Well the 10 year treasury yield keeps popping with the current yield reaching 1.75% before closing the day at 1.73%.
Preferred stocks fell about 1/2% with some of the higher quality issues moving lower by 1%.
Obviously investors believe there is inflation around the corner and fear the Fed, who seems determined to let inflation rise without intervention, is a bit wacky. If we do see inflation at what point will the Fed act? No one has the answer, of course, and I no longer seriously attempt to forecast these things—just doesn’t pay.
It is interesting to watch the yield curve–obviously steepening. 1 month notes are now at 1 basis point–which is down from 3-4 basis points early in March–while the 10 year has risen from 1.45% to 1.73%. Bankers have to be loving the curve.
My next move here is to identify those high quality issues which are getting ‘beaten up’ with the increase of interest rates and likely buy a few of them–I’ll need to wait a few days and see if we are going to get a day or two pause in increased rates. I love quality issues–normally, but I don’t want to go crazy at this time. The better ‘junk’ issues work better here so I continue to hold those issues that are mid quality (not investment grade, but perceived to be solid).