Author: Innovative Income Investor

For the 6th straight month pending sales have taken a tumble. The National Association of Realtors index fell to 73.9 for November which is apparently the lowest reading since the index was started in 2001 (except a couple pandemic months).

Homes sales have fallen 37.8% year over year–of course they have–doubling interest rates will do that.

Regardless of falling homes sales interest rates are up 3 basis points to 3.88% even though the 10 year treasury yield traded around 3.80% earlier today. Income issues are off a penny or two on average.

I do note that the Federal Agricultural Mortgage 5.70% perpetual (AGM-D) is off 97 cents at $20.81 for a current yield of 6.85% and a yield to 1st optional redemption of almost 18%. While these issues are not rated AGM is perceived as a relatively solid company. Here are their most recent financials.

Again yesterday we had interest rates shoot higher – this time by 11 basis points (on the 10 year treasury) and these spikes are getting kind of painful. After having nice gains in October and November income issues have seen those gains evaporate–oh well nothing I can do about these movements except work my plan. Of course December is a big dividend and interest month so we can take some solace in that fact.

Yesterday income issues ended down by 9 cents a share–which was off the low of the day by a penny or two. The sp500 fell by just shy of 1/2% – volume was around 25% lower than the norm as we move toward another holiday weekend. Futures, which probably mean little, are up by 1/3% at this moment. The 10 year treasury is at 3.81% which is off 5 basis points from yesterday and with only pending home sales on the economic calendar maybe we will see drifting rates for the time being.

For those looking for a stable 5.875-6.5% a review of the 5.875% RiverNorth Capital and Income Fund term preferred (RMPL-P), which matures in October 2024, should be on your list. Additionally the XAI Octagon 6.5% term preferred (XFLT-A) has traded very steady. Each of these issues has traded right near $25 because of the short date maturity. Both of these issues are closed end funds so they are required to maintain a 200% asset coverage on senior securities. I am overweight in both of these issues.

The average $25/share preferred or baby bond is off about 1/2% today thus far–the last couple weeks have been painful as the average issue is now just about 2% above the 2022 low on 10/17/2022.

Almost without doubt we can’t get traction to the upside with interest rates moving higher and higher–up 10 basis points today again (the 3rd time in the last 6 trading days) to 3.85%. On the other hand we have had opportunities to search for ‘bargains’ again and again.

I haven’t done anything today–like most days recently. I have a little nibbling money available and have looked at the Bank OZK 4.625% perpetual (OZKAP) which is trading at $15.89 today for a current yield of 7.28% and of course a huge yield to 1st call of about 17% (not that this will be called very soon if ever). This is a solid $26 billion in assets regional/community bank that someone mentioned in comments last week (can’t remember who) that checks most of my boxes–we’ll see. If I nibble this one it will be my last banking issue as I will have 4 issues. Just a note that OZK has had some write downs, like most all the banks and insurance company’s have had, as their available for sale securities have gotten smacked down.

I am going to move onto the BDC baby bonds soon and see what I can find there (if anything)—of course I have a huge concern that the business development company’s are going to have massive write downs if we see a weakening economy from here. I don’t think thus far the BDCs have been severely ‘tested’–it is yet to come I think.

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I am grateful to find that so many folks – whether they be regular commenters or whether they are normally lurkers, but chose to donate.

I have posted the snail mail address on the donation page for those who would prefer to use that manner for donating.