So we are 15-30 minutes away from the FOMC rate decision announcement. The day has been pretty tame so far–but that will change. We will see the S&P500 shoot straight up (or down) likely followed by a move in the other direction as the algo’s run the market for some minutes. Then we will wait for Jay Powell to hold his presser at 1:30 (central) and this will no doubt move markets depending on his choice of wording in his statement and while answering questions.
Banking preferreds are mixed today with losses outnumbering gainers, but the losses are not massive like we have seen in some recent days. 1 issue of note is the PacWest fixed rate reset 7.75% (PACWP) which is trading off again and now is at $12.00–this would be a very dangerous buy and not something I would mess with–a total crap shoot as whether the bank will survive.
So buckle up for a few minutes of wild machine trading–we’ll get this behind us and then await employment numbers on Friday.
Big news of the day. I’m hearing a report that most all $25 preferred libor floaters will be converting to SOFR. I know of 5 issues that aren’t. They coined a phrase I refuse to use, to explain their interpretation of the prospectuses.
While that is currently 48 basis points below three month libor….. I would be very happy with some clarity.
Make sure we are on same page with terminology. My impression through readings is it will be 3 month TERM SOFR plus 26 bps. Not 3 month SOFR. There is a difference.
https://www.cmegroup.com/market-data/cme-group-benchmark-administration/term-sofr.html
Libor yesterday was 5.336%… 3 month term SOFR was 5.111% yesterday in above link. Toss the 26 bps on and that is 5.37%. They wont mirror each other but they tend to stay close over time with the 26 bps add on.
Thanks
Now that one magic word, “transitory”, has been expelled to purdah and replaced by the new magic word, “sticky”, what is the over/under as to how many times Powell will say “sticky” in his presser?