Well we got the consumer price index numbers which were generally on forecast. So is a Fed Funds rate cut for September now absolutely locked in?
Barring any massive surprise I think there is almost no doubt that the 1st rate cut is a certainty–BUT the question remains–how large of a cut? 1/4 or 1/2%?
I think once again Powell has backed himself into a corner as far as cutting rates–continual hinting of a cut makes it a given. Of course we have plenty of data to be released before September 17-18 so the size of the cut is less certain as a bad PCE (personal consumption expenditure) number later this month could help drive this decision. Then, of course, we have PPI, CPI and employment numbers being released in September before the FOMC meeting and I think the combination of this data will drive the decision as to whether it is a 1/4 or 1/2% cut.
For now it really doesn’t matter to our investing plans–I continue to move toward increased allocation to preferreds and baby bonds as coupon available on treasuries, CDs and money markets drift lower. I find no urgency to get the shift completed because while I may forgo a 1/4% or so because of falling coupons it is no excuse to make potentially bad investments.
One cut is not material unless Powell indicates more to come. First, PCE, NFP and CPI.
r2s I think the Feds are going to be cautious and only do a 1/4 point in September and then maybe another in October as the data will show by then the economy is softening faster than expected. People will probably claim it’s political just before the elections but no one will be able to supply proof.
Lending has slowed down, at least traditional lending has and with rates as high as they have been commercial and residential building has slowed. Building and lending are major parts of the economy.
Same here Tim, Only one small buy lately. A purchase in my wife’s Roth with all available funds that had accumulated from dividend and interest. Only 30 shares of CKNQP on a GTC order. Wish I had set up the same in a few other accounts.
Charles, do you think CoBank will fix the floating rate CKNQP like CHS fixed the rates on CHSCM and CHSCN?
Jimmy, no idea. The talk with people on here is they think it may be called and are just looking at it as a safe place to park money short term for a decent rate. As far as I know this is just talk as I don’t think anyone has seen it in writing.
But only about 2,000 shares traded hands yesterday so outside watching a computer screen or having a GTC order sitting out there the odds are not good you can just go and get some unless you’re willing to over pay.
“In the case of the Series H Preferred Stock, the spread adjustment added to 3-month CME Term SOFR will be 0.26161% plus, according to the terms of the Series H Preferred Stock, a margin equal to 3.744%.”
https://www.cobank.com/documents/7714906/7715425/CoBank-LIBOR-Discontinuation-Notice-for-Series-H-and-Series-I-Preferred-Stock.pdf/381b0165-9d9e-d0d0-fb9a-7766c7a3d59d?t=1711720655570
Series H = CKNQP
I just found that article and was going to post and then I see you already posted. Now, will everyone be happy with the 3.744% plus SOFR?
You nailed it, Tim.
market says roughly 50/50 for 25bp cut vs 50bp cut for Sept.
Stephen–if I nail it it falls under the ‘blind squirrel finding a nut’ category. Usually I am too logical–and their decisions don’t seem logical to me most of the time.