After breeching the 2.70% the 10 year treasury has fallen again below the mark today with a drop of 5-6 basis points to trade right at 2.64% (this moment). The fall in the DJIA of about 250 points follows on the announcement by the European Central Bank (ECB) that they will not raise interest rates as the economy is slowing in Europe (no kidding). The ECB also announced another ‘cheap money’ scheme for banks to help encourage lending.
I think with this announcement and what is broadly forecast to be a weak 1st quarter in the U.S., with the Atlanta FED now forecasting .5% growth according to the GDPNow (not an official forecast–but just the same it is taken as an indicator) we are close to predicting no interest rate hikes for the year (we currently predicted 1/4% hike in June).
We are awaiting the “official” employment report tomorrow to see if it follows on the ADP employment report which was released yesterday and showed 183,000 new jobs being created. The forecast for tomorrows official number is for 175,000 new jobs being created.
Preferred stocks are off a little today–even with lower interest rates–kind of a mini fear trade looks to be occurring. I don’t think that the lower prices are meaningful–unless you own Chicken Soup for The Soul 9.75% preferred (NASDAQ:CSSEP) which has fallen $1.50 in the last 2 days. I do note that there a many more preferred falling in price today than there is rising – about 2 to 1. Maybe we will get a little bit of a buying opportunity after the sharp run ups in the last 2 months.