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Monday Morning Kickoff

The S&P500 bounced back nicely on Friday, although the week ended up with a lower close than the previous Friday by 7/10%–closing at 4136.  The index traded in a range of 4048 to 4187 as we had an interest rate hike on Wednesday and employment numbers on Friday.

The 10 year treasury yield close was almost dead flat with the close the previous Friday–closing at 3.446% versus 3.452% the previous Friday.  The yield had traded down to as low as 3.29% on Thursday.

This week we have economic news that will move the markets–we have the consumer price index (CPI) on Wednesday and producer price index (PPI) on Thursday.  We are now accumulating data for the next FOMC meeting in June and I don’t want to see numbers above forecast.  We just had a strong employment number last week so we are already under the gun for the June meeting.

Here is the economic calendar for the week.

The Fed balance sheet fell by $59 billion last week.  Quite surprising (at least to me) is that the balance sheet has moved sharply lower after the March banking crisis–a combination of the Fed continuing quantitative tightening (QT) and banks reducing their usage of the available facility for borrowings.

The average $25/share preferred stock and baby bond was annihilated last week—losing almost a full 4% to the lowest close since 3/24/23.  The average share fell by 91 cents, with investment grade issues falling 88 cents, banks falling $1.71, mREITs falling 67 cents. CEF preferreds were off just 15 cents as safety was on top of mind by investors. 

Last week we had no new issues price–as usual.

One thought on “Monday Morning Kickoff”

  1. Tim,
    Tomorrow Biden is meeting with the speaker of the house Kevin Mccarthy.
    Nothing political, just noting market sentiment will be influenced by what spin the talking heads report. May even crowd out of the news what the Fed gov’s have to say.

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