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Let’s Go! Get the Show on the Road

Now that the talk is about over it is time to get interest rates up 50 basis points. The FOMC ends their meeting today and Fed chair Powell will speak.

All this yakking every day about how much the Fed will lift rates today is getting old–no matter where you turn someone is talking about it. Yesterday I heard someone speaking on CNBC (I seldom watch it, but I do have it on the radio in my vehicle) and they speculated that after 50 basis point hikes in May and June the Fed would have to stop raising as the economy weakens. Well we will have to wait and see–there is almost no way that the Fed gets 6, 7 or 8 rate hikes done before we are tipped into a recession.

Anyway we have the 10 year treasury at 2.96% and likely to get over, and stay over, 3% soon.

Income issues have fallen again this week and I added 200 shares of the XAI Octagon Floating Rate and Alternative Income (XFLT) term preferred (XFLT-A). This issue has a coupon of 6.50% and has traded down to the $25.35 area. Current yield is 6.38% and a yield to worst in the 4.30% area. Remember that yield to worst assumes the issue will be called on 3/31/2023 (the 1st available call date). With rising rates I think it will NOT be called then and will continue to mandatory redemption on 3/31/2026.

OK–buckle up for todays roller coaster ride. Depending on what Powell says we could see huge swings today. They will address the balance sheet runoff and this will be a focus factor.

16 thoughts on “Let’s Go! Get the Show on the Road”

  1. Darn doctor’s appointment. I missed this afternoon’s action. I should send him a bill for making me wait and missing out on profitable trades.

  2. Didn’t the Fed say that “inflation was just transitory” a few months back? They created this massive inflationary environment by keeping interest rates too low for too long, the current administration handing out free money like injectable candy and now they are backpedaling like clowns in a circus 🤡. Unreal, just UNREAL, let see that sweet $30.5 billion of US National Debt http://www.usdebtclock.org continue to grow like crazy, accept nothing to show for the higher interest rates the government will pay on their treasuries and the US dollar continuing to get weaker 🤬… Stay Tuned my friends https://www.youtube.com/watch?v=V-OYKd8SVrI

    1. You do know that the 30 billion is only a fraction off the actual debt that the government is responsible for when the social programs are accounted for.

  3. I picked up a bit more SACC and OXLCM yesterday, I don’t know if that was smart or not, might have overpaid, but they both mature in a couple of years, so there is that. Been thinking of adding a bit more CMSD, but might not.

  4. I picked up 300 shares of NRZ-D at $23.15. The reset yield of the 5-year treasury plus 6.223% in 2026 seems like a good backstop.

    1. My biggest holding. Except when I swap some of it for NRZ-B or even NRZ-A. Prices swings between them have been intense lately, sometimes B is higher sometimes D is as much as $1 higher.

  5. I started a position in PSBprZ yesterday with the intention of adding after the market settles down. Not sure when that will be. The chart for this security is really ugly but I think undeservedly so . (famous last words). There seems to be a prejudice against preferreds of companies being taken over by another company. I go by the credit rating of the acquiring company in this case. Almost 7% yield is not qualified but that’s ok as it’s in a traditional IRA.

    1. I’ve been buying PSB-Z too on the selloff. I’m hoping they take the PSAs way down too.

    2. Blackstone is buying every REIT that is not nailed down, and paying a premium for this one too. Considering we are in inflationary times and inflation will continue a smart investment strategy. I am going to pick some up (close to 7%) and hold it till the sun comes up. Rated BBB- , practically no debt and a payout ratio of 29% selling at a deep discount to par. What is not to like?

      1. Jerseyvinny, DaddyDollars, and Payday Investor,

        Note that Moody’s has placed PSB under review for downgrade, including the 3 preferreds (currently at Baa2).
        Here’s the April 27 announcement:

        Here’s the April 29 update:

        Here’s some of the relevant text from the April 29 update:
        Moody’s placed PSB’s ratings under review for downgrade reflecting the likelihood that PSB’s credit profile will deteriorate under Blackstone’s ownership, with the potential for meaningfully higher leverage and secured debt levels that could result in a multi-notch downgrade of the REIT’s ratings, including crossing over to non-investment grade territory, upon transaction close.

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