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Another Quiet Day?

As I always hope for yesterday was a quiet day–certainly there was movement on a hour to hour basis, but overall with no economic news on the calendar investors mostly sat on their hands. The S&P500 closed up 1/3% while the 10 year treasury yield fell 5-6 basis points to close at 4.61%–I guess one might call it a Goldilocks day.

Yesterday and today is a heavy maturity day for CDs in our accounts–I will ‘roll’ some of the money into 3 month CDs at 5.35% AND begin my hunt for a new preferred or baby bond purchase. I will continue my long formulated plan by buying a modest yield ‘safe’ issue and balance it with a high yield buy. My higher yield buys have been primarily in BDC baby bonds with short maturity dates–my preference would be to a different sector, but I am undecided–we’ll see.

Today we have some economic news–not much, but some. At 7:30 a.m. (central) we have the employment cost index, at 8 a.m. we have the Case-Shiller home price index with Chicago PMI and consumer confidence to follow. Likely we won’t see any of these report cause wide movements in either stocks or interest rates.

Tomorrow is the FOMC rate decision–haha! The decision is made and it is obviously no rate cut. The fireworks could occur in reaction to the Jay Powell presser—will he reinsert his foot in his mouth? Just stick to the ‘data dependent’ theme Jay–it’s easy!!

Last night UMB Financial (UMBF) announced an agreement to acquire Heartland Financial (HTLF). UMBF is a $45 billion Kansas City banker and Heartland is a $20 billion Denver based (formerly Dubuque, IA based) bank holding company. The details are here. HTLF has a 7% fixed rate reset preferred outstanding (HTLFP) which will be converted into a UMB Financial issue with the same terms and conditions. I think it is safe to say we will see more of these types of acquisitions – we are destined to see bigger and fewer banking companies. I had owned the HTLFP preferred a while back, but unloaded it as I moved mostly out of the smaller banker sector.

Well let’s get to going on the market day. With stable futures and stable interest rates this morning I am looking for another quiet day. We’ll see!

11 thoughts on “Another Quiet Day?”

    1. just went ex-div that’s why it dropped near par. MFAO pays 9% priced equivalently. I’m in MFA-B taking the higher yield in exchange for being perpetual. Since I don’t expect rates to be higher.

  1. Is it just me but does it seem like preferreds in general got hammered (PFF down more than 1%) and especially straight preferreds but floaters and F/F’s mainly appreciated? Is the market now expecting a rate uptick?

  2. Tim, I added to MFICL today, X dividend, and just a couple of pennies over par. I balanced that with adding some NCZ-A. Not consciously following your lead, but it sure seems like a sensible approach to get a good blended yield.

    1. Timdman-
      The low price of the day, so far, on MFICL is 25.25– a percent doesn’t equal a few pennies– maybe you have more change in your couch 😉

        1. Timdman, Thanks to Gary for supporting accountability on this board. Everyone makes mistakes. However, if posts aren’t correct, things can quickly spin out of control.

          1. You are correct, Steve and Gary. Apologies. Things can go south quickly with wrong information, I guess I just didn’t appreciate the tone. I shall be more vigilant in the future

  3. House prices rose 7.0% from a year ago, accelerating from the 6.3% Y/Y increase in January, according the Federal Housing Finance Agency.

    Too many dollars chasing too few assets.

  4. Tim, what other sectors are left? Shipping, REITS, Oil & Gas , Hotels, Mortgage, Insurance, banking, communications? Hunting for higher yields in these areas leaves you choices of which is the least bad apple in the group.
    A lot of these sectors fell in the March Covid panic, leaving a lot of us scrambling to sell and take losses to build up cash and buy the higher quality that got thrown out with the bath water hoping they would recover and which did happen over the next year.

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