The rush out the door is on again, in particular with First Republic Bank (FRC) and PacWest Bank (PACW), but in general with all regional bankers. We saw the big bounce earlier in the week in these issues and their preferred issues and I mentioned a number of times that the ‘bounce’ was the time to lighten up if you had a need to do so. The bounce and retest of lower prices are kind of predictable, although not one I participate in – I am not a good short term trader. I know many folks here were buying the bottom of some preferreds–either for longer term investment or a quick flip. Quite obviously it will take weeks if not months to stabilize this situation.
Today we have 1st time unemployment numbers in 90 minutes–205,000 is expected after last weeks 211,000. These economic numbers are on the back burner somewhat now, but they will in the aggregate still weigh on FOMC interest rate decisions. We also have housing starts and building permits at 7:30 a.m. (central)–these are both forecast to be totally flat with last months numbers–1.31 million and 1.34 million respectively.
Yellen will be testifying before congress today–this is not a banking hearing, but I understand that she will making comments on the banking system. Obviously this could move markets, but I doubt it will be a giant market mover.
I have bought CDs again this week–from American Express Bank and Discover Bank. Yields remain strong on the 1 year issues (i.e. 5.35% non-callable) and strong on the longer dated issues, but the longer dated issues are ‘callable’ so I have stuck mainly to the 1 year issues.
Interest rates are again lower this morning with the 10 year treasury around 3.47% and the 2 year treasury is just under 4%—just around 10 days ago the 2 year treasury was over 5%—what a ride it has been.
Well let’s get another day underway and see where we go–there will continue to be market moving data coming from the banking sector–we will some bank sales in the month ahead, some of which will occur as the regulators apply pressure for sales to certain banks. Let’s go!