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Monday Morning Kickoff

Last week the S&P500 fell by about 4.6% — it had fallen 4.8% the previous week–so 9.4% in a 2 week period.

The 10 year treasury yield moved up a hefty 1/4 point after rising about 15 basis points the week before. The yield closed the week at 3.70% . At this moment (6 am central) the 10 year yield is at 3.79%–the 2 year is at 4.30%.

The Fed balance sheet fell by $16 billion last week. The balance sheet is now off $150 billion from the peak in April–around 1.5%. It is pure silliness to believe that the balance sheet will shrink by a meaningful amount, in fact, I think the Fed will slow the reduction later this year as interest rates move higher.

The average $25/share preferred and baby bond moved lower by a giant 63 cents per share. Investment grade fell by 48 cents, banks fell by 49 cents, CEF preferreds fell 75 cents, mREIT preferred were decimated, falling 88 cents. BDC issues fell by 25 cents and insurance issues fell 52 cents.

Last week we had 1 new income issue priced. Merchants Bancorp (MBIN) priced a new fixed rate reset with a very tasty 8.25% initial coupon.

The issue is trading OTC under ticker MBIPL now trading around $24.80.

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8 thoughts on “Monday Morning Kickoff”

  1. MREIT common stocks getting pummeled here to fresh new lows; NLY and AGNC now single digits. (NLY trading R/S today btw)

  2. Placed a trade this morning before market opened–400 shares @ 24.85 limit.
    Filled a few minutes after mkt. opened at 24.80–$6.95 commission no matter the amount due to not being yet on the exchange–Schwab is VERY good for preferred stock investing!

  3. “I think the Fed will slow the reduction later this year as interest rates move higher.” I think you are spot on this matter Tim. After the Fed overreaches raising interest rates from looking in the rear mirror without glasses, they will get some bi-focal lens which may not help either.

    I am reading the next 3 month I-Bond rate is speculated to drop in the 6% range, inflation may be cooling off (less energy which may skyrocket if the Chinese’s get off covid-restrictions and a cap on oil prices is a variable unanswered)

    Anyone else reading or hearing that?

  4. “I think the Fed will slow the reduction later this year as interest rates move higher.” I think you are spot on this matter Tim. After the Fed overreaches raising interest rates from looking in the rear mirror without glasses, they will get some bi-focal lens which may not help either.

    I am reading the next 3 month I-Bond rate is speculated to drop in the 6% range, inflation may be cooling off (less energy which may skyrocket if the Chinese’s get off covid-restrictions and a cap on oil prices is a variable unanswered)

    Anyone else reading or hearing that?

    1. If the inflation numbers this month does not increase over August’s number then the November I-Bonds reset rate will be 6.03%.

  5. This is now trading on gray market under symbol MBIPL. Fidelity will not allow purchase. Does anyone able to buy? Where?

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