Quiet Markets While The FED Meets

It is most interesting that since the FED claimed they are on hold until we see inflation news, markets are not paying too much attention at all to them.

They began meeting today and tomorrow they will make an announcement on the Fed Funds Rate–certainly any change, in any direction, would be one heck of a surprise to everyone.

Just watching the 10 year treasury–while no one is talking much on the meeting it is certain the bond traders are waiting for the official ‘news’–which will be no news.

The 10 year treasury opened the week at 1.83% and hasn’t moved more than 2 basis points in either direction in 2 days–that is pretty unusual.

Personally I have barely peaked at the personal accounts–although moments ago I looked for the 1st time today and there is some upward creep–I’m talking a few cents–maybe a dime in an issue or two and as always I am just fine with quiet markets–certainly excitement of some sort will come before the month is out.

17 thoughts on “Quiet Markets While The FED Meets”

  1. Sorry, call me stupid Steve.

    Last Fed meeting, we are holding rates until we see move in inflation.

    This meeting the fed is saying the market neutral rate is 2.5%.

    Okay, so we are going to hold the rates 0.75% – 1% below the market neutral rate until we see inflation.

    That means we start 0.75% – 1% behind if inflation reoccurs.

    OK – that’s one heck of a plan.

  2. Off topic*

    This is addressed to Tim or perhaps to anyone aware of it.

    Normally Investcorp Credit Management BDC ( NYSE: ICMB ) pays interest to its notes CMFNL 0.38 per share but they have announced this: “On November 6, 2019, the Board declared a distribution for the quarter ended December 31, 2019 of $0.25 per share payable on January 2, 2020 to
    stockholders of record as of December 13, 2019”
    Why is this difference?

    1. Eugene,

      I think it refers to the dividend on it’s common stock, not the quarterly interest on the CMFNL notes. For instance, they refer to the 25 cent distribution representing a 14.77% yield on the Company’s $6.77 share price … which was the common stock’s price, not CMFNL’s price.

      Here is the November 12th company press release:
      On November 6, 2019, the Company’s Board of Directors (the “Board”) declared a distribution for the quarter ending December 31, 2019 of $0.25 per share, payable on January 2, 2020, to stockholders of record as of December 13, 2019. This represents a 14.77% yield on the Company’s $6.77 share price as of market close on November 11, 2019.
      Distributions may include net investment income, capital gains and/or return of capital, however, the Company does not expect the distribution to be comprised of a return of capital. The tax status of distributions will be determined at the end of the taxable year.

    2. Eugene–that is on the common. CMFNL being debt doesn’t have to be “declared”–different from preferreds or common shares. Hopefully they are on track ok–I own this one.

      1. Tim,

        Do you have any reference for this fact? Dealing with closed-end funds, my understanding has been that all NYSE/Nasdaq exchange-traded securities must declare interest/dividends ahead of time, as opposed to bonds where it is automatically assumed the company will pay the interest. This prevented a company from unfairly declaring an ex dividend after the fact and was enforced by the exchange to the point of creating a new “ex date” other than the one declared if inadequate prior warning have been given to investors.

        However, I can’t say with certainty that this applies to exchange-traded debt. Thanks!

        1. Matt, I never see a company announce a declaration of exchange traded “baby bond” debt. Its still debt same legal recourse as bond market issues. Now some trust or 3rd party trust debt have have to as legally its not debt. Its certificates that ultimately lay claim to debt in a trust.

        2. Hi Matt–I can only say that I have not seen companies ‘declare’ interest on baby bonds. Language in preferred stock prospectuses explicitly states “dividends are payable when, and if, declared”. Baby bonds do not have any such statement–instead the prospectus states “payable quarter on (whatever date) of each year commencing on”. Now maybe there are some exchange rules that override the prospectus–don’t know.

          On the particular security mentioned (CMFNL) etrade is still showing an ex date of 9/12–but it did go ex yesterday. For whatever reason sometimes the baby bond data is not updated for whatever reason.

          If you have or find data to the contrary please link it–let me know so I can post that info. Thanks for your input.

            1. Matt, just in case you didnt know, I will add this as many get confused by baby bonds…They think they are bottom rung bonds being exchange traded. That isnt true. This is just the vehicle the bond is traveling through. Its the terms of the actual bond that matters. Some baby bonds are mortgage backed bonds that are way up in capital stack. Others can be deferrable subordinated debt which is the lowest possible rung of debt.

    1. Thanks Ron–seems like no one is paying attention at all–guess markets moved a bit higher, but certainly nothing of note.

      1. Tim, if you want to see some excitement you gotta buy the stuff that is jumpy. I had some of that GSLD last week but dumped it for quick 65 cents. And then used the proceeds to buy equally gnarly PEI-B at 18.85. That one moves around and will keep you looking at the price. As it mostly has moved one direction….down.. So I wont be playing here very long.

            1. But, I did get totally killed on IPWLO today. Lost about $30,000 today as it went to zero in my account. This happens whenever it goes months without a trade. The brokerage zeroes it out. Then one day down the road it will trade again and suddenly I will have made $30k on it, ha.
              …I read the blow hards on SA yacking about the mall reits but I never buy. PEI is just stuck in my head for some reason, though there isnt a reason for it as Im not buying.

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