We are gearing up (mentally) for an active week in the stock and bond markets. Almost without question the tariff situation globally and in particular with China is going to cause some pain and suffering in some commodity markets as well as potentially in the equity markets.
Looking at the futures tonight share prices are off in most all the markets of the world–although we all know that the futures aren’t worth much in terms of forecasting closing prices tomorrow.
Last week we had the 10 year treasury trade in a range of 2.89% to 3.01% closing around 2.92%. Of course the key items we had last week was the Trump summit with Kim Jung-un, the Fed Rate hike and a late week rush to safety as the U.S. announced tariffs on Chinese goods. Of course not reflected in trading last week was reaction to China’s retaliation which came over the weekend.
Stock markets were down a bit last week closing around 25,090 on the DJIA–a loss of 220 points on the week–totally meaningless. I have to admit that I thought it was much worse–I don’t pay too much attention to the equity markets unless they have a REAL move up or down (maybe at least 300-600 points in a day). All I remember was the talking heads on CNBC were saying this was the “worse week of the year”–what idiots–I really need to have different background noise in my office.
For this coming week we have just 3 Fed presidents speeches—just shut your yaps–no good comes of these folks spouting off. Then on Monday we have the Housing Market Index (builder confidence) and Tuesday Housing Starts are announced for May–both are expected to run hot–but that is the consensus so likely it won’t add to upward interest rate pressures. Wednesday Existing Home Sales for May are announced and on Thursday the FHFA Housing Pricing Index is announced. Also on Thursday the Leading Indicators is announced. We would be really surprised if any of these are meaningful to any interest rate or equity market. We won’t need fundamental economic news to make for some wild markets this week.
As we had noted on Friday the Fed Balance Sheet was up $2 billion in the lastest week and thus didn’t contribute to any upward pressure on interest rates.
We had 2 new issues announced last week. 1st RenaissanceRE (NYSE:RNR) sold a non cumulative 5.75% investment grade preferred. This issue is now trading on the OTC Grey market under ticker RNREF and is trading right around $25/share. Ohio banker Synovus Financial (NYSE:SNV) sold a non cumulative 6.3% fixed-to-floating preferred from which they will redeem their outstanding 7.875% (NYSE:SNV-C) fixed to floating rate preferreds.
Also the new 7.75% baby bond issue from Cowen (NASDAQ:COWNL) began to trade and is right around $25.05/share.
We ended last week with the average preferred stock trading at $25.12 which is up a few cents from the previous week. Additionally there are 168 issues trading at $25 or below–2 fewer than last week.