Category: General Commentary

Who is right and who is wrong? ADP showed a very soft employment picture yesterday while today the bureau of labor statistics shows a firm amount of hiring – in particular in state and local governments. Seems like the economy is holding up.

We saw a little pop higher in interest rates as the employment numbers were released–now at 4.33%. Also this would seem to call into question any thoughts of a Fed rate cut in July–honestly I was thinking if we had a very soft number for June July would be on the table–but not. There is very dramatic amounts of political pressure on Powell to get a rate cut done–but that alone won’t work to lower rates—we need data.

Of course, equities are higher today–all news is good news. The S&P500 is darned near up .8%—for us old timers, it is hard to accept that stock markets only move in 1 direction, although I suppose there will be a day of reckoning.

Today stock markets close at noon (central time) and of course tomorrow markets are all closed. Hopefully I get a chance to make some buy decisions for next week–I have the cash. I did deploy some cash back into CDs this morning, but I have to direct most of the balance into short duration term preferreds or baby bonds to keep the higher income flowing.

mREIT New York Mortgage Trust (NYMT) priced their new baby bond offering as expected at 9.875%.

This is their 3rd baby bond issue and will trade in the next weeks or so.

The issue becomes callable 10/1/2027 and matures 10/30/2030.

The pricing term sheet can be found here.

I have noted many times that I wanted to see some sort of deficit reduction in congresses budget bill–looking at the headlines today I am not seeing it–I am just seeing the the deficit grow. Of course many of you have predicted that would be the case.

It is funny that the 10 year treasury yield is off 4 basis points today to be trading at 4.24%—where are the bond vigilantes? The only chance we probably have to get something constructive done is if interest rates shoot higher and right now that appears to be something that isn’t going to happen.

I have in my plan to execute 1 buy this week—originally I planned to buy either a perpetual preferred or a shorter dated baby bond. I had giant sized maturities in my CDs the last few days so I am sitting with bunches of money in the accounts–to move portfolio yields higher I need to buy something with 6%, 7% or higher coupon and right now I am not feeling great about buying anything. Maybe tomorrow. On the other hand I will not make a stupid move just to move the yield higher–confidence is everything and right now I don’t have much.

Interest rates have fallen a tiny amount this morning and are now trading just under 4.30%.

Preferreds and baby bonds are moving somewhat higher–not bunches but but enough to moves our accounts to new highs–although June 30th is a huge dividend and interest payment date for our holdings so things should jump nicely that day.

We seem to have some kind of calmness in the middle east–I think–one never can tell as it depends on what channel one watches on the boob tube, but at least the saber rattling seems to be toned down somewhat.

Still haven’t made my weekly buy, but certainly will do so any minute. Mr Conservative tossed out the Corebridge Financial 6.375% baby bonds (CRBD) as a possible buy that would fit me–Corebridge is an insurance and annuity company and most recently has performed well. The biggest segment of their net income is off the annuity business where they profit from the spread between what they pay out and how much income they garner from investments–sometimes this can be a feast or famine proposition, but most investors realize that is the case. The biggest problem I have with Corebridge is that investors can sour on annuity companies – i.e. Brighthouse Financial (BHF) . CRBD certainly has a tasty current yield at just over 7%–and is investment grade. We’ll see.

Well let’s see how the afternoon goes–if markets can hold their gains and if the middle east can stay at least semi calm.