Yesterday was an interesting day for income issues.
With interest rates falling yesterday I noticed that preferreds and baby bonds bottomed and rose a fair amount, before falling back off again as the ‘nervous nellies’ took the opportunity to sell into the rally. This is exactly the way it works–prices fall and continue falling for months while eventually there is a reason to buy like yesterday (falling rates and whispers of Fed pausing). Then as buying sets in and pushes prices higher all of the ‘nervous nellies’ take the opportunity to sell. I watched my accounts yesterday and I had a gain of around .5 or .6%, before ending the day up .2%.
Am I saying the bottom is in—NO. No one will know when the bottom is in and we may need to see numerous replays of this price action and then it will be weeks or months before we know the low is in (20/20 hindsight of course).
Today we have important economic news being released in a couple hours with the 1st read on 3rd quarter GDP being released. The forecast is 2.3%–a beat or a miss could move interest rates. We also have the durable goods report with a forecast of .7%.
For what it is worth (not very much recently) the S&P500 futures are pretty close to flat at this moment with the 10 year treasury yield bouncing between 4.06% and 4.08%.
I will be out of the office during trading hours today so will not do any buying–I don’t make any trades on my phone.