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Interest Rates are Popping

I am watching the 10 year treasury today as it is up 7 basis points to the 3.92% area. Preferreds and baby bonds are not reacting well as they are off maybe 1/3% on average (hardly a wipe out). The flip side is that it is hard to hold up the pricing on income holdings with rates starting to move higher.

There are predictions by some that the Fed will have to back off quantitative tightening (QT) this fall as the treasury begins to soak up liquidity with huge issuance of treasury bills/bonds. Honestly I haven’t looked at the calendar to see what the treasury is doing—and I haven’t seen any news relative to the topic either–but maybe we need to watch that a little closer?

I did not buy the be Bridgewater Bank 5.875% Preferred (BWBBP) today–I fiddled while the market took the price up by almost $2/share. I have about 1/2 of a full position and will buy more–but hopefully I will get that chance at a lower level–we shall see. These pops tend to fizzle somewhat after a few days.

One thought on “Interest Rates are Popping”

  1. A good example of how different people approach things differently.

    If I had half a position in an $16 dollar stock, and it moved up $2 in a couple of days before I could fill the other half, I would probably sell the first half and put in a GTC order for a whole position at $16 (betting that the volatility would continue). The annual dividend is about $1.50, so I would be ahead if my GTC order filled any time in the five quarters.

    My kind of greedy approach does have its down side – sometimes the stock doesn’t come back down and I am left on the sidelines.

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