Each time we have a number of pieces of economic data released in a day we seem to have contradictory information.
This morning the number of Job Openings announced in the JOLTs report came in at 7.44 million–way below forecast which was 7.99 million and way below last month which was at 7.86 million. Seemingly showing some softening in the economy–OR maybe it shows that the ‘fake jobs’ that were rumoured to be listed back when we had such a severe shortage are being removed from being active finally.
Then we had the consumer confidence numbers released by the conference board which came in at 108.7–above the 99.5 forecast and 99.2 last month. Seems contrary to the JOLTs report.
We also had the Redbook sales report released and it showed sales up 5.6% growth in the last year–I guess folks are still spending, whether it be with excess cash or simply running up their credit cards. Regardless the economy seems to be humming along.
I’m sitting tight and not really doing much in the markets—I’m going to let the situation play out some more with the employment numbers being released on Friday.
The 10 year treasury continues higher and now up about 5 basis points with the yield now at 4.32%—is topping out? Or will data later in the week send it shooting higher?
The 52 week tbill auction went back above 4% after dipping slightly below last auction.
No matter which political party wins the upcoming election, inflation or stagflation appears to be inevitable. There will be an enormous issuance of Treasuries because the deficits are high and actually continuing higher. There will be no consensus regarding limiting Medicare or Social Security benefits because it is a loser politically. Both parties will ‘kick the can down the road’ until a serious economic crisis happens eventually, which will require action by whichever party is in control. In the meantime, the Fed will do its best to keep interest rates at a ‘bearable’ level. Whoever is President will put enormous pressure on the Fed to somehow manage to keep interest rates down. To me, it’s a gloomy picture.
I just bought The Southern Company 4% issue (Baa3) at $98.324, which is callable on 1/15/26 for a 5.45% YTM. It then floats at the 5 year T plus 3.73%. I wouldn’t be surprised if it doesn’t get called. If it’s called, 5.45% is better than a MMF yield. JM2C
Whidbey; That doesn’t look like a bad deal at all. Plus the reset rate looks pretty good too. I just checked the 5 Year and it said 4.11% so even if it comes down one full point that still puts you at 3.11 + the 3.73.
Here is a similar structure worth a look IMO.. Stanley B&D (SWK – ~10% today on earnings miss) 4% coupon 3-15-60 floats 3-15-25 at 5y tsy + 265.7 split investment grade (Senior debt baa3/A-)… can be had ~ 98 today… not sure on YTC numbers/redemption. Cusip 854502AM3 Likely 5yr tsy more resilient to Fed moves than 3m sofr..?
Yield to call looks pretty good on that one. But if it’s not called … 35 years is really a long time out ….