After a reasonably calm start to last week the S&P500 index took off and closed at 2970 after trading as low as 2893–a gain of almost 3% on the week. This based on a China trade deal that didn’t happen (although maybe there was progress).
Likewise interest rates traded on a trade deal the last couple of days last week and the 10 year treasury closed the week at 1.75%. Early in the week the 10 year treasury traded as low as 1.51%.
The Fed balance sheet grew by just $4 billion last week. Of course the Fed Chair has now announced that they will be growing the balance sheet and will keep doing repo agreements into November. I had mentioned last Monday that they were doing asset purchases the previous week–prior to the Fed admitting it. Let’s face it this is Quantitative Easing (QE) and the Fed is essentially underwriting the Federal deficit. Additionally there may be bigger issues in the banking system–as mentioned by some, and I speculated months ago–German bank Deutsche Bank may be having issues of some sort. Deutsche Bank is one of the largest holders and traders of derivatives in the world–and honestly, has shown itself to be a bad actor numerous times.
For those wanting to follow some of this closer you can access the Federal Reserve Bank of New York’s Repo and Reverse Repurchase page here.I have posted the link on the education page. The New York Fed does all the of the Feds repo operations on the open market.
Last week we had a number of new income issues announced.
BDC Gladstone Capital (GLAD) announced a new 5.375% note issue with a maturity date in 2024.
BDC OFS Capital (OFS) announced a new baby bonds issue with a coupon of 5.95% and a maturity date in 2026. You can see further details here.
BDC Fidus Investment (FDUS) announced a new baby bond issue with a coupon of 5.375% and a maturity date in 2024. Further details are here.
Lastly, New York Mortgage Trust (NYMT) announced a fixed to floating rate preferred which was priced at 7.875% to being with and becoming floating in 2024. Recap of the details can be found here. This issue is trading OTC Grey market under ticker NYMGP and last traded at $24.95.