We can’t predict what next week will bring, but we sure can see that last was the best week income investors have had for months and months.
The average $25/share preferred and baby bond was up by about 1.6% as interest rates (as depicted by the 10 year treasury) fell by 14 basis points from the previous Friday.
The ‘relief’ rally in common stocks was pretty intense with a gain of around 4% in the S&P500–all this in a week where the Fed tacked on another 75 basis points to the Fed Funds rate and GDP for the 2nd quarter was a minus .9%.
I have continued to nibble– investment grade, term preferreds and some perpetuals preferreds (such as the Arbor Realty issues–any of the 3 as they are near equivalent). For next week I am pondering nibbling on the Customers Bancorp (CUBI) fixed to floating issues–some of the folks were discussing these issues in the Sandbox this week and I am always up to stealing a good idea. CUBI has 2 fixed to floating issues now floating with potential coupons of 7% to 8% in the future (dependant on 3 month libor)–this is a great coupon on a solid (not investment grade) banking company. Caution that the CUBI-E issue is trading 64 cents above call price ($25/share) so there is a small amount of call risk to be aware of–while the CUBI-F issue trades just below $25 at $24.85 so there is no call risk. These issues can only be called on a dividend payment date the next which is 9/15/2022. All fixed to floating rate issues with ‘potential’ coupons can be found here.
So off into a new week–the biggest economic number for the week are the employment numbers on Friday. 250,000 new jobs are forecast to have been created in July with the unemployment rate remaining at 3.6%.