Economic and Fixed Income Insights as of January 31, 2018

Presented by Stifel, Nicolaus & Company, Incorporated

Janet Yellen’s final FOMC meeting as Chair of the Federal Reserve concludes today, and the latest policy decision and accompanying statement will be released at 2:00 p.m.  Market participants widely expect rates to remain at the current range of 1.25%-1.50% but will be combing the statement for any sign of a more hawkish tone for monetary policy that could indicate a quicker removal of accommodation than the three hikes the Fed has forecast for 2018.  A rate increase at the March FOMC meeting is largely considered a lock at this point.  Friday, the latest round of jobs data is expected to continue the trend of robust hiring.  Key in the report will be wage growth, which has remained sluggish despite unemployment that remains near record lows. Bond yields continued to trend higher for the week ended January 30, 2018.  The 10-year UST climbed 11 basis points to yield 2.72%, and the 30-year UST finished 7 basis points higher to 2.97%.  Municipal yields outpaced their taxable counterparts.  The 10-year MMD jumped 19 basis points to yield 2.34% while the 30-year MMD finished 18 basis points higher to yield 2.91%.

Interest Rate Observations

Benchmark Current Previous
(+/-) Change Previous
(+/-) Change
10-Year UST 2.72% 2.61% 11 2.47% 25
30-Year UST 2.97% 2.90% 7 3.08% (11)
10-Year MMD 2.34% 2.15% 19 2.34% 0
30-Year MMD 2.91% 2.73% 18 3.09% (18)
Federal Funds Rate 1.50% 1.50% 0 0.75% 75
1-month LIBOR 1.57% 1.56% 1 0.78% 79
SIFMA 1.16% 1.23% (7) 0.65% 51
10-year LIBOR Swap 2.74% 2.64% 10 2.38% 36

Source: Thomson Reuters, Bloomberg. The table above reflects market conditions as of January 30, 2018.

Important Disclosures

This material was prepared by Stifel, Nicolaus & Company, Incorporated (“Stifel”). This material is for informational purposes only and is not an offer or solicitation to purchase or sell any security or instrument or to participate in any trading strategy discussed herein. The information contained is taken from sources believed to be reliable, but is not guaranteed by Stifel as to accuracy or completeness. Past performance is not necessarily a guide to future performance. Stifel does not provide accounting; tax or legal advice and clients are advised to consult with their accounting, tax or legal advisors prior to making any investment decision.

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