Monday Morning Kickoff

The S&P500 moved lower last week – moving a range of 4335 to 4490 and closing at about 4370-a loss of about 2.1%

The 10 year treasury moved in a range of 4.15% to 4.32%, closing the week out at 4.25% up about 9 basis points from last weeks close. This morning the 10 year yield is at 4.29%. The economic news last week was generally as expected with home builders talking out of both sides of their mouth-on one hand having low confidence, but on the other hand continuing to build houses and apply for permits in spite of high interest rates.

This week we have only minor economic news – none of which I would call market moving, although in this day and age lots of stuff can move markets that in days gone by would not have been paid attention too. We do have Fed Chair Powell giving a speech in Jackson Hole at the end of the week.

The Fed balance sheet fell by a sharp $63 billion last week after a 1 week respite in the drop as the week before the balance sheet was near flat as it grew $2 billion. This runoff of the balance sheet is removing a lot of potential demand for new treasuries.

It was a nasty week last week for $25/share preferreds and baby bonds as the average share tumbled by 31 cents. Investment grade issues fell by 42 cents, banks by a hefty 52 cents. CEF preferreds fell 16 cents, mREIT preferreds fell just 6 cents with shippers fell a dime.

Last week we had one new income issue priced and Apollo Global Management (APO) sold a new 7.625% fixed rate reset baby bond (APOS). The issue has not begun to trade as of now, but will likely trade sometime this week.