The past week could have been exciting for market participants, but it turned out that the SP500 closed almost where it began the week –closing at 2992 after opening the week at 2996. The low for the week was about 2990 and the high was 3017–so about a 1% range. We remain very close to an all time high in stocks.
The 10 year treasury opened the week at 1.83% and traded as high as 1.88% on Monday and then traded with lower yields the rest of the week to close the week at 1.76%.
All in all markets were quiet for a week in which we saw the Fed Funds rate reduced by 1/4%, jitters from an attack on the Saudi oil fields and of course never ending banter about trade wars.
The Fed Balance Sheet grew by a MASSIVE $75 billion as the Fed had to step into the repo (repurchase agreement) market and provide liquidity to the banking system. This situation is somewhat unnerving and hopefully is a temporary situation. This $75 billion was”created” to allow the cash needs of financial institutions to be met because of shortages in the financial system–causing demand to drive overnight interest rates to as much as 10%—wow. Let’s watch this closely–the Fed stepped in daily this past week and if the supposed reasons for the cash shortages is in fact tax payments for the quarter the situation should resolve itself soon. If it is huge issuance of debt by the treasury to fund our deficits that is causing a cash shortage we may have a huge problem. As of Friday the FED said they would be doing some 14 day repurchase agreements next week–the explanations all seem fishy to me.
We had a few new income issues come to market last week.
REIT Rexford Industrial (NYSE:REXR) cam to market with a new preferred with a 5.875% fixed rate coupon. The issue is trading under temporary OTC ticker REXCP right now and last traded at $25.27.
Athene Holding (NYSE:ATH) sold a non cumulative preferred issue with a coupon of 5.625%. The issue is trading under temporary OTC ticker ATHHF and last traded at $25.50.
B Riley announced a new baby bond with a fixed coupon of 6.5%. Proceeds will be used to call their 7.5% baby bond (RILYL). The new issue will trade under the ticker RILYN–but has not yet traded, although we see it is set up to trade soon.
Lastly JMP Group (NYSE:JMP) sold a new issue of baby bonds with a fixed rate coupon of 6.875%. The company intends to call their 8% JMPB senior notes which are currently outstanding. No ticker was announced for the new issue but we are guessing it will be JMPE.