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Interest Rates Trying to Push Higher

We have a plethora of Fed folks yakking this week–and while I haven’t checked out their speeches I think it safe to assume that most of them are pretty much in lockstep with their line on probably pushing out rate cuts into May. The 10 year treasury is now at 4.14% which is up 11 basis points.

Up until today interest rate moves have not been detrimental to preferreds and baby bonds – that has changed today as I see we have numerous issues off by 1% —i.e. the Jackson Financial 8% reset preferred (JXN-A) is down 1%–also the Spire 5.90 preferred (SR-A) is off 28 cents at $24.23. Losses across the board are generally not of large magnitude and considering the gains in recent months I don’t think these minor losses are of concern. If we were to get widespread 2% losses I think it would be a buying opportunity–not a selling opportunity. For me it would be minor buying until mid month when I get the CD maturity dates.

Bottom line is that we need a little wake up call on occasion that shares go both up and down – although recently it has been mostly higher.

8 thoughts on “Interest Rates Trying to Push Higher”

  1. Yes China is tanking hard. And interest rates have broken upward hard. But I think left unmentioned is the worries unleashed by NYCB.

    1. China is in deep denial: they passed a new law which makes it illegal to say anything negative about the economy. That comes after market restrictions against short selling and data irregularities. The Evergrand liquidation order and the expected resistance to that order from the Chinese mainland reveal how unreliable the financial law can be in a Communist country. Experts opine that foreign investors in Evergrand will get little to none out of their debt holdings. I gave up on China after the Jack Ma fiasco and now feel more certain that China is to be avoided. Mexico?

  2. If you believe the current narrative that the Fed is done raising rates and will eventurally be lowering rates, then I agree with you that larger sell offs likely would be a buying opportunity, as long as you can wait it out.

  3. Article on MSN by Reuters about the disinflation in China. Article basically said it’s been going on for a while and small business and manufacturers are laying off people and taking contracts and losing money rather than lose customers and market share. One person interviewed wondered if he should reopen after the Chinese New Year.
    Memorable quote, This will be the best year of the next decade.

    1. Charles,
      Lots of Chinese companies had been prohibited from laying anyone off (and have been since beginning of COVID). Had to keep paying, even during shutdown. Some got bail-out money from the gov (infusions or loans), but its not sustainable. Some layoffs are now allowed, but not enough to balance the economy. Unemployment is still very high (under 30 year olds as high as 40%, depending on who you ask – even higher if you consider underemployment, like engineering grads delivering fast food).

      the Chinese economy is far from bottomed.

      One interesting development – a Hong Kong judge ordered real estate giant evergrande to liquidate last week. Hugely in debt, but forcing it to liquidate would likely trigger a financial crisis (IMHO) because there is a LOT of “hidden” debt underlying. I don’t know whether the judge has any hope of making that stick, but she is certainly brave to even say it publicly (I am waiting for to be arrested or disappeared).

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