Interest Rates Continue Lower as Preferreds and Baby Bonds Stay Slightly Green

The 10 year treasury yield is off 6 basis points to 3.51%—most income issues are flattish to slightly green–my main accounts are up about 2/10%. So will see the 5th up day in a row. This is the best rally in income issues since November when we had near a 4% gain. I would think markets would cool a bit for a couple days and then on Thursday with the CPI release we will see fireworks one way or another.

The NY Fed released the consumer 1 year inflation expectations this morning and it came in at 5.0%–the lowest level since July, 2021. Although consumers believe inflation will moderate they plan to spend much less in the future–the last reading was a 6.9% growth in spending while the current reading was for 5.9%. This may account for interest rates ticking down a bit today–but who knows with absolute certainty. It also plays into the possibility of an economic slowdown as folks rein in the spending plans.

I didn’t nibble anything today–I was out of the office for 3-4 hours early so didn’t get a chance to survey the possibilities out there–although there are plenty of possibilities.

It will be interesting to see how the just announced new fixed-rate-reset preferred will be priced by Redwood Trust (RWT). We have 1 other mREIT fixed-rate-reset issue out there and it is from AGNC Investment (AGNC)–7.75% with a 4.39% spread. It is trading kind of weak at $21.81%.

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