Shares of Bank of America (BAC) , one of the most interest rate-sensitive among big banks, gained 18.2% in the past month, outperforming the S&P 500 Index. Meanwhile, its close peers – JPMorgan (JPM) and Citigroup (C) – rallied 10.8% and 18.5%, respectively. BAC One-Month Price Performance Image Source: Zacks Investment ResearchThe U.S. stock market experienced notable volatility over the past month, largely due to developments in trade policy and monetary decisions from the Federal Reserve. Early in the pe ...

Summary of Conference Call Records Industry Overview - The records discuss the fixed income market in China, highlighting the impact of economic slowdown on global markets, with an estimated 1.5%-2% impact on global economic growth due to China's economic deceleration [1][2]. Key Points and Arguments - **Economic Slowdown**: High-frequency data from April indicates a significant slowdown in economic activity, with the Business Condition Index (BCI) dropping by 4.6 percentage points and new home sales down by 20-30% year-on-year, reflecting weak domestic demand [1][2]. - **Monetary Policy Constraints**: The monetary policy has not been timely or aggressive enough to stimulate demand, leading to a constrained downward movement in interest rates. The central bank has primarily played a passive role in liquidity management [1][2]. - **Market Outlook**: The political bureau meeting suggests limited government special bond supply and credit expansion pressure in Q2, with no large-scale stimulus policies expected. This indicates a higher likelihood of downward market movement and a lower probability of interest rates rising [1][3]. - **Investment Opportunities**: In the current market environment, there are opportunities arising from the narrowing yield spread between short-term and long-term government bonds. It is recommended to increase allocations in short-term government bonds and monitor credit bond investment opportunities closely [1][5]. - **Government Bond Issuance**: The issuance plan for special government bonds and supplementary bank capital bonds in Q2 is expected to have limited impact on market supply pressure, with net financing for special government bonds estimated at approximately 4.4 trillion yuan, slightly higher than Q1 [1][6]. - **Price Trends and Inflation**: The escalation of the US-China trade conflict and domestic economic slowdown have led to a significant drop in the industrial product price index, with expectations of a notable increase in PPI declines in April, potentially reaching a year-on-year drop of 2.8%-2.9% [1][7]. - **Trade Conflict Impact**: The ongoing US-China trade conflict is expected to have a delayed impact on economic indicators, with more pronounced effects anticipated by May 2025, which may lead to further downward pressure on interest rates [1][8]. Additional Important Insights - **Investment Strategy**: A "barbell" investment strategy is recommended, focusing on one-year term deposits and credit bonds, as well as long-term government bonds (10 years and above). This strategy is expected to provide better value given the current market conditions [1][9]. - **Interest Rate Projections**: The yield on 10-year government bonds is projected to potentially drop to around 1.4% this year, reflecting the limited upward movement in long-term bond yields due to substantial fundamental pressures and limited government bond supply [1][10].

Market Overview - The bond market continued its warm trend on April 28, with most government bond futures rising and interbank bond yields declining by approximately 1 basis point [1] - The central bank conducted a net injection of 103 billion yuan in the open market, indicating sufficient liquidity before the end of the month [1][5] - Analysts suggest that with a weakening fundamental outlook and increasingly accommodative monetary policy, there is potential for yields to break lower in the future [1] Bond Futures Performance - The closing prices for government bond futures showed an increase in the 30-year main contract by 0.30% to 120.180, while the 10-year main contract rose by 0.03% to 108.840 [2] - The yields on major interbank bonds also saw slight declines, with the 10-year government bond yield dropping by 0.85 basis points to 1.649% [2] International Bond Market - In North America, U.S. Treasury yields fell across the board, with the 2-year yield down by 5.94 basis points to 3.7377% [3] - In Asia, Japanese bond yields mostly retreated, with the 10-year yield decreasing by 1.5 basis points to 1.32% [3] - In the Eurozone, yields on 10-year bonds showed an increase, with French bonds rising by 2.2 basis points to 3.185% [3] Primary Market Activity - The results of the Tianjin local bond auction showed strong demand, with bid-to-cover ratios exceeding 19 times for all issues [4] - The 7-year bond "25 Tianjin Bond 22" had a winning rate of 1.80% and a bid-to-cover ratio of 19.25 [4] Liquidity and Monetary Policy - The central bank announced a 2.79 billion yuan reverse repurchase operation at a fixed rate of 1.50%, resulting in a net injection of 103 billion yuan for the day [5] - The deputy governor of the central bank indicated that adjustments to reserve requirements and interest rates would be made as necessary to maintain ample liquidity [6][7] Institutional Insights - Citic Securities noted a decline in overnight funding rates, suggesting that the rates should remain slightly below policy rates to support growth and credit expansion [8] - Huatai Fixed Income emphasized that the current fundamentals favor the bond market, recommending a buy-on-dips strategy [8] - Guosheng Fixed Income indicated that while the bond market may experience fluctuations, a downward breakthrough is more likely, with long bonds offering better value [8]

