Last week we saw the S&P500 move in a range of 4304 to 4448 and closing on Friday near 4410—a gain on the week of over 2%. The 4448 high for the week is also a new 52 week high. On the surface one could call the equity markets overvalued, but with the massive amount of money resting in money market funds and other short term income vehicles there is plenty of ‘dry powder’ available to move values much higher.
The 10 year treasury closed the week at 3.77% after trading in a range of 3.68% to 3.85% on the week. Honestly a fairly tight range given the amount of news that occurred during the week. Both CPI and PPI were released and were approximately as expected. The FOMC ‘paused’ with rate hikes, but pretty much telegraphed more rate hikes to come–we’ll see as we watch what they do versus what they say.
This weeks actual economic news is fairly sparse, but the big show will be the Fed chair testifying to congress – the house on Wednesday and the senate on Thursday. We will have the leading economic indicators on Thursday which will be closely watched. The LEI has sunk for 13 months in a row and has historically been a fairly reliable indicator of recessions–obviously, thus far in this cycle, we haven’t see a real recession.
The Federal Reserve balance sheet assets fell by $1 billion last week–the 2nd week in a row the balance sheet has been relatively flat. The constant reduction in assets will resume soon–quantitative tightening is still in place so the run off of the assets on maturity will tick up this week.
I am not publishing weekly prices of $25/share preferred shares and baby bonds. This is the 1st time since 1/3/2020 I have not published these values. Google quotes have been so bad over the course of the last week that I can’t come up with reliable numbers–hopefully things get corrected this week.
We did not have any new income issues priced last week, but the new issue 7.75% baby bonds from Capital Southwest Corp (CSWC) started trading and closed the week at $25,22.