No, I am not talking about the REO Speedwagon song from the 1970’s, but referring to yesterdays stock market and interest rate action.
Long time preferred stock and baby bond investors know that when we have common shares taking a fairly substantial hit on a day like yesterday that the best action is to simply watch–no buying or selling.
Yesterday as I watched markets I was primarily watching interest rates. The 10 year treasury was down around 1.30% which indicated to me that the equity selloff likely was not going to last too long–a day or two. If the 10 year treasury would have fallen to 1.20% with stocks off over 1000 Dow points I would have more concern that we would see a deeper market follow through as it might have indicated a massive ‘rush to safety’.
Of course I didn’t do anything in our accounts yesterday—everything was ‘red’, but not harmful in a major sort of way. With a fall in equities of a couple percent we didn’t see the ‘throw the baby out with the bath water’ stage.
So for now I am waiting for the Fed statement and press conference tomorrow. We’ll have to see if we get an interest rate reaction–can’t imagine anything more that a few basis points movement.