Trade continues to be a reason to sell stocks today and it again is benefiting income issues as the 10 year treasury is trading down at the 2.81% area.
We are not taking the lower 10 year treasury as a ‘serious’ move lower in rates and think rates will be moving higher once this temporary trade scare moves past us which it will within a day or two. We would be very cautious about thinking that any interest rate move lower is a permanent move–or the start of a trend.
In conjunction with this weeks move lower in interest rates we do note that perpetual preferreds and long dated maturity baby bonds have rallied back 50% of the losses from the last month. A good share of this is recouping losses from previous overreactions of the marketplace and is part of the normal pattern in income issues. Overeaction, a slow climb back higher and then a slower drift lower–kind of normal.