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Monday Morning Kickoff

Last week the S&P 500 closed last week up 1.64% from the previous Fridays close–a decent week 

Interest rates closed at 3.69% (the 10 year treasury)–which was up a pretty large 23 basis points from the previous weeks close of 3.46%.  This week we have no economic news today (Monday) – but we do have at least 4 Fed yakkers.  We have FOMC minutes on Wednesday–that while old news will get a big reaction.  Personal consumption expenditures (PCE) comes on Thursday which will be news the market will react to strongly.

Last week we saw the Fed balance sheet drop by a healthy $56 billion–honestly I didn’t think the Fed would get the balance sheet worked down that far, that fast.  The balance sheet grew by about $400 billion when the banking ‘crisis’ hit in early March–now darned near ½ of this $400 billion increase has been recaptured through maturity runoffs and repayments of loans by bankers.  At this rate we will see the balance sheet back down to $8.3 trillion which was the low point of the current cycle (of course trillions above just a few years ago) in a couple more months.

Last week we had a bounce up in the average $25/share preferred stock and baby bond with the average price up 33 cents.  Investment grade issues only bounced 12 cents, but banks–in particular the regional and community banks moved up by 87 cents. mREIT preferreds were up 1 penny with shippers down 5 cents

Last week we had Allstate price a fixed rate preferred issue with a 7.375% issue.  The issue is trading strongly at $26 under ticker ALLJL.

3 thoughts on “Monday Morning Kickoff”

  1. For the timid. Or those wounded in the Regional Bank Wars. The second – or is it the third – bite at the proverbial apple for CDs. Plenty available all across the board, well north of the popular 5% level, including — if you scroll a bit — non-callables, monthlies, and quarterlies, 1 year and up. No guarantee how long those high MMF rates will be around: time to add another rung to the ladder?

    6 month Treasury yields are now at – well, that sure must be a misprint. Maybe default jitters? Also, some Fed noise today about needing 2 more hikes. (The exact same number he said over a month a ago, shouldn’t it be one now?)

    Just my opinion. DYODD.

    1. I heard a thory that rates were spiking in anticipation of the treasury having to flood the market with treasuries after the debt ceiling issue is resolved. Sounds possible to me?

      1. “What is the impact on Treasury auctions from the risk of a potential technical default?

        “In the 2015 debt ceiling episode, Treasury announced a delay to the 2-year note auction originally scheduled for October 27, citing concerns that it would be unable to settle the notes — the first time this had occurred since May 2003. With Treasury estimating it will exhaust all resources on June 1, we think the 4-week and 8-week bills slated for auction on June 1 are at risk for postponement, as are the 13-week and 26-week bills to be auctioned on June 5.” – Attributed to a JPMorgan Q&A on Friday.


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