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Fed Jawboning and War Keep Interest Rates Tumbling

Once again interest rates are tumbling this morning as Federal Reserve folks continue their dovish talk. There is something a bit strange that all of a sudden these folks are all talking dovish when only a month ago most of them were hawkish–seems to me that political pressure is getting to them.

The 10 year treasury is at 4.59% this morning–almost 30 basis points below the close last Friday. In the end the marketplace will determine the price of the treasuries and over the medium to long term we have huge supply caused by the inability to restrain government spending–regardless of the Fed we may well see rates higher, but of course who knows for sure.

Well we had the producer price index (PPI) just released–tomorrow is the consumer price index (CPI). The PPI has come in hotter than expected—but the CPI will be more critical. Obviously these are important numbers as we are just 2 1/2 week out from the next FOMC meeting.

Well let’s see if we get a bit more rallying in income issues–yesterday there was a small move higher–a refreshing rally OR a temporary move that does not last long. Of course – no one knows.

19 thoughts on “Fed Jawboning and War Keep Interest Rates Tumbling”

  1. Does anyone know whether GLP prA got called? Price plunged 89 cents today, although GLP prB is down only marginally…

    1. I couldn’t find anything on their IR page.
      GLP-A became callable 8/15, and started to float the same day – so a call wouldn’t be a huge surprise.

    2. If there had been a notice of call, rest assured it would be trading higher than it is now. Even at 9.75% coupon ignoring the float rate whatever it is, if announcement of call 30 days from now happened today, these would be trading north of 25.44 imho, but I don’t follow this company or any K-1 issuers..

      1. If you wanted to follow this one, it has one of those very simple K-1s because the money is guaranteed payment for capital – so only one line item (4b), no UBTI.

        The common has a messier K-1. I have some in an inherited account and have been slowly selling it off so I don’t trigger UBTI for the recapture. Pain in the neck to have in an IRA.

        1. Thanks, P, but no thanks…… My last experience was with a very minor position with very minimal dollars and cents on the form from some company I don’t even remember…… The amounts involved were so small to be inconsequential. The problem was that for whatever reason the K-1 screwed up Turbotax and nothing I did would let me complete the return….. I ended up spending probably 3 or 4 hours with TT support (after figuring out how to find them) strictly doing nothing more than trying to get TT to tell me I was good to go…… Promises of simple are nice, but staying away is nicer in my eyes….

      2. Anyone get a dividend from them in Nov? Looks like I am missing and trying to determine why.

  2. This is a warning to anyone who owns, or is thinking of owning, any Invesco-managed closed-end funds. I own shares of IHIT, a fixed-income fund slated to be liquidated on or about December 1, 2023. This fund’s NAV has plunged about 8% in the last 6 weeks or so. I have spent hours trying to contact Invesco many times to get an explanation of why a fund nearing liquidation would be invested in holdings that are declining so much and whether the liquidation date has changed from that stated in the prospectus. I have been unable to find a single person at Invesco who knows anything about Invesco closed-end funds. I am guessing that the fund has sat on large holdings of CMBS securites, probably because prices have declined, and hoped that a recovery might occur, so as to reduce the fund’s losses. So now they are paralyzed because continuing losses have put the fund between a rock and a hard place. The managers of this fund have, in my opinion, been derelect in failing to discharge their fiduciary obligations by orderly liquidating fund assets in anticipation of a known liquidation date. So my warning is to anyone who owns or is thinking of buying Invesco closed-end funds–I don’t think you will ever be able to get any information about the fund from Invesco, and a fund group who would grossly mismange a fund’s liquidation such as IHIT and fail to provide any way for shareholders to get any information about a fund they own is not one that deserves your trust or your investment dollars.

    1. Ha! I share your pain and your experience….. I think I posted this before but I tried to get a hold of somebody to confirm that they are now passed the date to which they can extend maturity beyond December without shareholder approval and this is the “response” I got….. If you want to try Computershare more power to you…. I didn’t because imho, there’s no way that firm would have a clue as to the answers to the questions we want to ask:

      “Thank you for visiting invesco.com.

      Because the Invesco Closed-End Team is handled by Computershare who specializes in Invesco’s closed-end mutual fundsany questions regarding a closed-end fund should be directed to a Computershare Representative at 1-800-341-2929 . We hope this information is helpful to you.

      Please reference the Communications ID listed above on any future inquiries regarding this request.

      If you have any questions regarding the above information, please call one of our Client Services Representatives toll free at 1-800-959-4246 from 7:00 a.m. to 6:00p.m. Central Time, Monday through Friday. We will be glad to provide further assistance.

