Monday Morning Kickoff

Right off the bat it looks like an exciting day ahead as stock indexes are plunging on new Chinese tariff threats from Trump, but we will deal with this elsewhere.

Last week markets of all types mostly moved along in a Goldilocks fashion–with an upward trend. The SP500 traded in a range of 2900 to 2952 before closing out the week at 2945 on Friday after a strong jobs report lifted stocks.

The 10 year treasury traded in a range of 2.46% to 2.58% before settling back to close Friday at 2.53%.

The Fed Balance sheet plunged by $40 billion last week meaning a runoff of $46 billion in the last 4 weeks–quite obviously this in a not a linear runoff. The asset balance is now $3.889 trillion. This gives us a runoff of about $500 billion in the last year–around $10 billion a week.

The average preferred stock and baby bonds moved all of 3 cents higher last week to end the week at $24.83. There are 225 issues trading at $25 or under—compared to 231 last week.

Last week we had only 1 new income issue priced and that was the new baby bond from B Riley (NASDAQ:RILY). The new issue was priced with a coupon of 6.75%. The financial services company originally announced a 2 million share offering, but it was up sized to 3.6 million shares (bonds). This issue will trade maybe later this coming week under the ticker RILYO. The company has 5 other baby bond issues outstanding–they can be seen here.

The recent new preferred issues from KeyCorp and from Regions Financial have both moved from the OTC Grey market to their permanent trading exchanges (NYSE). The KeyCorp 5.625% issue (KEY-K) closed Friday at $25.13/share while the Regionals Financial 5.70% perpetual (RF-C) closed at $25.52/share.

One thought on “Monday Morning Kickoff”

  1. ” The Fed Balance sheet plunged by $40 billion last week meaning a runoff of $46 billion in the last 4 weeks–quite obviously this in a not a linear runoff. The asset balance is now $3.889 trillion. This gives us a runoff of about $500 billion in the last year–around $10 billion a week. ”

    On the heels of this largest tranche of asset sales in two years, the Fed is scheduled to sell another $25 billion for the week ending May 15th. Like flowers after a spring rain, these big treasury sales bring volatility to the markets. Weak hands beware!

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