This morning retail sales were announced much stronger (up .7% versus up .3% forecast) than forecast. It seems that all the forecasters are using the premise that the consumer is tapped out–credit cards maxed, running out of savings etc. Well I guess this isn’t the case and interest rates are responding accordingly–now trading at 4.83%.
I think the nibble, nibble, nibble on pertual preferreds and long dated baby bonds needs to take a ‘pause’. I made 3 small nibbles last week and 2 of the 3 are underwater – with my personal conviction that rates are going higher it makes no sense to consider further adds at this time. When will I nibble again—data dependent on that determination.
Term preferreds and short dated baby bonds will not react similar to perpetuals and long dated maturity baby bonds. But just the same as long as rates continue higher there is no rush to buy even these.