Last week the party just kept rolling on and Jay Powell contributed mightily to the ever higher S&P500 as he continued to speak in a dovish manner. His latest speech at Jackson Hole all but promised a rate cut–although the timing and size remains a mystery.
The S&P500 moved higher last week – over 2% with a range of 5525 to 5643. Of course Friday was the big gainer as markets reacted to the Fed Chair speech.
The 10 year treasury was kind of quiet on the week with a range of 3.79% to 3.90% and closing the week near the low of the week at 3.81%. When/if we see Fed funds rate cuts it will be interesting to see how long rates react–or if they do react given the massive issuance of debt by the treasury.
This week we have a super important piece of economic news being released on Friday in the Personal Consumption Expenditure (PCE) numbers on Friday. We do have many other reports being released included GDP on Thusday–but this is the 2nd read on GDP so no real surprises should occur with this number.
The Fed balance sheet assets fell by a giant sized $38 billion last week to $7.19 trillion. Another couple of months and we will be under $7 trillion which I didn’t think we would see given the huge debt issuance from the treasury. We now have headroom for a reversal of quantitative tightening in the event of a black swan event.
Last week was a good week for the average $25/share preferred and baby bond as the average issue rose by 22 cents. Investment grade issue rose 26 cents, bankers rose 24 cents with CEF preferreds up by 6 cents, shippers rose 8 cents and mREIT preferreds rose 19 cents.
CTA-B has been on fire. I got it at $68 a while back due to discussion on this site. Now pushing 74 – might have legs to 80-85 fairly short-term We’ll see.
For anyone who owns CTA-A, there have been really good opportunities to swtich to CTA-B lately to pick up some additional yield.
Looks like somebody fat-fingered a CTA-A trade today to push it momentarily to 64!
Great, can I buy it back for a lower cost than I sold it for!
barely 6% now after a big runup. No thanks.
I still think CTA-B looks underpriced relative to a lot of other preferreds out there.
I think I figured it out. This might have already been mentioned by Bea, or 2WR but Rida told his followers about the CTA preferred on Friday over on SA. Wouldn’t be surprised he bought up a bunch before hyping to the herd
Yeah, there was also that speech in Jackson Hole…
oh – that makes sense!
Agreed – I like this one as a sock drawer pick anywhere under 75-ish. Could easily get back to $90 or even par ($100) if rates come down as predicted. 120% allocation (from a full/100% personal benchmark for investments) in my portfolios at $68 basis.
Don’t say “6%” and “underpriced” in the same sentence. Not now, maybe later if rates drop enough. Can be an adequate holding pattern slightly better than fixed income with minimal risk but not “underpriced”
You forgot to read the “relative to a lot of other preferreds out there” part of the sentence.
Look up current yields on other BBB’s trading way below redemption price that generate QDI. Let me know where to find much better deals than CTA-B.
I had to move my GTC sell limits the other day to avoid unwanted sales of this, lol. Been enjoying the ride up on this.
NVDA earnings Wed.