Category: Monday Morning Kickoff

Another week and more ‘excitement’ will no doubt occur during the week. Weekends used to be kind of quiet, but now we have a continual stream of market moving events occurring 7 days a week. The past number of days we had Canada install a digital services tariff on U.S. companies and the U.S. administration pull out of Canadian tariff talks–then the Canadians removed the tariff. Almost all of this while markets were closed.

Last week the S&P500 moved to record levels and up 3.4% on the week. The index pulled back late in the day Friday to close at 6173–but futures are up nicely this morning and we are heading for new highs.

The economic news this week is accelerated because of the July 4th holiday on Friday–this means that we will have the June employment report on Thursday instead of the traditional 1st Friday of a month. This is a potential market moving event, although a negative market reaction will simply bring in the ‘buy the dip’ crowd so probably nothing to fear, unless you are short the market.

Finally the 10 year Treasury closed the week at the lower end of recent ranges–at 4.28%, although it was as low as 4.24% earlier on Friday. Certainly there is a sense the economy is slowing somewhat–while at the same time a belief that the economy will keep growing. Of course on the other hand we have plenty of government debt to sell which is likely to keep longer maturity interested rates elevated.

The Federal reserve balance sheet took a nice $19 billion dip in assets as the downward movement continues after a couple weeks of flattish moves.

The average $25/share of preferred moved higher again last week–not strongly, just 8 cents–and up is up for the second week in a row. The average $25 shares moved 8 cents higher, investment grade issues moved 8 cents higher, bankers moved 6 higher, CEF preferreds 5 cents higher and mREIT issues 8 cents higher.

Well last week we got through the FOMC meeting with no change in the Fed funds rate, as expected. Equities were pretty tame and interest rates continue in the same relatively tight range. This week we have the personal consumption expenditure (PCE) on Friday, which one would think might be the big driver on the week, but now we have other potential worries with the Iran situation –who knows what this will bring? At this moment (7 p.m. central) equity futures are down somewhat–but not what one might believe–NO ONE knows the reactions that will occur and with the never ending ‘buy the dip’ crowd anything is possible. Additionally crude oil is up $1.50-$2.00 right now which is mild given the threat from Iran.

The S&P500 moved in a fairly tight range of 5942 to 6051 closing near the low at 5968 in a 4 day trading week as markets were closed on Thursday.

The 10 year Treasury moved in a range of 4.35% – 4.45% closing the week around 4.38%. Nothing new and different here as this tight range has been maintained since early May resulting in minimal movement in income securities over the last 2 months. As mentioned above we have the personal consumption expenditures (PCE) with inflation indicators being released on Friday–of course this could move markets, but the Middle East situation takes center stage. We’ll see if bonds are ‘safe haven’ investments this week or if after decades and decades of being safe havens global investors are turning elsewhere.

The Fed balance sheet grew by $4 billion again last week which is the 2nd week of increases–since policy announced has remained unchanged we can assume the balance sheet will move lower in a larger way in the next 2 weeks.

The average $25 preferred and baby bond moved higher by 9 cents as we moved past one of the busiest ex-dividend weeks. Investment grade issues moved 11 cents higher, banks were 8 cents higher and mREITs were up 4 cents.

Another week with more data which seems to indicate an economy which is slowing–but at a snails pace. At the same time we are seeing inflation which has remained under control (at least for now) while demand at Treasury auctions has been respectable.

The S&P500 moved in a fairly tight range of 5963 to 6059 before closing the week at 5977 which was down almost 1/2% from the close the previous week.

Interest rates remain ‘stuck’ in the 4.30% to 4.50% range where it has been for 4 weeks or so. No matter the economic news rates are moving in this range. Inflation would seem to indicate rates could go lower–but the bond vigilantes push rates higher anytime it looks like they are ready to move lower. All eyes remain on the U.S. budget process, which is painfully slow, and has not brought any ‘deals’ toward deficit reduction.

