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.