Stocks and Interest Rates Tumble. What’s Next?

The 10 year treasury is tumbling some today-now off 5 basis point to trade at 1.72%. Apparently the bloom is off the rose in regards to the China trade deal and we have moved into fear of a global slowdown based on a virus. One can never, ever know where these things will take us, but more often than not it is likely we won’t see longer term damage to growth–but the knee jerk reaction is negative. We will just have to wait and see.

Stocks have tumbled as many as 200 Dow points–a non event really–less than 1%. As I have mentioned before I don’t give serious attention to equity moves until we see at least daily moves of say 1.5% or more and then my attention is too watch for more panic moves by nervous nellies bailing out of their income securities.

As mentioned by many in comments today all of the shipping companies are giving up ground–both preferreds and common shares. By far and away they are the biggest and most wide spread losers in the preferred arena.

I do see 1 ‘silliness’ move in the CEF preferreds as someone paid $27.85 for Gabelli Utility Trust 5.625% (GUT-A). This issue is up $1.30 from earlier in the month. The issue has been redeemable since 2008–folks are looking for a bruising as they could call this any minute–no doubt they could garner a 5% coupon (or better). I owned this issue last year and while it was a base holding I exited because of valuation (coupled with call risk).

The average $25 preferred and baby bond is off 3 cents today–no doubt being driven by some of the shippers as most sectors are plus and minus a penny. The only line on our chart moving lower is the 10 year treasury–and I expect that move will continue–slowly.

10 thoughts on “Stocks and Interest Rates Tumble. What’s Next?”

  1. Chinese quarantine another bad news item for energy stocks. And seems to be taking down world GDP expectations. Both of which could continue pushing rates lower.

    1. Yeah, IYP, we don’t need no stinkin’ hydrocarbon energy. No how, no way.

      The Duncans & insiders bought over $60mil of EPD below 28 over the last few months, so I bought some, too, especially late today.

      XD in a week.

      If we’re wrong, I have enough to insulate my coffin nicely.

      Thank you very much.

  2. As a person native in Chinese language I may be reading more Chinese sourced news and social posts than most people here. And the virus thing maybe much bigger than anyone may think. The China govt has been trying to cover up and now they stop covering simply because it is out of control. I have been seeing social videos of citizens (or bodies) on the ground with no one to help and hospitals full of hopeless patients. An English research update here: https://drive.google.com/file/d/1fz7EwlAJjrZs708YGPym1Xj_3PmysukL/view

  3. Bloomberg published an article yesterday that said the 20-year treasury was likely to lower rates for the 10-year. So this could be one of the drivers of the lower 10-year treasury. So it may be China or it may be other factors as well.

    I have no real idea but if it’s the 20-year treasury, this will likely be longer lasting than a China reaction. It would make sense to me that the 20-year squeezing in between the 10-year and the 30-year could do this.

    But only time will tell

    1. Sometimes fortune goes your way. I have owned GLOP “B” for quite some time. I rode it down and then back up, and have been thinking about selling it, because I think it is way too risky for me. I sold 2000 shares two weeks ago at my cost of $25.13 and today it’s down to $24.56. I guess that helps make up for times when fortune (or my bad judgement) didn’t go my way.

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