This week has the potential to move markets sharply as we have the FOMC meeting starting on Tuesday with the announcement on rates on Wednesday afternoon as well as the Jay Powell presser. We continue to have pressure from the administration for lower rates with inflation seemingly under control. The CME Fedwatch tool shows just a 3% chance for a rate cut at this meeting–essentially saying no chance of a cut. Obviously with the high odds against a cut any surprise cut would make markets move big time.

The Federal reserve balances sheet grew by $4 billion last week– of course still trending lower by $30 or $35 billion monthly.

Last week, once again, we had little movement in $25 preferreds and baby bonds–flattish is almost always good–at least for my portfolio. The average share moved 5 cents lower with investment grade issues off 9 cents, bankers down 6 cents, mREITs were up 7 cents and shippers were off 5 cents. Numbers are a bit distorted this week as 6/13 was a huge ex-dividend date and share prices were marked down by the dividend amount.

A new week, although likely to be the same as last week with some volatility in equity prices with various DJT tweets and battles in Congress over the new budget details. We’ll find out who caves in as the congress people and senators joust mightily—we’ll judge who has the longest nose as they speak.

The S&P500 moved higher around 1.75% as markets liked the ‘official’ government employment report–slowing, but not too much too quickly. Markets have gotten used to the tariff issues and I guess generally are adjusted to all the Washingon balony–for now.

The 10 year Treasury closed to week at the high point of the week on Friday at a yield of 4.51%. Once again, as has been the case for weeks and weeks rates traded in about a 10-15 basis points range. No doubt this can’t continue forever but if it did maybe it wouldn’t be so bad.

The big economic news for the week will be the consumer price index (CPI) release as well as the producer price index (PPI) on Wednesday and Thursday. Now we would normally think this is a time for some potential big interest rate moves–but who really knows anymore.

The Federal Reserve balance sheet fell by $1 billion last week as we knew it would after multiple large drops in previous weeks.

$25 preferred shares and baby bonds, once again, moved little last week. Just like interest rates–shares can’t get any real juice in either direction. The average share moved higher by 4 cents, investment grade issues moved 5 cents higher, banks were up by a 3 cents, CEF issues by 2 cents as were mREIT issues. All things considered not a bad week.

Last week we had one new income issue sold as PennyMac Mortgage Investment (PMT) sold a 9% senior Note issues.

Well last week was certainly plenty exciting–as have been most weeks since the last presidential election. The S&P500 traded in a range of 5843 to a high of 5943. A range of less than 2% has been on the low end of the normal range – just maybe investors are learning to ignore presidential tweets–am hoping that is the case.

Interest rates, as measured by the 10 year Treasury, continued in their range of 4.39% to 4.50%s where they have been ‘stuck’ for the last 3 weeks. Economic news that has been fairly decent–certainly not ‘hot’, has been balanced with more tepid government debt auctions and administration chaos. Last week we had the personal consumption expenditures (PCE) was released showing very modest levels of inflation. Consumer sentiment has continued to make gains as folks are adjusting to the ‘tariff’ situation.

This week we have employment numbers on Wednesday (ADP) and Friday (official government numbers). Prior to these numbers we have the JOLTs (job openings and labor turnover) report on Tuesday.

The Fed reserve balance sheet fell by $15 billion last week– kind of a surprise to me , but likely meaning we seen little movement downward for the next few weeks. The balance sheet is down to $6.7 trillion from the peak around $9 trillion –this progress over a period of just over 3 years. The lower the better as it makes for some Fed flexibility for dealing with potential future ‘troubles’.

Last week the average $25 preferred and baby bond moved only a penny–down by 1 penny. Investment grade issues moved 6 cents higher, bankers were down 4 cents, CEF preferreds were up 2 cents with mREIT preferred were off 8 cents. Obviously a pretty steady week.

Last week we had just 1 new preferred issues sold as UMB Financial sold a fixed rate reset issue with an initial coupon of 7.75%. Almost undoubtedly they will use the proceeds to redeem their 7% fixed to floating rate issue on 7/15/2025.