After a day without trading the bond market is falling with the yield on the 10 year treasury popping higher to be trading at 4.37% right now. Tomorrow and Thursday we have both the consumer price index (CPI) and producer price index (PPI) being released. So are rates going to move higher from here or are we going to settle down in the 4.30% area? Obviously no one knows, but the chance of rates moving higher because of other factors–i.e. a massive supply of paper being sold by the treasury should be causing many investors to be looking at shorter dated maturity income issues.
Some investors care about creating monthly income without regard to movement of their capital. Some, like me, look at total returns on their portfolio. These are different goals–they cause one to invest differently.
Right now–today, I am looking for a shorter maturity security–a term preferred or a baby bond. It is likely I will buy a security in one of these area today. Recall I lightened up on some perpetual issues earlier this month–high quality, lower coupon issues and generally these issues are lower today than when I sold them. Of course much of the money went to money markets drawing 4.7% at this moment and this is not tenable over the longer term when my expectations are for returns in the 7% area.
So my ‘shopping day’ begins. I’m shopping here—and will add to a position or initiate a new position today.
