Monday Morning Kickoff

What does this week hold in store for us? Higher interest rates? Lower rates? No one has this answer, but we do know employment figures last Friday were stronger than anticipated and over the weekend the senate passed the new stimulus bill–sending it back to the house for final approval. Wednesday we will have the most recent consumer price index (CPI) released–will it confirm inflation or throw cold water on the thought of rising prices?

So the S&P500 rose last week by just under 1% after trading in a range 3740 to 3915 – closing at 3842.

The 10 year treasury closed the week at 1.55% which is an increase of 9 basis points from the previous week. The yield hit 1.65% during the course of the week. This back and fill action has helped quality preferreds and baby bonds firm up in price–at least for the time being.

The Federal Reserve balance sheet fell by $33 billion last week.

The average $25 preferred and/or baby bond rose in price by 17 cents last week while investment grade issues rose by 24 cents last week. Banking issues rose by 25 cents and mREIT preferreds fell by 3 cents. So pricing reversed when compared to previous few weeks—quality rose and junky issues flattened or fell a bit.

There were no new income issues prices last week, although CEF Priority Income Fund filed a preliminary prospectus for a new term preferred stock issue, but no further filings (i.e. pricing) were made.