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Let’s Play the Inflation Game 1 More Time

Well yesterday we got some consumer price index (CPI) numbers that we hotter than forecast – markets reacted strongly – for about 90 minutes and then yawned. The S&P500 fell a bit–but nothing of significance, while the 10 year treasury fell 5 basis points to close at 3.98%. Right now equity futures are falling with the S&P500 off by about 1/3%.

Today we have the producer price index (PPI)–forecasts are for numbers that are up .1%. Is there a reason to think markets will react strongly – nope. In fact after the release of CPI yesterday the odds of a rate cut by the Fed in March rose to 70% – hope springs eternal I guess.

Maybe a bigger issue to markets at this moment is the U.S. and UK airstrikes in Yemen last night which has served to drive up crude oil prices by $2-3/barrel. The escalation of issues in the Middle East could easily drive oil prices up by $10-$20/barrel–or more. Let’s hope this situation settles down-for lots of reasons, but certainly for economic reasons–i.e. shut down of the Suez canal.

Last night Eagle Point Credit (ECC) priced a new issue of term preferred at 8%. This is a monthly payer and will trade under ticker ECCF. Egan-Jones has the issue at BBB. The pricing term sheet is here.

I did nothing yesterday–no buying or selling. Accounts are sitting just below record levels–daily movements have been minimal–movements are primarily around dividend and interest payment dates. I have very large maturities of CDs in February and March–I have concerns that I will be able to deploy these funds in a timely and responsible fashion, but given that I can earn 5.3% in a money market fund I have a little grace period to figure it out.

So let’s get this day rolling!!

4 thoughts on “Let’s Play the Inflation Game 1 More Time”

  1. Fed watchers may be able to interpret the comments coming from some of the fed governors. ZH see say goodbye to QT and a return to injecting cash on the short end!?!

  2. Oil is in a significant downtrend. Yes you can make a div or even a short term pop…but be careful. If after all this mess in the ME and we are still trending down thats an indication. Delta forward expectations just another cause for concern

  3. No recent moves here, either. But, I do have a chunk of treasuries maturing on the 15th so will have a lot of dry powder I will look to put to work soon.

  4. Today is going to be a downer for the market after people realize the market is going to be closed for Monday. They are not going to want to be holding positions over a 3 day weekend with the Middle East heating up.
    At least that is what my spidey sense is telling me. Maybe a few GTC lowball bids will hit with some stocks having ex-dividend dates today.
    I have been buying an oil stock the past week or so expecting it to go ex dividend in about a month. Not happy watching it go down not up and kept buying as it went lower. Finally had to call some friends in the Pentagon and ask them for a little help.

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