Monday Morning Kickoff (on Tuesday)

The S&P 500 rose rose by about 1.5% last week as it traded in a range of 3885 to 3937 before closing near the high at 3935–another week and another record high.

The 10 year treasury traded in a range of 1.13% to 1.20% and closed the week out last Friday at 1.20%–the highest close in almost a year. I note that the yield is 1.247% this morning.

The Federal reserve balance sheet grew by about $32 billion last week on the never ending march higher.

The average $25 preferred stock and baby bond fell by 7 cents last week. Investment grade issues fell by 17 cents, banks fell by 13 cents, mREIT issues rose by 13 cents and shipping issues rose by 15 cents. Again, for the 2nd week in a row, junky preferreds and baby bonds outperformed the quality issues. It is very common–and we have mentioned it here so many times–in a rising interest rate environment low coupon, high quality issues will suffer while junky high coupon issues will outperform. If rates move sharply higher in a day or week all issues will move lower–but junky issues will move lower at a slower pace.

There was just one new income issue last week as Ready Capital (RC) priced a new issue of baby bonds with a coupon of 5.75%. The permanent ticker is RCC. This issue has not traded yet.

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4 thoughts on “Monday Morning Kickoff (on Tuesday)”

    1. Who knows? US Government securities may become buy-and-hold investable again in our lifetime.

      1. I doubt it. If they let it go up too much they won’t be able to afford the interest on all the debt they are issuing. Sure in the end game they will monetize the debt away but in the intermediate term they have to at least pretend that they aren’t in full Weimar/Zimbabwe mode. I suspect that if 10 and 30 year yields rise too much, they will institute yield curve control, very similiarly to the WWII aftermath. Right now they seem to be playing chicken with the market – letting rates go up to curb speculative excess, but they won’t let it get out of hand.

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