Well we have seen interest rates move up smartly over the last 3 months or so from all the way down around .85% back in December to as high as 1.60% (on a closing basis).
So with muted inflation numbers being released by the government, employment numbers that were fairly strong and this week some decent treasury note auctions it looks like we are to the ‘back and fill’ period–the ‘pause that refreshes’.
February was tough on holders of investment grade issues–including me–BUT March has been pretty darned good with all of the February loss completely erased with nice capital gains as well as interest and dividends payments.
As I had mentioned before I had lightened up on investment grade issues in December and January and then loaded up with some investment grade issues in February as they tumbled pretty hard. So today and yesterday I reversed course and got rid of some shares of the investment grade issues that I had been overweight in for a month.
So as we go through the month of March I’m not looking for higher rates to speak of – but a month from now we will once again have more data–inflation and employment, as well as more treasury auctions from which to gauge the appetite for buying our high yield debt (high yield in the sense that much of the globe still has negative rates).
With some sales in the last few days I am looking to be a buyer if we get another set back in pricing in the quality issues once again.
I remain is the same ‘mid tier’ issues I have had for some time. Some of these issues are from Telephone and Data Systems (TDS) and US Cellular (USM), UMH Properties, Monmouth Real Estate (MNR), Vornado Realty (VNO) – all of which I feel good about, relative to risk/reward.
Speaking of Telephone and Data Systems, the new 6.625% perpetual preferred (TDS-U) popped today and now is up about 2% from where one could have bought in the OTC grey market. I was fortunate to have bought a 2X full position on the 1st or 2nd day of OTC trading–a full position to hold and a full position to ‘flip’.
So for now I will sit back and collect bunches of dividends over the course of the next 30 days while we see what develops in the interest rate complex.