The 10 year treasury yield is now at 3.39%–obviously the debt markets see something ‘scary’ on the horizon, while equity markets are partying–the S&P500 futures are up 1/2% as big tech announces earnings.
Yesterday ended up being a ‘green’ day for preferreds and baby bonds as folks just seem to keep buying–someone (Charles M I think) mentioned in a comment yesterday that no matter where he looks prices keep stair stepping higher and certainly this has been true. While some of us have been looking for prices to setback some it isn’t a foregone conclusion that this will happen. As I generated some cash in the last week or two my hope was for a 2% or so setback–but I may get stuck with funds in money market for a while, but a 4% yield is not a terrible place to be stuck at for some amount of time.
Today I get back to normal investing–searching for something that meets my needs. My needs are for at least mid level quality with a current yield of 6.5% and 7%–I have 1 issue in my ‘sights’ and need more due diligence before pulling the trigger. It is important to me to have a nicely diversified portfolio with the correct blend of quality. As I have generated cash in the last couple of weeks it wasn’t just to lock in some profits, but was also to balance the quality. For instance I consider Oxford Lane Capital and Eagle Point Credit to be low quality and thus I trimmed my position–I won’t be able to replace the current yields, but I will sleep a bit easier.
I see that 1st time claims for unemployment came in just now at 183,000 which was under the forecast of 195,000–Chair Powell continues to focus heavily on employment when discussing interest rate increases–there seems to be little relief coming from this arena–obviously more news coming on employment tmorrow.
Tim, take a look at TRTN-B. Current stripped yield is almost 8%. callable 9/24. S&P rated BB.
Chairman Powell doing his best Dream Weaver:
“I’ve just closed my eyes again
Climbed aboard the dream weaver train
Driver take away my worries of today
And leave tomorrow behind”
Allowing people to dream whatever they want to dream.
HYG, is an ETF for non IG issues.
I’ve posted a few times that the HYG signals the risk on and risk off attitude in advance.
HYG is above the 200DMA for 15+ straight days. RISK ON!
I am frozen by this. HYG is clearly telling me don’t sell fixed income issues yet.
The HYG can stay above the 200DMA for many months.
So, I will abide. I will even pick up some IG issues still over 6%.
I don’t have that list yet, but this weekend, I will do research.
Maybe, I’ll stick to short maturities as a precaution.
I hate looking at accounts first thing in the morning as it leads to rash decisions sometimes. I prefer looking at a news feed just to get a feel for the markets. But I did open one this morning to research a stock and never seen the account so high, probably jinxed it now.
Myself, in this market I wold be happy with a 5-1/2% yield and put a bid in on a ute preferred.
I think we are swimming in the same pond.
As an income investor this past year with the “spike” in yields got me spoiled. I cringe at the thought that we may be back to the days of above par 4% coupon IG issues and 6% unrated issues at over $1 par.
(Heavy sigh….shakes head)
So, I am loading up on sock drawer IG issues 5-5 1/2%. Fingers crossed they are not called for a long time.
I’m over weight the Entergy issues, big banks. Wish I got more of the prudential issues.
Maybe by summer I may snag some unrated high yield term issues.
We do live in interesting times.
Stay safe.