Well here we go – a potential debt ceiling deal is hand—but it is just a potential right now – maybe a few more days of drama as extreme folks on both sides of the aisle need to weigh in on the deal.
Last week we had the S&P500 move a tiny bit higher from the close the previous Friday–about 1/3% higher as positive spin on the debt ceiling was being talked about on Friday which sent the index up by over 1% for the day.
The 10 tear treasury yield continued to move higher – closing the week at 3.81% which is a full 12 basis points higher than the close the previous Friday. Most of the economic news on the week was slightly unfriendly to interest rates. Services and manufacturing purchasing managers index (PMI) were both a bit hot. Durable goods orders were better than expected–the 2nd read on 1st quarter GDP was revised upward as well. 1st time unemployment claims were 16,000 below expectations while personal income was at expectations while personal spending was much hotter. Personal consumption index was hotter than last month. All in all the economic news brings into question my hope for a ‘no hike’ in June from the FOMC.
This week we will have the JOLTS (job openings and labor turnover) report and the monthly employment report. Of course these will be closely scrutinized by the Federal reserve for hints of where we are going with this economy.
The Federal reserve balance sheet continued to work its way down–it was off $20 billion last week.
Last week we had the average $25/share rise by 8 cents – boosted by strong gains in the banking preferreds–up 31 cents. Investment grade issues were up 3 cents, mREIT preferreds were 3 cents and shipping issues fell by 4 cents.
Last week we had 1 new income issue price as BDC Gladstone Investment (GAIN) brought a 8% baby bond to market. The issue is not yet trading as far as I can tell.