Well the FOMC meeting starts today–75 basis points of rate hike is pretty much the consensus, although 100 basis points could happen. I suspect that equity markets will pretty much remain flattish until tomorrow at 2 pm (Eastern) when the rate hike announcement comes.
I continue to keep a close eye on the utility preferreds and baby bonds–I mentioned the Duke 5.75% perpetual yesterday (DUK-A) hitting a 52 week low (it went ex last week), but now we have bunches of issues between current yields of 5.5% and 6%. While we hold a number of these as others get to or go over a 6% I just have to add some more. If one were to assume that a year or 18 months from now interest rates started drifting lower capital gains potential on some of these issues makes for a 7-10% total annual return for a number of years (for those issues trading down around $17-$21).
In an hour we have housing numbers released–building permits and housing starts–consensus has them softening–barely. If these numbers remain firm the Fed isn’t getting the results they want–I hope they soften personally–not a lot but below consensus. My ‘local’ observation is that activity is softening–I am seeing builders put up spec ‘shells’, but not completing the construction until a buyer steps forward. We’ll see soon.