Well September is over and it was a somewhat difficult month for both stocks and bonds, although for many of us with 50 years of investing experience we have seen many months that were more negative than the 4.9% loss that the S&P500 incurred.
Last week the S&P500 fell by .7%–which interestingly is just 7-8% below a 52 week high. Right now the equity futures are dead flat.
Interest rates are really the big story and they are near a 15 or 16 year highs–the 10 year treasury traded up 14 basis points to 4.57% on the week–which is a pretty large weekly gain, but the close Friday was near 12 basis points below the high of 4.69%.
Last week we had a fairly heavy economic calendar with the personal consumption expenditures (PCE), which was released on Friday, being the most important coming in favorable to forecast.
This week is kind of a medium load of economic data–but of course the most important (or at least most closely watched) will be the employment report on Friday. It is difficult to see a meaningful recession if employment remains super strong.
Last week the Federal Reserve balance sheet assets fell by a somewhat normal $22 billion. Finally we will be going below $8 trillion in the next 2 weeks.
Last week the average preferred fell by 10 cents. The weekly drop was much worse going into Friday, but we saw a decent bounce. Investment grade issues were off 18 cents, banks were off 3 cents, mREIT issues were off 24 cents while shipping issues were up 8 cents.
As is the norm we didn’t have any income issues prices last week.
MMFs…
VMRXX ~ 5.31%
VMFXX ~ 5.30%
SWVXX ~ 5.24%
Preferred ETFs Dividends…
PFF ~ 7.01%
PFFD ~ 6.7%
PFXF ~ 7.44%
Other…
TLT ~ dropping, $86.97
Fed Speak Today (Bloomberg) ~ Fed’s Bowman Again Urges Multiple Rate Hikes to Curb Inflation…”sees risk that energy prices hurt price-growth progress”
Treasuries..
10 yr ~ breaks through the 4.7% mark!
10 yr ~ 4.701%
20 yr ~ 5.021%
30 yr ~ 4.813%
ALL B Was called in full, or so I’ve been told. I not seeing that on systems nor at Quantum
And this is not the first. Never got notice AAM A&B were called until they showed up. Is it just me??
Told by whom, IYP?
Any opinions on ALL-J? looks like a decent rate with almost 5 years to the call date. YTC 6.42 at current price of 26.
I would ask first, what benefit you are looking for with J at a 6.42% YTC. As compared to ALL-H at a present 6.59% yield at $19.18.
Gridbird,
Ya, you’re right. I was thinking duration but it doesn’t seem likely that H will be called in 2024 given how far below par it’s trading so H has the edge with potential for capital appreciation. I may go with a smidge of that one but not yet.
AJ, Now there is nothing wrong with J if you are wanting one to be more “call anchored” like down the road. There is never a right or wrong reason, generally its matching up your goals or expectations to your purchase.
I have a mixture of both, though my floaters are generally the ones that are around par. I have slowly been buying fixed perpetuals on drops. But my goal here is to buy them well under par with a decent yield still. But Im trying to play a cap gain type play down the road (maybe its waaaay down the road, ha). Overall I am still a bit shy on spinning my tires out and gunning the pedal on the fixed perpetual road just yet. But I cant wait for the bells to ring to buy either.
Instead of All-H, wouldn’t All-I be better?
Both have similar capital appreciation potential and current yield:
I = $18.19 / 6.53%
H = $19.38 / 6.58%
But, All-I has slightly longer till its 1st call date and better chance it doesn’t get called with it’s lower coupon:
I = 1/2025 / 4.75%
H = 8/2024 / 5.10%
(I’ve owned ALL-I for longer than I’d like to admit and looking to lower my cost basis soon)
I didnt mean to imply H was better than I. I was just giving a different scenario for about same yield with one well under par. Im personally not biting much on the liquid perpetuals just yet. Except for a couple small dabbles. The only quasi Allstate issue I own for time being is GJT.
Got nowhere checking with Allstate, but TDA Corporate Actions knows nothing about ALL-B being called
…and no SEC filings from ALL
Still trading at $25.61, for 15 days worth of interest if called.
It should be trading somewhere around $25.10.
