While equities fell near 1/2% yesterday income issues got off to a green start as the 10 year treasury yield fell by 10 basis points to close the day at 3.79%. Yields are off another 10 basis points early today – 3.69%. The 10 basis point moves (up and down) seem to be the standard move lately. My accounts were green yesterday by 1/3% or so–no giant move but green is green.
I see that refinancing mortgage applications are down 87% year over year while mortgage applications for purchases are down 42%. From the perspective of the Fed this is indicating slowing—folks have always refinanced for 2 reasons—to lower their interest rate and/or they suck out equity in the form of a ‘cash out’ transaction. With current interest rates available consumer spending power is being curtailed—down the road a quarter or two this will translate into a slowing economy. On the other hand equity is still being accessed via home equity lines of credit, but at very high interest rates (relatively speaking)–as a homeowner accessing equity now may be kind of dangerous as we have potential falling values (some areas have already fallen in values–in the midwest we are fairly stable leaning toward softening). You best have solid employment if you are pulling equity now.
Yesterday I bought 5 shares (yes 5) of the PS Business Parks 4.875% perpetual preferred (PSB-Z) for $11.50/share–current yield of 10.69%. Of course you all know that the 3 PSB preferreds are being ‘delisted’ on or around 1/13/2023. This is purely a research/educational purchase–I have never owned a delisted issue and the only way I will keep track of this saga is to own a few shares.
At 9 a.m. (central) today we have the JOLTS (Job Openings) report release and 10.1 million openings are expected versus 10.3 last month–don’t think this is a big market mover but who knows for sure. Then at 1 p.m. (central) we have the release of the FOMC meeting minutes from the last meeting–this will move markets one way or the other even though it is old news for the most part.
Well here we go–equity futures are up a bit–mostly meaningless of course, but better up than down.