Finally we see a week where stocks ended on a down note. Monday was a holiday and Tuesday, Wednesday and Thursday were fairly flat–as the S&P500 opened the week at 3321 and closed Thursday at 3326. Friday came and shares took a tumble closing the day and week at 3295–still just a measly fall of less than 1%. Whether the Corona Virus gets worse during the coming days or not appears to hold the answer as to the movement in common stocks–and potential bleed over into preferreds and baby bonds.
The 10 year treasury moved lower as it opened the week at 1.79% and closed the week at 1.68%. While a move lower by 11 basis points is substantial, it is not a giant panic–huge panics would show this move lower in a day-versus over the course of 4 days.
The Fed Balance Sheet fell by a relatively large $30 billion. This is the 3rd week in a row of moves of larger amounts–there has been no overall balance sheet growth for weeks now. It shouldn’t be assumed that the FED is withdrawing any liquidity to speak of as likely we are going to see some spring back next week.
We had a new issue sold by mREIT ARMOUR Residential REIT (ARR). The issue carries a 7.00% coupon. The company will call the ARR-B 7.875% issue in full.
The pricing term sheet can be read here.
While we saw a larger downdraft in common shares on Friday the overall $25 preferred and baby bond only moved lower by 2 cents on the week. Banks moved lower by 4 cents. We will see what this week brings as common shares look ready for a large fall.
