Category: Monday Morning Kickoff

Are you ready for the week? Economic news is somewhat minimal this week–a least until the official release of jobs numbers on Friday. We can get a good hint of the economy by focusing on the jobs numbers (we also have the ADP jobs numbers on Wednesday). Also we will once again face the tariff issue at least on Tuesday of not all week long.

Last week we saw the S&P500 was off by about 1% last week with a strong bounce coming Friday afternoon which salvaged the week. The coming week we will see tariffs be activated on Tuesday against China, Mexico and
Canada—will they go into effect or will be they be paused? We’ll see as they will likely be extremely important to markets.

The 10 year Treasury fell by a huge 19 basis points last week to close at 4.23% as compare to 4.42% the Friday before. With the employment numbers being released on Friday and other more minor economic reports will likely be scrutinized closely we will see if rates break lower yet.

The Fed balance sheet fell by $31 billion as the Fed continues the balance sheet runoff. With rates falling lately I wouldn’t expect the Fed to be motivated to discontinue stop the run-off.

As might be expected the average $25/share preferred and baby bond rose in price last week–although quite modestly–only 9 cents. Investment grade issues rose 9 cents, banks 9 cents, CEF preferred up 8 cents, mREIT preferred moved 6 cents higher and shippers continue fairly steady and up 2 cents.

Last week we had 1 new income issue come to market as Rithm Property Trust (RPT) brought a very high yield issue to market–priced at 9.875%.

Last week was a somewhat difficult week for the S&P500, although the index is just a tiny bit, around 2%, below an all time record highs. Have we seen the high for this cycle? Of course no one knows, in particular with all that is happening with the Trump administration.

The 10 year Treasury drifted lower last week and closed at 4.42% which was 5 basis points below the close the previous Friday. There is a fear of a return of inflation, pitted against softening economic news, which may be clarified a bit this week when on Friday we have the release of the personal consumption expenditures (PCE) which will point the way for interest rates for a week. Next week we will have the employment numbers released on Friday which will give further hints as to where the economy is going. As you can see below we have lots and lots of economic news so I think we will have lots of movement in equities this week.

The Federal Reserve balance sheet fell by a giant sized $31 billion last week–this followed a few small reduction weeks. It will be interesting to see if the Fed lowers the run-off in the months ahead–if interest rates continue lower likely they will continue the run-off at the $65 billion rate.

Even with interest rates moving lower last week the average $25 preferred and baby bond fell by 7 cents. Investment grade issues were off 4 cents, banks off 8 cents. CEF preferred were up 8 cents with mREIT issues were a penny lower with shippers up 2 cents.

We had 1 new income issue launched last week as Oxford Lane Capital (OXLC) sold a larger issue of 7.95% baby bonds.

Here we go again—it could be a relatively quiet week, although we do have FOMC minutes being released on Wednesday and this can always set off fireworks-one never knows.

The S&P500 moved higher last week by 3/4% and now just a tiny amount below a record level. This week is starting off looking some higher, but the future market gains can evaporate quickly.

The 10 year Treasury closed last week at 4.47% (down 2 basis points from the previous Friday). At this moment (5:30 central) the 10 year is at 4.52%–up 5 basis points. As noted the economic news is somewhat light this week, but we don’t know what kind of curve balls that the new administration will throw at the market. My thoughts are that the 10 year will continue in the relatively modest range until we get to next week when we have the PCE being released–we’ll see which way rates get pushed.

The Fed balance sheet grew by $3 billion last week–a rare increase which will be offset by falls in the weeks ahead no doubt. The chart of the balance sheet levels is an interesting chart–falling back front the highs quite dramatically.

The average $25 preferred and baby bond rose by 7 cents. Investment grade issues moved 15 cents higher with banks up a dime, mREIT issues up 6 cents and shippers continue to hover around the $25 area and down 3 cents.

Well we almost certainly have another exciting week to look forward to –up or down who knows, but likely in both directions. Last week the S&P500 moved up just 1/2%, but moved in about a 2% range. This week we have the consumer price index (CPI) and the producer price index (PPI) being released on Wednesday and Thursday respectively and additionally we have Powell testifying before the senate and house on Tuesday and Wednesday. Lots of excitement will be created.

The 10 year Treasury yield closed the week 4.49% which was down 8 basis points on the week. The yield moved in a range of 4.41% to 4.60% for the week. Economic data continues to push rates around–most data has been a bit mixed–some better than expected with some worse than expected.

The Fed balance sheet fell by$8 billion last week as the balance sheet runoff continues.

Last week in spite of interest rates falling 8 basis points for preferreds and baby bonds didn’t respond as the average share price fell by 2 cents. Investment grade issues rose 3 cents, banks rose 1 cents, CEF issues rose 2 cents, mREIT issues rose 3 cents.

We had one new income issue launched last week as mREIT PennyMac Mortgage Investment sold a baby bond with a coupon of a tasty 9%.

Well last week was another record breaking week for equities with the S&P500 trading at record highs by 11 a.m. Friday–then the selloff began which sent the index down almost 2% where it closed. For the week the index ended up down 1% from the previous Friday–Monday was a wild ride for tech stocks as AI indigestion hit–but unless you owned the tech issues you probably did ok.

The 10 year treasury yield ended up down about 5 basis points from the previous Friday close. The yield was trading right down in the 4.50% area until midday and a serious realization of the ‘tariff’ issue and then rates headed higher closing the day at 4.57%. There was economic news during the week (GDP, FOMC rate news etc) which were not huge factors as the news generally met forecast.

This week the economic news is generally mild until we get to Friday when we have the December employment news being released.

The Federal reserve balances sheet fell by $14 billion last week–continuing as expected as the Fed has not changed their policies on balance sheet runoff.

Last week, in spite of interest rates falling on the week the down draft Friday afternoon sent prices down, The average $25/share preferred and baby bond fell by 17 cents. Investment grade issues fell 26 cents, banks were off 15 cents, mREITs fell 11 cents and shippers were off a nickel.

There was one new issue priced last week as Triton International priced a new perpetual preferred with a coupon of 7.625%. The container leasing company has 5 other outstanding preferred issues.