It’s quite funny to see the expectations of folks – they really, really want Jay Powell to say during his 1:30 p.m. (central) press conference that they have a target date for lowering interest rates. Surprise–it ain’t going to happen. While much economic data shows that we might have a tiny bit of softening–employment in particular is hanging tough.
So today we have the conclusion to the FOMC meeting with an announcement of policy changes at 1 p.m. (central). The decision is ‘no change’ in the Fed Funds rate–the statement will be ‘we still have work to do’. Yesterday we essentially had no change in the consumer price index (CPI) –why would Powell announce ‘victory’. Last weeks employment numbers showed unemployment falling to 3.7% from 3.9% and we still continue to create plenty of new jobs month after month.
Also today we have the producer prices index (PPI) being released in 45 minutes which will add a little intrigue to the mix.
Right now equity markets are slightly green and the 10 year treasury is trading right around 4.18%–down a couple basis points from yesterdays close. Honestly markets have been trading in a goldilocks fashion – we’ll have to see how long this continues before the ‘tension on the tape’ breaks hard one way or another.
As I mentioned I bought a small starter position in PennyMac 8.50% Senior Notes (PMTU) with a short maturity date. This fits right in my wheelhouse (a balance of safe issues with modest yields and mid level quality with high coupons and yields)–at 8.5% it provides a lift in the portfolio toward my 7% overall target–and share price movement should be minimized with the shorter maturity date.
I have my eye on a mid level quality security this morning with a 8%+ yield to maturity–if I can get it at ‘my’ price I will be a buyer this morning–more to come on this one.