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Rally Holds Up – Somewhat Surprised

The S&P500 held up well by the market close today after falling to ‘flat’ midday. The 10 year treasury yield which fell to as low as 3.77% early today closed out at around 3.80%. I though we might see some give back, but the soft PPI hammered that thought.

Preferreds and baby bonds were green once again – maybe around 1/2%. My portfolio mirrored the markets.

I tried to ‘nibble’ on 2 issues early today. The MGR 5.875% baby bond from Affiliated Manager (AMG) order was executed. but the order for the Spire 5.9% perpetual preferred (SR-A) did not execute–the hazard of not spending a few extra cents on a limit order–I see the shares ran up 59 cents. I hold current positions in both of these issues.

I see Preferred Stock Trader has a new Seeking Alpha article on B Riley baby bonds for those with access.

7 thoughts on “Rally Holds Up – Somewhat Surprised”

  1. WS ivory towers have gone bullish on bonds. Munis, govies, junk, even pfds. I see many rallied strongly today.

    I was looking at some munis to buy up four points in 3 days….The markets been thin, this doesn’t help. I bought some for a ‘friend’ 2 weeks ago and said this was best pricing in 15 years……

    1. Im very fortunate to have jumped in on my long duration bonds when I did buying most at peak yield a few weeks back. My biggest hold a 2039 UE bond has dropped almost 60 bps in yield since I last bought. My short duration 2-3 bonds are the ones that got zinged the most as they were my first purchases. But they are trying to climb back. But it largely doesnt matter as they mature in a short time frame anyways.
      I need the long duration to sag again to get interested some more. Until then I just kind of monitor it loosely.

      1. Grid, Bought heavy straight through pfd price nadir, about 75% of 38 pfd positions now in the black before divvies with the rest darn close. Expected the eventual price reversal to be violent but wow that was outsized. LT picked a few like 2037 Duke (under), 2029 FHLB (at 100) and laddered out a few longer-term pfds and perpetuals.

        Was lazy with LT with that nagging thought we may still encounter LT yield enhancements in Q1/Q2 2023 via:

        1) Higher for longer
        2) QT
        3) Treasury liquidity issues
        4) Recession/widening spreads
        5) an event

        1. Yes, Alpha, I dont think victory is at hand either. Im certainly not on that bandwagon just because a dip in CPI last month….For the variables you stated. And to be honest overall, I doubt I got the recent lift many did, as I never got much of a drop prior. I never seem quite to be very much in the “wrong” things, but not much in the “right” things either. Just sputtering around being up 2%-6% all year, and around 4% now. But overtime, have rotated the stash and de risked by a considerable amount, and still increased total yield going forward. But tomorrow is a different day, so we shall see.

    2. I’ll agree with the market being “thin” and best pricing since financial crisis got a call finally from from my broker, he has a built in alert on my criteria. New issue Indiana muni slight discount 4.4% ytm ’38 AA, BAM insured got full dose 30M in wife’s, account. Like was said best price/yld. in 15 years feeling good about this one very small only 2.5MM gone in 20 minute

  2. Hard to get very fired up to buy right now when a lot of stuff is quite a bit higher then just several days ago. I expect some profit taking will take place bringing things back down in short order. I will wait and see what happens. If not I am also happy with that. I am not sitting on a lot of dry powder at this stage.

    1. fc—I’m with you. I don’t see things screaming higher and I am fine with a flat market for now. This interest rate drop might be a fake out (but who really knows for sure)

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