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Interest Rates Continue Push Higher–Some Bargains Being Created

Well once again the 10 year treasury yield has moved higher–thus far today it is 5 basis points higher to 1.18%.

Thanks to Bea I had added back the preferred share loss/gain page. I had removed it previously trying to consolidate info, but Bea asked about it and I added it back in last Friday.

You can find the page here. Check for bargains there (of course one person bargain is the other person junk).

I note today that the Sterling Financial 6.50% non cumulative preferred (STL-A) has taken a sound whipping the last 3 weeks or so–it had traded as high as near $28 3 weeks ago and now is at $25.38. Granted this issue–like many of the smaller banks was totally overpriced so couple with rising rates price has tumbled.

12 thoughts on “Interest Rates Continue Push Higher–Some Bargains Being Created”

  1. What is driving KSU- beyond $35? Waiting to buy another slug of ATO (Atmos Energy Corporation).

    1. The Company is exacerbating the price as they keep buying the shares up, presumably at any price. Check their SEC filings. Dec. 2017 they had over 240,000 shares outstanding, not its under 218,000. They make note of purchases and prices in some filings. Its an old float, and they seem resolved to keep buying them up. Here is a recent filing example.
      During the three months ended September 30, 2020, KCS repurchased 3,961 shares of its $25 par preferred stock for $0.1 million at an average price of $28.97 per share. The excess of repurchase price over par value is allocated between paid-in-capital and retained earnings.

  2. Forgive my cynicism, but why do think that rates are going to stop rising? A falling security price is only a bargain if it stops falling after you buy, no? Otherwise you’re like the guy who fell off a ten story building who yells as he approaches the fifth floor “ So far, so good!.”😁

    1. I agree that this may only be the start of a correction. The market’s understanding that there will be no zero (or negative) rates will likely lead to investors moving away from fixed income. Sentiment can change at any moment and change will be rapid. I keep my powder dry and wait.

    2. No one knows what direction rates may take. Most expect rates to trend higher as a result of a recovering economy and excess liquidity. But we could also see falling rates if the economy flounders. If you like the rate and the company, buy.

    3. Potter—it isn’t whether I think they will rise or fall—I am but one of millions of investors. You must remember that income investors have different goals–some simply lock in a yield they believe is safe –PERIOD. They don’t try to guess interest rates–they just collect their dividends and let share prices moves where they may. Everyone is different.

      As I said one persons bargain is anothers junk.

  3. Bea

    I’ve been using the weakness in utilities to add to my position in DCUE. It’s a convertible for Dominion Energy that’s squirrely but I thin it’s worth a look.

  4. Thanx again Tim! if rates continue higher and the etf’s start selling off, this could cascade into some nice opportunities as some previous swoons have provided us. Utilities getting hit as well today. I have a few on my watch list, ED, NWN, NGG. Bea

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