Equity markets were strong last week with the S&P500 moving in a range of 2853 to 2940 closing the week 2926—up almost 3%. The 10 year treasury moved in a range of 1.44% to 1.54% before closing the week at 1.51%.
This morning stocks are showing a loss as new tariffs kicked in on Chinese goods over the long weekend and there is a fear that higher prices will now flow through to the consumer.
The average $25/share preferred stock/baby bond moved 8 cents lower last week. The average current yield is 6.38%. There are 138 issues trading at $25/share or below which is 9 less than last week.
The Fed Balance Sheet, which is now supposed to be a neutral mode, fell by $5 billion last week. When added to the previous weeks $24 billion runoff it totals a $29 billion runoff in 2 weeks (note that we incorrectly stated last weeks runoff at $12 billion). Seems like the Fed is taking advantage of very strong bond markets to let the runoff continue–we will see if this continues or if it is just a short term adjusting period.
We had no new issues announced last week. The JMP Group (NYSE:JPM) baby bond issue announced 2 weeks ago has not priced–we will continue to watch for a pricing.
Late this week (Friday) we will have the employment number for August announced and this is a critical number as we look at the Fed meeting mid month—to cut or not to cut.