If it has been called, it is a secret.
I am starting to sell puts on TLT here – took a couple of the Jan 2024 80 strike at $1.00/contract. If it goes that low, I’m effectively purchasing TLT at 79. Interesting times. In its entire lifetime since 2002, it has not been below the upper 80s. We shall see because I am not sure how to calculate what it might have been in the 1980s!
Yazzer,
I’m not sure I understand the logic of this trade. You are basically getting paid $100 on $8000 for taking the risk on a possible loss and a 109 day hold on the $8000. That’s about 5% compounded annual plus potential for significant loss. If you like TLT and want to buy it at 79 why not put the 8K in a 13 week T-bill at 5.5% and see if TLT goes to 79 or even below. If it doesn’t, you’ve made 5.5% vs the 5% on selling a put. If it goes below, you still made the same 5.5% and can now buy more TLT for that same 8K initial investment.
if you sell the put you get your money market interest AND the premium. your other points are, of course, true, but then again we might buy nothing if the price were always more favorable in the future.
Your point is well taken. In fact, I did not realize that margin req’ts for TLT are 40% but for treasuries, it’s 1% at eTrade. So, basically, in my trading account, it costs me basically nothing to hold treasuries as a backdrop (equal to cash). I rarely go into a margin debit situation unless I see a quick trade (read: a couple days) that makes me bite – and only in my (relatively) small risk account. My position in the TLT put is small at this point so really no biggie but will temper my thinking before the next tranche.
any idea about this new issue? BTW, this company is debt free.
SWK Holdings (NASDAQ:SWKH) has priced its previously announced registered underwritten public offering of $30M in aggregate principal amount of 9.00% senior notes due 2027.
Peppino–don’t know this one–but am looking to see what is up with it. Thanks for catching it.
SWKHL
Asset Coverage Compliance
We agree that for the period of time during which the Notes are outstanding, we will not as determined on a consolidated basis (i) make additional borrowings, including through the issuance of additional debt or the sale of additional debt securities, unless our asset coverage (as defined in the 1940 Act and, for the avoidance of doubt, including our consolidated assets and liabilities), with respect to our senior debt securities, for any class of senior securities representing any of our indebtedness, equals at least 150% after such borrowings, and (ii) declare any cash dividend or distribution upon any class of our capital stock, or purchase any such capital stock if our asset coverage (as defined in the 1940 Act and, for the avoidance of doubt, including our consolidated assets and liabilities) for any class of senior securities representing any of our indebtedness, were below 150% at the time of the declaration of the dividend or distribution or the purchase and after deducting the amount of such dividend, distribution, or purchase. For the purposes of determining “asset coverage” as used in the immediately preceding sentence, any and all indebtedness of the Company as determined on a consolidated basis, including any outstanding borrowings under the Credit Facilities and any successor or additional credit facility, shall be deemed a senior security of us.
Maintain a Credit Rating
We will agree in the indenture to use our commercially reasonable efforts at our own expense to maintain a rating of the Notes by at least one NRSRO at all times while the Notes are outstanding provided; that no minimum rating will be required.
Thanks 2wr–no minimum rating is required–its already BBB- from EJ—pretty scary.
Maintain a Credit Rating
We will agree in the indenture to use our commercially reasonable efforts at our own expense to maintain a rating of the Notes by at least one NRSRO at all times while the Notes are outstanding provided; that no minimum rating will be required.
E-J must be very proud to be included… https://www.sec.gov/about/divisions-offices/office-credit-ratings/current-nrsros
Current NRSROs
Below is a list of credit rating agencies currently registered as NRSROs, organized in alphabetical order. Documents related to each NRSRO are accessible by clicking on the name of the NRSRO.
A.M. Best Rating Services, Inc.
DBRS, Inc.
Demotech, Inc.
Egan-Jones Ratings Co.
Fitch Ratings, Inc.
HR Ratings de México, S.A. de C.V.
Japan Credit Rating Agency, Ltd.
Kroll Bond Rating Agency, Inc.
Moody’s Investors Service, Inc.
S&P Global Ratings
2wr – Given the number of regulatory actions against them in the past the bar must be set pretty low.