      Sincerely,

      Kaisey Murnaghan

      Correspondence Representative”

    2. 2 WR:

      Thanks for your comments. I tried ComputerShare also. Totally worthless and unhelpful.

      I have, over the years, filed numerous complaints with SEC about activities of investment managers of closed-end funds. I never got a single response, and have no reason to believe any investigation or action was ever taken. At this point, I think investment managers do what they do because, like the answer to the old joke about why a dog licks his b**** (becasue he can), they can get away with it, and they know it is unlikely they will ever have to answer for their actions. So maybe the best thing for investors to do is spread the word–do not buy that manager’s funds. I myself will never again own an Invesco fund…I suggest a new joke: who’s worse for protecting investors, fund management firms or the SEC? Answer: Yes! (or perhaps, Both!)

    3. Thanks all for your comments on this boat anchor. I’ve held since March 2020 so the div cushions some of the capital losses.

      CEF Connect has IHIT’s current price at a 6.64% discount to NAV ($6.68 vs $7.15). Am I right in thinking that if we hold this dog till its December-ish liquidation we’ll see some of that? Or is the mark-to-market effort delayed/suspect?
      https://www.cefconnect.com/fund/IHIT

      1. Of course what we will get is a moving target but in general, the spread between NAV (whatever it is) and share price should narrow to zippo by Dec 1. Also theoretically, as Robert stated, NAV ought to be stabilizing by now as the managers liquidate more and more of IHITs assets to go to cash in prep of liquidation…. that is if it was being managed the same way other target terms manage their funds when approaching the target…. That it hasn’t happened yet had me believing they would extend the target date by 6 months, which they can, once, without shareholder approval. Now because of the total lack of communication from Invesco, who knows what to expect? The idea of making a statement by boycotting any Invesco funds makes sense….. Only trouble is why would anyone think they’ll hear us when they don’t now?

        1. 2 WR,

          Excellent question. Let’s MAKE them hear investors. EVERYONE ON THIS SITE: tell everyone who asks you for advice–“Don’t invest in Invesco funds.” Every chat site and investment site you visit–SPREAD THE WORD. Encourage others to do the same. “The journey of a thousand miles begins with but a single step.” Tim P: what do you think about about a link on this site to rate preferred issuers, CE fund managers, and/or individual issues by ticker? Have a master list, perhaps graded A through F? If an issuer screws investors, make it known so that everyone, including newbies, can quickly be alerted that XYZ is someone you probably don’t want to trust or invest in. If enough people stick together, they can make a difference. Patrick Henry: “Gentlemen, we must all hang together, or assuredly we will hang separately.”

    4. I think that applies to the majority of closed-end funds of which I have sizeable holdings.

    5. The CEF space has been decimated, many approaching down 70%. No word from any of the, especially Blackrock. But there still collecting 1.5% management fees!

  3. To be fair to the folks at the Fed, long term rates have changed significantly in the past month. Although the Fed only has direct control over short term rates, both long and short term rates have an impact upon growth and other economic conditions. There have been times in the recent past when Jerome Powell and the Fed were under much greater political pressure, including public discussion of firing him. He didn’t bow to political pressure then, so I give him the benefit of the doubt that, under current circumstances, the more recent dovish talk is probably based upon a good faith reaction to changing rates and economic conditions rather than bowing to political pressure.

    1. I often think of Powell is like my 2 year old grandson playing Mario Kart with his aunts and uncles (its a racing game on a game console).

      The adults give him an old x-box controller that is the same color as the controllers they use. He pushes buttons on his controller and jumps around, thinking he is controlling the first place driver (whoever that happens to be), and he gets very excited when he wins every race. Its adorable for a two year old.

    2. Roger, as I remember it, two years ago a couple of Fed governors (presidents) were under investigation for insider trading (for doing what Congress and their families do all the time) and four seats were up for appointment. The White House was promoting a huge spending program,BBB, that was one or two votes short of passing. If Powell had agreed with just about everyone else and warned of serious inflation, BBB would have died an early death.

      I believe that Powell was greatly pressured and he bowed to that pressure to save his seat and to prevent Senator Warren from picking the four new members. ‘Transitory inflation” and QE prevailed and inflation is still not under control.

      Luckily for Powell, Biden is not physically capable of knocking him down like LBJ but any first term president wants a second term. I look for rates to be cut next year no later than May or June, almost regardless of inflation, because of that pressure from the White House and the new political appointees on the Fed.

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