Author: Innovative Income Investor

You all know already that the December jobs number came in way hot–I was fearful of that occurring. With an expectation of 155,000 new jobs markets are not taking kindly to 256,000 new jobs. Of course on one hand it is good news–lots of folks should be employed which is always a good thing, but on the other hand interest rates are soaring with the 10 year treasury at 4.77% after trading as high as 4.79% just a bit ago.

For holders of income securities we will see some pain today–but looking at the bright side of things we may be able to maintain short term interest rates at current levels–or even a bit higher, which should bring us continued ‘decent’ rates on money market funds–and maybe CDs.

It is getting closer to a time to do some bargain hunting in perpetual preferreds–I don’t think the time is here–but it is closer. The strong economy and government debt demands are going to keep moving interest rates somewhat higher, but where that exact peak is isn’t known of course. One is going to have to ‘leg in’ to buy some bargains.

Of course today all equity markets are closed–although the futures markets were open until 8:30 (central time) but didn’t show much movement. Interest rates and stock prices are totally joined at the hip right now so one can’t expect much movement without all markets being open.

Tomorrow we get an extremely important jobs number–with 155,000 new jobs being forecast for December with the unemployment rate pegged to be unchanged at 4.2%. Obviously a super soft number could help bring don interest rates while something hot is going to send rates up toward 5%.

I am now starting to put together a list of potential buys of perpetual preferreds–I have no intention of buying any for now, but I want to be prepared. The perpetuals that I pared back a few months ago are trading 4-10% below my sale price–for instance the Affiliated Managers 5.875% baby bond (MGR) is now at $22.40 and I had sold part of my position at $24.92 and it is likely I will move back into more shares at some point in time. We’ll see.