Larry Fink, chief executive officer of BlackRock Inc., speaks during the 2025 National Retirement Summit in Washington, DC, US, on Wednesday, March 12, 2025.BlackRock CEO Larry Fink said Monday that many business leaders believe the United States economy is already in a significant downturn."Most CEOs I talk to would say we are probably in a recession right now," Fink said at an event for the Economic Club of New York."One CEO specifically said the airline industry is a proverbial bird in a coal mine — cana ...

Financial Data and Key Metrics Changes - For Q4 2024, the company generated GAAP net income applicable to common stockholders of $9.1 million or $0.29 per diluted share, while earnings available for distribution (EAD) were $3.3 million or $0.10 per share, impacted by approximately two cents per share of special committee-related expenses [12][25][26] - Book value per common share decreased to $3.82 from $4.02 as of September 30, 2024, with NAV down approximately $5.5 million or 2.3% relative to the previous quarter [13][26] - Financial leverage remained consistent at 5.3 times, with $46 million of unrestricted cash on the balance sheet [14] Business Line Data and Key Metrics Changes - The MSR portfolio had a UPB of $17.3 billion and a market value of approximately $234 million, representing about 46% of equity capital [19] - The RMBS portfolio accounted for approximately 38% of equity capital, with a weighted average three-month CPR of approximately 5.7% compared to 5.4% in the previous quarter [22][23] - The RMBS net interest spread was 2.9% lower than the prior quarter due to improved repo costs being offset by a reduction in swap and dollar roll income [23] Market Data and Key Metrics Changes - Long-term yields rose to seven-month highs, with the ten-year yield ending at 4.57%, nearly eighty basis points higher quarter over quarter [7] - Mortgage spreads widened and volatility increased due to concerns about the US election and future debt levels, despite two rate cuts by the Fed [16] - Prepayment speeds for the MSR portfolio averaged approximately 4.7% for Q4, down modestly from the previous quarter, while RMBS prepayment speeds rose modestly as expected [20][22] Company Strategy and Development Direction - The company completed the internalization of management, which is expected to reduce operating expenses in 2025 by $1.1 million to $1.6 million [9][11] - The investment strategy will continue to focus on agency RMBS and select MSRs that present strong risk-adjusted return profiles while maintaining strong liquidity and prudent leverage [14][15] - The company remains cautious of the macroeconomic environment and geopolitical factors, expecting to maintain its current investment strategy [8] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns over persistent inflation and uncertainty about economic growth, indicating that additional rate cuts in 2025 will be fewer than previously expected [8] - The company anticipates continued volatility in the near term, with rates expected to remain higher until inflation shows signs of moderating or economic growth falters [18] - Management highlighted the importance of aligning management and shareholder interests through internalization, improving transparency and decision-making processes [10] Other Important Information - Operating expenses for the quarter were $4.5 million, including special committee-related expenses [28] - The board declared a dividend of $0.15 per common share for Q4 2024, paid in cash on January 31, 2025 [28] Q&A Session Summary Question: Special committee expenses and internalization benefits - The special committee expenses were found in the SG&A line item, and benefits from internalization will be reflected in SG&A and compensation and benefits going forward [31][33] Question: Repo costs and portfolio growth - Elevated repo costs were attributed to year-end expenses, but benefits have been seen in the first quarter, with potential for growth through capital raising [35][36][42] Question: Capital allocation between investment bins - The increase in servicing equity composition was due to an increase in MSR value, with a focus on RMBS for better returns in the current environment [48][51] Question: Expectations for Fed rate cuts - Expectations for fewer rate cuts this year may impact investment strategies, with a focus on the MSR portfolio's returns if rates drop [56][57] Question: Refinance activity and spec pools - Current refinanceability stands at about 5-10%, with a need for mortgage rates to drop to around 5.7%-5.8% for significant refinancing activity [71][73]

In a falling interest rate environment, it’s more important than ever to ensure your savings are earning a solid return. Putting your money in a certificate of deposit (CD) is one smart way to lock in today’s elevated rates before they’re gone. In fact, many banks and credit unions are offering CD rates of 4% APY and higher. And the best CD rates may be found at your local financial institution. Use the following map to see the highest CD rate available in each state. You can toggle between banks and cr ...