Well time to start another week and see if the S&P500 continues to ‘levitate’ or if common share holders decide to bring things down to what some might believe is more reasonable price levels. My hope is that if shares move lower they will do it in an orderly fashion. We all remember the days of drops of 2,3 or 4%—not something we have seen in quite a while. While I generally hold little–if any common shares I never what to see dramatic sell-offs–I guarantee a sharp sell-off will drag preferreds and baby bonds lower and I am getting used to seeing green most days.
Last week the S&P500 moved up by just a hair over 1% from the previous Fridays close. This leaves us just a little bit below and all time high which was hit earlier in the day on Friday. Apple and Microsoft both report earnings this coming week and will set the tone for further gains or losses in the index. Last week Tesla got hammered (by over $30/share) and kept the S&P500 from moving even higher.
The 10 year treasury closed the week at 4.16% which was a measly 1 basis point higher than the close the previous Friday. Economic news was mixed on the week–but markets were laser focused on anything relative to an inflation number. Some inflation related numbers showed inflation under control–but not necessarily moving lower at this time.
This week we have a FOMC meeting starting on Tuesday–ending Wednesday–virtually no one expects any FED action on interest rates from this meeting. The CME Fed Watch Tool is showing a 3.1% chance of a rate cut. We start off the week with no news scheduled for Monday.
The Federal Reserve balance sheet moved $4 billion higher last week. Overall the balance sheet has barely moved since 1/3/2024–down just $4 billion since that time. It is rare that we would go a whole month with no movement lower–have they changed the balance sheet run-off goal? Not that I know of–still at a total of $95 billion per month.
The average $25/share preferred and baby bond moved higher last week by 27 cents—all things considered a fairly stellar week. The average share hit $22.03 which is the first time we have moved above $22 since 3/3/2023. Investment grade issues moved 31 cents higher, bankers moved 39 cents higher while CEF preferred moved just 10 cents higher with mREIT preferreds moved 21 cents and shippers moved up just 1 cent.
Last week we had 1 new income issue price as Atlanticus Holdings (ATLC) priced a new baby bond with a coupon of 9.25%. It will probably be a week before this one trades. Make sure to do your due diligence before chasing this yield–their write offs are generally pretty hefty.