While stocks are off by a percent and REITs and Utilities are off by more than a percent this seems like a surprising orderly sell-off in light of the movement of the 10 year treasury moving higher by 8 basis points. It helps that the talking heads are spewing garbage every moment about “skyrocketing interest rates”. We all know what skyrocketing rates are and 8 or ever 12 basis points don’t qualify.
The average preferred and baby bond is off by 7-8 cents which is orderly and as we have mentioned 100 times before investors barely notice the loss of capital from their accounts at this rate, but over time you do lose a percent or two from your capital. At a slow pace of rate movement higher dividends and interest payments tend to mask the capital losses.
As rates move higher we are keeping our eyes on term preferreds and baby bonds for any move to $25 or even lower. At that point most of these issues would be great low stress positions (assuming they do go broke–so the RAIT issues should be avoided by most). If a conservative investor can lock in 6-7% for a 1 or 2 year period it would likely be good timing for at maturity there may be some much better yields available assuming interest rates continue to move higher.