Let’s Wrap This Week Up!!

My old brain is tired–too much market activity this week I guess with interest rates decisions and market movements higher. So many capital gains in accounts (with a few dogs of course) as investors everywhere piling into preferreds and baby bonds and forcing one to decide if there are profits to be locked down. Some would say one just needs to sit back and enjoy the ride and in the end I think that is mainly what one should do–collect dividends and interest and not sweat the share price movement.

I did let go of 75% of the WR Berkley 5.70% baby bonds (WRB-E) and then 50% of my XAI Floating Rate 6.50% term preferred (XFLT-A). Both had good capital gains– I will re-enter the positions if we get share price setbacks to under $25. Additionally for those that noted my weightings in the portfolio both insurance and closed end funds (CEF) were high and this helps to get a bit more balance. Obviously this puts cash in the account which needs to be reinvested–dealing with ‘reinvestment risk’ now is a big problem. Does one move out the risk spectrum to garner yield?

The 10 year treasury is trading at 3.73% this morning–7-8 basis points higher than when the Fed funds rate cut occurred on Fed day. I find this very interesting and not helpful in some ways to the economy–mortgage rates are now just over 6% (for some borrowers anyway) and they are unlikely to move much lower if the 10 year treasury has plateaued. It is also interesting to note that 3 month SOFR has not moved even a basis point lower–we’ll see if this moves lower over the course of the next month. Lots of items to watch in the weeks/months ahead.

Well let’s get the day started and see if equity markets can maintain their record highs–no doubt fun times ahead.