Interest Rates Fallback a Bit

Yesterday we got a bit of a fall back just a bit—closing the day at 4.57% and now trading at 4.58%. This is a nice bit of relief for income investors as our accounts got a bit of a bounce yesterday in response. Does this mean for the weeks ahead? We have no earthy idea–we have to see data and that will start in earnest next week with the release of GDP on Thursday the 25th and the personal consumption expenditure (PCE) on Friday the 26th. With this 1-2 punch we could see interest rates move to the next higher level–OR we could see them begin to work their way back down. NO ONE knows—I think the talking heads, Fed officials and economists have all proven they don’t have a clue–nor do we.

I see crude oil has backed off 5% from the high earlier in the week–now trading around $81. I would not expect a further sell off–unless there is instant peace in the middle east and that isn’t going to happen, but we all know that further tensions are likely to arise and it could send oil way up–let’s hope this doesn’t happen. Lower prices aren’t hugely helpful to the inflation picture, BUT it certainly doesn’t hurt to pay less at the pump.

As mentioned by some folks in comments Trinity Capital (TRIN) has made a partial call (on May 17) of their 7% baby bonds (TRINL). We own this issue so will have a prorated amount called away. Everyone knew this was coming so no loss of capital will be sustained by owners–the company had stated in an earlier prospectus that they might call some of this issue. The companies partial call announcement is here.

Today I will likely take a nibble on a BDC baby bond–I’m looking for a 8% current yield (or thereabouts). I will add to a current position. Since I one bonds with 4 BDCs I see no reason to add a new company. Current holdings are on the laundry list page. Given the uncertainty in interest rates BDC baby bonds, with there shorter maturities, should provide some price stability.