Interest Rates Back Under 4%

After the 10 year treasury hit 4.09% yesterday we have seen a backing off to under 4% today—as low as 3.97%.

$25/share preferreds and baby bonds are up a little bit today–maybe 10 cents on the average share–but really I think they are just in a wait and see mode awaiting tomorrows news on consumer prices (CPI).

It is interesting to read some ‘takes’ on inflation prior to tomorrows release, which shows a forecast of .3% on the core CPI for June after a .4% last month. Tom Lee of Fundstrat, who has a decent track record, is calling for buying equities before the release of the CPI because he expects a soft report tomorrow. His thoughts are here. Given the level of common share prices there best not be a surprise to the CPI to the upside–it could be ugly if there is one.

For me – totally not motivated to do anything right now. CD rates are stuck where they have been for a few weeks. I have what I want for now and will consider more at the end of the month (the FOMC meeting starts 2 weeks from today). I have some cash available for buying – maybe 5% of portfolio values and once again I will be adding cash in August which is when another batch of CDs and/or treasuries mature–so will I roll them or add to the cash? Don’t know yet.

Interestingly the FOMC meeting end and rate decision falls right at the same time as many of community and regional bankers will be reporting earnings. Could make for some double barrelled fireworks in the sector.