Just looking at interest rates this morning it is pretty obvious we are going to see a decent move in the next day or two–we do have the consumer price index tomorrow and that is followed up by the producer price index on Thursday. The 10 year is at 4.29% this morning–we could easily see 4.4% or 4.2% tomorrow–just a tiny bit of a surprise read on consumer prices will move rates. We’ll see.
CD rates are hanging in there at the 5.5% to 5.55% area – I believe I mentioned last week I bought a bit of the 1 year callable 5.55% issue from JPMorgan–but now it will probably take 5.6% and above to get me into more. I say ‘probably’ because we never know what the future holds – maybe rates peak next month and one wants to lock in some safe money? Who knows?
Talking about interest rates peaking–and I have no idea whatsoever when that will occur—there is dramatic potential upside to so many securities (perpetual preferreds). These are the high quality, low coupon issues from quality company’s. The question is – does one buy these issues in anticipation of capital gains in the next year or two ahead? There is no correct answer because every person has a need for different levels of quality–you give up some current yield in anticipation of future gains, but you gain the peace of mind of holding a quality security. Just pondering.
Well equity futures are a bit soft right now–meaningless of course–I think we may tread water as we await the inflation numbers in the next couple of days.