Author: Innovative Income Investor

Interest rates are backing off while equity futures are just a small amount higher. Little economic data being released and only 2 minor Fed yakkers .

The 10 year treasury is trading at 4.02% after closing yesterday at 4.07%. The high in the last year has been 4.33% or so. Of course mortgage rates follow the 10 year treasury to a large degree and with rates moving higher so goes mortgage rates–after backing off to the 6% area rates are now heading toward 7%.

Equity futures are higher by the tiniest amount–just 1/4%. The equities have traded pretty quiet all week–none of the big economic numbers have been released–employment and inflation. Just the same it seems the equity markets are pretty complacent. With rates moving higher and expected to move higher for months it would seem the S&P500 would back off–maybe another 10%.

Last night I posted a bankruptcy filing article in ‘headlines of interest‘–you can find it here. I wouldn’t call the number ominous –but certainly concerning.

Also last night in headlines of interest I posted lodging REIT Sotherly Hotels (SOHO) earnings report. Pretty decent–they survive –no common dividend being paid, but preferreds are being paid (although there remains some arrearages). With the common at $2.33 they should consider liquidation of the company while asset prices are higher and before the next recession–but they won’t as long as the top folks are getting paychecks.

I’ve been waiting for 4% to be breached–and right now the 10 year treasury is trading at 4.03%. This is a mostly meaningful because it is a round number–psychologically important. Inflation is the culprit–not just in the U.S., but globally. Seems to me that many folks on the website have done the right thing–raised a little cash in the last month and then sat on their hands as ‘cash’ rewards them for their patience. Market timing is generally a loser for me, but this time it seemed more ‘obvious’ that booking some gains and waiting was the right thing to do.

Where are rates going? Higher–how much higher is anyone’s guess, but until we see employment affected in a significant way rates will go higher. It goes without saying that we need to see the CPI and PCE numbers to soften a bit. We will see February jobs number next week.

In 30 minutes we have 1st time jobless claims. We need to see this start moving higher in the weeks an months ahead–this is the canary in the coal mine for employment–we get it every week. Expectations are for 197,000 claims versus 192,000 last week–not to wish ill will to anyone, but would love to see 210,000 or some such number, but no reason to believe that will happen.

So I will again be sitting on my hands—nothing new about that.