Quiet day again in the income markets.
We are not seeing any preferred issues down more than a buck
We are seeing most of the regular ‘suspects’ near new lows–i.e. AmTrust Financial preferreds, a JPMorgan 6.70% perpetual (JPM-B) which is redeemable on 3/1/2019 and will undoubtably be called at that time (also it just went ex-dividend).
The 10 year treasury is now at 2.71% and we expect it to move into the 2.60’s if the FED gives a dovish statement tomorrow OR Jay Powell leans dovish during the press conference after the FED meeting announcement. This announcement and press conference are very important to the equity markets–although not too important to the income issue markets.
We will be rebalancing the Enhanced High Yield Income Portfolio which can be seen here. While we have rebalanced our personal holdings we have left way too much risk in this model. It will end the 1st year with a gain of around 2%–will is totally unsatisfactory. The model is loaded with shipping issues as well as the hated Spark Energy 8.75% preferred. Needless to say if you have a portfolio dominated by these issues you have been spanked quite hard in capital losses–which fortunately have been balanced a bit with the high yield of the issues. While we are not totally negative on the shippers they need to be held in modest quantities–in this small portfolio we have 3 issues–just too much.