We kind of ignored the markets for the last couple of days as we wanted to get past the distracting noise of the Fed Funds rate hike. Markets were well behaved, but no use taking a chance in case traders tried to make a big deal of the hike.
Of course with the 1/4% rate hike the DJIA gyrated around a bit–but nothing of true note. The 10 year treasury traded up a few basis points to 2.93% before settling back to 2.91%. Preferreds and baby bonds yawned and closed totally flat (on average). For Thursday and Friday we shall see if the 10 year holds the 2.90% level after trading in the 2.80% to 2.90% range for the better part of the month. Quite honestly the increasing 10 year yield has moved in almost a perfect manner–up a little – down a little – it is not the absolute level that scares investors, but instead is the speed at which it gets there.
We did watch about half of the Jay Powell news conference this afternoon and it was refreshing to see someone shoot straight and tell folks they should remain calm and that interest rate “dot plots” weren’t worth much (which we knew already).
We have been reviewing the shorter maturity baby bonds for our next purchase in the Moderate Duration Portfolio and we will be making a purchase Friday. We also will be adding an issue to the High Yield Portfolio, but we are dragging our feet on this one as we may have some interest in the new CAI International fixed-to-floating rate preferred announced today that has not yet been priced. The container and rail car leasing company has super net income–but the balance sheet is loaded with debt. We will write more when the pricing is announced.