Well it appears the tension is off the stock market tape with the SP500 up almost 1% today. The interest rate “tension” is still there with the 10 year treasury off about 2 basis points today at 2.57%.
We think it is likely that it will take the 1st quarter GDP announcement on Friday to move the needle on interest rates. There is quite a wide range of estimates of GDP from 1% all the way up to 3%. Certainly anything outside of this range would move the markets–anything in the range can move interest rates a little bit–5 basis points–but probably not a big breakout higher or lower.
Through the 1st day and a half of the trading week we see the average preferred stock and baby bond has moved 2 pennies higher. In over 2 weeks the average price has moved in a range of 5-6 cents–I guess the tension on the tape is in the preferred stock arena.
Volume is low today in preferreds with the Citigroup N issue leading the way with 105,000 shares traded followed by NextEra Energy N issue trading 92,000 shares. This is much lower than recent volumes which hit 2 or 3 times this amount by midday. These 2 issues have moved 7 cents and 4 cents respectively–yawn.
The new 5.625% KeyCorp preferred is trading OTC Grey Market under ticker KEYLL and is pricing right now around $24.85/share on over 2 million shares of volume. Not going to drive this one higher too fast.
We are awaiting pricing for the new Regions Financial preferred which will come after the market closes–we are hopeful for something in the 6.25% area since it has a 10 year fixed rate period–but we have been disappointed continually with low coupons so maybe it will come lower–maybe our expectations are purely selfish hoping.