With the better than expected consumer prices announced this morning interest rates have continued there downward tumble–the 10 year treasury is now trading around 3.89% which is off 9 basis points from yesterday.
With the core CPI announced at .2% month over month folks will start to question the FOMC rate hike which is likely to come in 2 weeks. While we see softening numbers in inflation and in employment (if you believe the ‘government’ numbers) I think the FOMC is ‘locked and loaded’ for another 1/4% increase–it just doesn’t matter at this point–give the markets what they expect.
With earnings season upon us and the smaller banks announcing earnings later in the month I am ready to buy–subject to me changing my mind of course–it is much easier to have a change of heart when you can get 5.5% on short term money–the risk/reward just doesn’t pencil out.
I have continued to sit on my hands. I did ponder adding to my XFLT-A 6.50% term preferred position for a ‘dividend capture’ with an ex-dividend date of 7/14 (Friday), but I resisted since I am already overweight by quite a bunch on those and no use trying to get too cute now.