Monday Morning Kickoff

Markets are likely to trade in a wider than normal range this week-stocks and interest rates.

Regardless of what fundamental data we see this week, the middle east situation will likely dominate the news and thus affect the markets. Historically these types of events have ‘blown over’ in a few days (or weeks), but I get the feeling this one may be with us for longer. When Iran says they will retaliate we simply don’t know if that will happen this week, next month or next year.

The S&P500 traded in a range of 3212 to 3258 before closing at 3235 which is just a small loss of last week. The 10 year treasury traded in a wider range of 1.78% to 1.94% before closing at 1.79% on a rush to safety.

The Fed Balance Sheet rose by just a small amount on the week, adding $8 billion worth of assets.

Last week we again had no new preferreds or baby bonds offered. After 2 weeks without issuance we will likely see a restart to normal issuance this week.

Pricing on preferreds and baby bonds continued strongly higher last week as you can see in the chart below.

5 thoughts on “Monday Morning Kickoff”

  1. Hope to see more new issues or some weakness to buy some. I’ve raised lots of cash maybe too much.

    1. Right there with you Gabriele. Getting increasingly difficult to hold some of these issues in the path of what appears to near panic buying. AATRL which I alerted here in the last few weeks at $47.25 I sold today around $49 – and the ex-date ($0.64) was 6 days ago. That’s a tad over 5% in about ten days. BXP-B is today trading at a multi-year high and beyond expected range so also let that one go today. Trading as low as $25.10 just 30 days ago, sold today near $26 for a 3.5% gain in 30 days. TNX has been dropping, but the correlation is broken as past prices for these issues v TNX were much lower at these levels. The core holdings are still intact but too much cash now and much more difficult to find buys.

  2. Thanks Tim for your work. It will be interesting to see where the 10 year goes. Everybody thinks yields will go higher, we shall see, ATB.

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