Sliding Into the Weekend

Employment numbers were within the expected range so we are not seeing much action today in any particular market–that’s good–I like quiet.

Interest rates have moved a bit lower on the tepid wage growth of .1% in the employment report so it is being extrapolated to mean no inflationary pressures. The 10 year treasury is off 3 basis points to the 1.83% area.

Last week the Fed Balance Sheet tumbled by a healthy $24 billion. Given that the balance sheet grew by $108 billion during December it is reasonable for there to be some reductions simply based on timing–I am 100% sure that the FED will continue QE (I say BS to the Fed claim this is not QE) in the next week or two. The plan remains for $60 billion a month in balance sheet growth–that would be $720 billion for the year if it continued–wow–all I can say is WOW!! With trillion dollar deficits as far as the eye can see this will not end well, but we have no way of knowing, or predicting, when bad stuff will happen so we simply have to labor on–it could be years before the ‘piper is paid’.

Today the Fed did a $41 billion overnight repo (actually 3 days because of the weekend). Nothing abnormal there–at least if we define ‘normal’ as what has occurred since September. I continue to watch for a new Fed statement on REPO plans for the next few months–I am not certain I need their statement–liquidity needs will continue and so will Fed REPO’s.

Lastly as of noon (central time) the average $25 preferred and baby bond is UP 2 cents since yesterday. We see common stocks go higher and higher, but no doubt that income issues are pushing the upper end of reality as well.

8 thoughts on “Sliding Into the Weekend”

  1. I’m out of this stuff, at least until the mid of the earnings reports season. Can’t believe this madness will last for a long.

  2. Yeah they’re good for current income but if the can’t go higher in this market than I’m concerned.

  3. Thoughts on annaly mortgage preferreds, specifically the nly. f’s?
    Snall gains over year and a half
    Surprised they haven’t done more.

    5.61 ytc at 25.90.

    1. I’ve got the G and the I. Added to I today at $25.13. My thought is that they are doing OK in the current environment which should continue for a while with the FED on hold. I also hold AGNCO with the same thoughts

    2. NLY is considered one of the safest REITs so less risk of losing your money. But then the high price suppresses the YTC. Pay date is 30 days after ex-div, using that date I get a lower YTC than you listed. NLY-G pays higher YTC and less post call. NLY-I is somewhere in between.

      I boost my return by trading between NLY issues. F and I issues have had some price divergences lately, creating some generous returns on the swaps.

      1. I’ve also been adding to MNR-C here, right around par. 6% yield, can’t be called til 9-2021

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