Last week the S&P500 moved in a range 4447 to 4512 about 1% before closing near the low of the week at 4450 which 7 points below the close the previous Friday.
The 10 year treasury moved in a range of 4.22% to 4.34% before closing the week at 4.32% The close is about 7 basis points above the previous Fridays close. This morning the treasury is trading around 4.35%—will it break higher this week.
In spite of substantial economic news (in particular the consumer price index and producer price index) last week markets are simply not moving, but we all know how quickly that can change.
This week we have the FOMC meeting starting on Tuesday and wrapping up on Wednesday with an interest rate decision announcement at 1 p.m. (central) followed up by Jay Powell’s presser shortly thereafter. Expectations are for no change in interest rates, but you can be certain that each word spoken at the press conference will be parsed forward and backward. We’ll see where traders decide to take the markets.
The Federal Reserve balance sheet moved just $2 billion lower last week–a slowing in the last 3-4 weeks so we are due for a sharp drop in the next week or two.
The average $25/share preferred and baby bond moved up 12 cents last week. Investment grade issues moved up 16 cents, banks by 11 cents with CEF preferreds up 2 cents and mREIT preferreds up 12 cents.
Last week we had no new issues priced, but recent new issues are trading generally right new liquidation preference ($25).
Tim, just saw this…
$7.6 trillion of publicly held U.S. government debt matures in next 12 months.
https://www.marketwatch.com/story/7-6-trillion-of-u-s-government-debt-matures-in-next-12-months-what-does-the-treasury-do-next-cfaf5369#:~:text=A%20total%20of%20%247.6%20trillion,at%20asset%20management%20firm%20Apollo.
Seems like a shocking event…hopefully someone smarter than I can explain the implication for treasury rates?
Cheers! Windy
The green line approaching 50% is interesting. That 31% of GDP- $7T is a shocker. (that no one saw coming?).
Who’s getting 7% on treasuries?
windy
Not any smarter but that’s a whole lot of supply for a world where the largest foreign buyers (China, Japan) are decreasingly interested in US debt
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As I have posted before, the present economic prospect discussion appears to be a tug-of-war between a goldilocks scenario of falling interest rates with an improving economy vs a recession/oversupply scenario of increasing interest rates.
Both sides seem to have a convincing argument.
Who knows?
My personal solution is a balance of solid preferred stocks and a 15 month year ladder of T-Bills.
If rates rise, the ladder will prosper and the strong companies will still be able to pay their preferred dividends.
If rates fall, the ladder will suffer but the preferred portfolio should enjoy capital gains.
IMHO
Whazzamatter with you guys??????? Don’t you realize Modern Monetary Theory tells you that none of this matters????? https://www.investopedia.com/modern-monetary-theory-mmt-4588060 “Put simply, modern monetary theory decrees that [monetarily sovereign countries] do not rely on taxes or borrowing for spending since they can print as much money as they need and are the monopoly issuers of the currency. Since their budgets aren’t like a regular household’s, their policies should not be shaped by fears of a rising national debt.” You mean to tell me you’re not a believer??? How old school……ha
we should ask people inside Turkey, Argentina, or Egypt how they are liking their modern monetary stance.