The end of the trading day saw the 10 year treasury pop up to 2.77% which sent quality income issues lower,which had a strange jump in price yesterday back down. When the quality issues popped up yesterday after a big tumble the previous day we thought it seemed strange–guess investors got so excited with the couple extra nickels they could garner with higher current yields they couldn’t resist moving prices higher.
Worse than the closing treasury prices are the overnight prices in Asia as the 10 year hit 2.80%. When we wrote the Monday Morning Kickoff this week we mentioned that traders were looking for a move to 2.80% if prices breached 2.68/2.69%, but we were thinking this would take a little longer than 4 days. With the employment report first thing tomorrow we will see how markets react.
At this moment we would pause any buying until we see how things shake out in the next day or two. Short duration baby bonds and term preferreds continue to trade reasonably strong and can be bought. Perpetuals, even high yield, should be paused–why buy today when you may get them 50 cents cheaper next week?
We are kind of drooling over some REITs-in particular KIMCO (NYSE:KIM) which is a investment grade shopping center REIT. I reviewed their financials from the 3rd quarter and they were fine and they should be releasing 4th quarter results soon (corrected–to announce 2/15) and I will be anxious to see them. We expect they will be as expected and maybe that will reverse the share slide. Shares closed today at $15.36 with a current yield of 7.29%. We will watch–who wants to catch this falling knife?