm Payrolls July 180k 222k week, Julys unemployment numbers will be released. Markets will
Fri Unemployment Rate July 4.3% 4.4% spend the week interpreting these numbers and anticipating how they
Fri Avg Hourly Earnings YoY July 2.4% 2.5% will affect future Fed action.

Euro zone core inflation unexpectedly picks up in July (Reuters) Raymond James Bond Market Commentary
Dollar Weighed By Month-End Flows, Renewed Political Tensions (Bloomberg) Interest Rate Monitor Index Monitor
Fixed Income Market Commentary by Kevin Giddis (RaymondJames.com) External Links: Investing In Bonds and MSRB

TREASURIES Friday WEEK AGO CHANGE 1-YR AGO

Five- to thirty-year Treasury yields inched up during the week of the 24th as the Equities (Price Appreciation)
seven- and ten-year yields were up 5 and 6 basis points, respectively, and the thirty- DJIA 21830.31 21580.07 250.24 18456.35
year 8 bp by weeks end. Many experts anticipate the two- to ten-year rates to S&P 500 2472.10 2472.54 -0.44 2170.06
continue to flatten, but the two-year ending the week virtually flat slowed the trend Nasdaq 6374.68 6387.75 -13.08 5154.98
for the week. The ten-year yield is settled at the lower rate end of its recent trading Treasuries
1 yr 1.220 1.220 0.000 0.530
range. Another week of mixed economic data contributes to a sense that investors
2 yr 1.340 1.360 -0.020 0.720
finally realize that low trending rates may persist for longer than expected. Forward
5 yr 1.830 1.810 0.020 1.090
observations are focused on Fed timing for balance sheet adjustments as well as the 10 yr 2.300 2.240 0.060 1.520
ECBs timing to taper their purchase program measured against any movement in 30 yr 2.890 2.810 0.080 2.230
stubbornly stagnant inflation. Anticipation of further Fed action is being pushed out Brokered CDs
to next year. 3 mo 1.250 1.250 0.000 0.600
BROKERED CDs 6 mo 1.400 1.400 0.000 0.650
Order flow continues to be strong inside of a year. Bank of China is leading the way, 1 yr 1.500 1.500 0.000 0.800
topping out at a 1.50% coupon. Some buyers are stepping out the extra month to 2 yr 1.700 1.700 0.000 1.050
pick up some of the 13mo offerings from Wells Fargo and Safra Natl Bk. Moving out 3 yr 1.900 1.900 0.000 1.200
farther, look for Discover Bk and Ally Bk to be the strongest in the 2-5yr space 5 yr 2.300 2.300 0.000 1.600
10 yr 2.600 2.600 0.000 2.150
currently. Well be watching for both Cap One banks, Sallie Mae, and Barclays to get
Municipal G.O. (AAA) MMD Scale
back into the market this week. Weve seen strong coupons from these banks in the
1 yr 0.850 0.850 0.000 0.460
last few weeks and are hoping for them to continue issuing. For those of you with 2 yr 0.940 0.940 0.000 0.520
large holding in Everbank, please be cautious with your FDIC limits when youre 5 yr 1.210 1.210 0.000 0.840
purchasing TIAA FSB offerings. Everbank is now issuing under the name TIAA FSB 10 yr 1.950 1.900 0.050 1.410
following the finalization of TIAAs acquisition of Everbank and their offerings are not 30 yr 2.740 2.690 0.050 2.120
separately insured. Municipal G.O. (AAA) MMD TEY @39.6%
MUNICIPALS 1 yr 1.407 1.407 0.000 0.762
Municipal yields were mixed for the week. MMD yields were flat from 1 to 6 years 2 yr 1.556 1.556 0.000 0.861
and higher by 5 bp at the 10 and 30-year maturities. Muni-Treasury ratios were 5 yr 2.003 2.003 0.000 1.391
higher at both 10 and 30 years for the week, and now sit at ~85% and ~95%, 10 yr 3.228 3.146 0.083 2.334
respectively. New issue volume is expected to rise to more normal levels of $7.16 30 yr 4.536 4.454 0.083 3.510
MBS 30-yr (Current Coupon)
billion, from last weeks $4.17 billion, according to Thomson Reuters. Volume is
FNMA 2.975 2.947 0.028 2.330
slightly higher than average for the year. There are 19 scheduled sales larger than
GNMA 2.822 2.789 0.033 2.213
$100 million, five of those are transportation related. The largest competitive sale at Corporate Index (A)
$252.8MM is the Metro Atlanta Rapid Transit Authority (Aa2/AA+). The CA Bay Area 1 yr 1.577 1.575 0.002 0.965
Toll Authority is anticipated to be $1.1 billion (senior Aa3/AA, subordinate A1/AA-). 2 yr 1.812 1.809 0.003 1.213
See the New Issue Calendar for additional transactions coming to market this week. 5 yr 2.419 2.402 0.017 1.784
CORPORATES 10 yr 3.172 3.128 0.044 2.566
Demand for quality credit spread product persists keeping corporate investment- 30 yr 3.934 3.866 0.068 3.526
grade spreads trending lower. Corporate earnings have fared relatively well so far Corporate Index (BBB)
this earnings season, which is encouraging to investors as they access credit risk of 1 yr 1.808 1.812 -0.004 1.342
corporations and helping to keep spreads low. Roughly 50 bp of additional spread 2 yr 2.072 2.072 0.000 1.657
5 yr 2.782 2.771 0.011 2.365
can be picked up moving from A rated bonds to BBB rated bonds, so for investors
10 yr 3.664 3.631 0.033 3.177
whose risk tolerance does not demand an A rating, consider looking at BBB rated
30 yr 4.367 4.317 0.050 4.108
names to pick up additional yield. Should the Treasury curve continue to flatten, Corporate CDS Index (bps)
history suggest we might see the corporate curve steepen if spreads on the 5 yr 57.34 56.90 0.44 78.78
intermediate to long end of the curve widen relative to the short end. For more Other Rates
information on credit spreads and index performance please see our Weekly Index 3m LIBOR 1.311 1.314 -0.004 0.757
Monitor here. Fed Funds* 1.000 1.000 0.000 0.250

(Source: Bloomberg LP, MMD, Raymond James) as of 7/31/17

*Lower bound of range. All entries are percentage (%) unless otherwise noted.
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