Monday Morning Kickoff

Last week was quite ‘exciting’ as all weeks have been for months and months and will be for the balance of the year—every piece of economic news scrutinized and debated.

The S&P500 was up on the week by about 1/3%, but traded in a about a 2% range. The index is about 14% off the 52 week high.

The 10 year treasury ended the week at 2.84% which was up 20 basis points on the week after strong employment numbers drove the yield higher on Friday. This week we have the release of the Consumer Price Index (CPI) on Wednesday morning so the tone for Wednesday, Thursday and Friday will be driven by this number.

The Federal Reserve balance sheet fell by $16 billion last week to $8.87 trillion.

Last week the average $25/share preferred stock and baby bond rose by 17 cents last week. Investment grade issues were up by 24 cents, banking preferreds rose 18 cents, CEF preferreds rose by a dime and shippers fell 2 cents—a decent week, although prices softened on Friday after the employment numbers were released.

Last week we had no new income issues priced.

8 thoughts on “Monday Morning Kickoff”

  1. Tax increases both through enacting a corp. minimum tax, stepped up enforcement of tax evasion, and the 1% excise tax on stock buybacks are contractionary. The ability of Medicare to negotiate drug prices seems pretty mandatory for those favoring free market policies. The bill is supposed to raise $739 billion and spend $370 billion, which would be contractionary. Some would say the climate spending would more than pay for mitigation spending later on, but for me, although it might be true, that is a bit of a stretch, especially if developing economies more than make up for any greenhouse gas reduction we do. Whether or not it is the “right” thing to do is really outside the world of economics.

  2. Just to give some color to that number on the Fed balance sheet, forgive my rounding error. The Fed reduced its holdings by 0.00182857143.

    Washington DC defies the adage that something is better then nothing. In Washington DC nothing seems to always be better then something and less costly.

    1. Except when it comes to spending… Then it’s the complete opposite…. I can’t help but feel insulted by the naming of this bill the Inflation Reduction Act. It only became that, without any change in its aimed for spending goals, after the polls told them that inflation was a huge worry for Mr. John Q. Public. So I tell you what we’re going to do, Mr. Public, we’re going to name the spending bill the Inflation Reduction Act. You’ll believe us..

      Feel free to delete, Tim, if I’m going too far down the political talk sewer..

      1. IMHO, Jerome Powell’s job just got a little harder, and this might test his conviction on 2% inflation. Would love to hear the conversations between him and the White House. I think we’d all like to know if Powell will “blink”; will he reverse course if the market tanks, if unemployment goes to 5-6%. Will he, like Vockler in the 80’s, stop raising rates to early and me met with a second round of inflation. Will he stay committed to 2% inflation and not yield to stubborn “sticky” inflation? Or, will he engineer a soft landing? We are watching history being made. Cheers!

      2. They have a long standing relationship with George Orwell and Franz Kafka to name their bills.

  3. Well too bad Paul Volcher didn’t know all we had to do to Win Inflation Now was to pass a bill called Inflation Reduction Act…and spend 700 billion on pork!!

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