Now that we have maybe pushed out reductions in the Fed Funds rate until at least May (well who knows for sure?) it seems that we will have some delayed pressure to move share prices up on baby bonds and preferreds. Seems to me that at this time with interest rates some elevated into the 4.16% area we will have some difficulty moving share prices higher for income issues.
My money markets funds are showing a current yield in the 5.3% area while eTrade has CDs as high as 5.25% for 9 month and 1 year issues–5.15% for the 3 month. Of course folks can always find rates a bit higher in various places. These rates need to move some lower to get more movement into alternative investments (i.e. preferreds and baby bonds). With the Fed Funds rate in the 5.38-5.50% area there is no reason to think we will see lower (or much lower) money market or CD rates.
So the bottom line is that capital gains of any magnitude are on ‘hold’ for now (except special circumstances)- we need competing investments to move to lower yields to force folks to go out ‘yield hunting’ in preferreds and baby bonds.