Interest Rates Move a Bit Higher

The 10 year treasury moved about 4 basis points higher today (to the 2.59% area) thus far–doesn’t appear to be any particular reason behind the move and certainly it is of no concern at this moment.

Generally markets are quiet. The SP500 started off with a pop on various earnings announcements, but then the health insurers started to tumble based on political rhetoric so now it is up a measly 1/10th of 1%–sounds just like yesterday.

We are showing the average preferred and baby bond up 5-7 cents on the week thus far–obviously the previous rally ran out of gas.

The active preferreds are the usual suspects. REIT Washington Prime Group (NYSE:WPG) preferreds are are off 2% today and the CBL issues are off 1%. Also the Summit Hotels 6.25% preferred (INN-E) issue is showing big volume without major price movement–trading at $23.55.

The Apartment Investment Management 6.875% preferred (NYSE:AIV-A) is off 1% today as investors got caught on a redemption notice with only 14 cents of accrued dividends. Shares were trading in the $25.40 area prior to the redemption notice. Shares become redeemable on 5/16/2019 and that is the day they are being redeemed.

We also noticed the very nice HECO Capital 6.50% Trust Preferred (HE-U) from Hawaiian Electric was called for redemption on 5/15/2019. This has been callable since 2009 and we hate to see it go.

12 thoughts on “Interest Rates Move a Bit Higher”

  1. Everything seems so overpriced compared to where we were in December. Anyone else really bothered by this, or do you keep buying here?

    1. Its all about issue and entry and timing now. I made $2 a share on HL-B this week holding maybe 2 weeks…IPWLK is up over a buck since I bought late last week, but that is more a non issue since its likely a hold. KTH is up over 40 cents since I bought Monday. Just to buy and hold traditional liquid perpetuals, like Bob said yesterday, I would be more suspect and wait.

      1. Grid, deja vu April, it’s 2018 again. I’ve stayed invested but not seeing many deals better than holdings. I wouldn’t be much of a buyer at these levels but I don’t need to be. One thing I have been watching new issues from the bigger Underwriters. My assumption is if major Underwriter were willing to take the risk I might be too. I only buy ones I wouldn’t mind holding, that’s a subjective qualifier. I’m up a few percent on all of them although took profits on a couple. Something more exciting will happen sooner or later. Meanwhile I collect the yields and putter around doing occasional flips when I’m not gone fishing.

      2. I also just sold KTH 31.15 bought at 29.20. I seem to be selling a lot of shares lately, not buying that much. Added to a few existing positions COWNZ, JMPD etc but holding a lot of cash.

        1. Libero, I was lucky to flip that thing many times when it got to the $29 area back then. I tried Monday to steal one last bite of the apple Monday at 30.78 but they only gave me 250 shares. Not enough shares to hold, so I just flipped them at 31.30 today and will now be able to afford to eat the rest of the week from the $120 I got, lol.

    2. Jacob,
      I share your concerns, but I also focus on letting my money compound and it can’t compound if it’s not invested. KMPA has been a frequent target of late for me and COF-P has also remained at a decent price level compared to many other 6% pfd’s. Lately, the key has been to jump in hard on IPO’s and then ride them up until you want to exit or continue holding. I’ve bought into about the last 8 IPO’s and have make a killing on most like PSA-H, NI-B, DLR-K, AIG-A, etc. Some are way higher than others – but as a whole, these things have rocketed higher.

      Another good strategy as of late has been to do some buying on the ex-date of good dual IG preferred’s. Doesn’t take them long to swing back up and give you some good coin.

      1. Thanks, I need to add more to my watchlist since a lot of what I’m familiar with has climbed beyond where I’m willing to buy it at.

        I’ll look into KMPA tonight in depth

  2. Thanks for the information Fred, as I noticed a number of REITs were down today. After a busy tax season (three days per week), I’ll have a little more free time now. Read a few articles on SA today and noticed that one of the most prolific writers did about 16 articles on Realty Income (O) in 2018. I’m not sure how this is helpful to investors, considering the company currently yields under 4%.

    Considering the Fed will not be raising interest rates in the next year or two, it’s challenging to find good fixed income investments at the present time.

    1. Did you mean to say 16 articles in 2019 Lou? Because if you purchased Realty Income (O) in 2018, you’re sitting on a nice fat gain.

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