Weekly Kickoff

I hope everyone had a great labor day weekend. In Minnesota the weather was absolutely glorious at around 70 degrees with blue skies. The cool weather has done nothing to help the farmers as all the crops are way behind normal in many areas of the state and the combination of low prices and in this state, wet and cool weather is going to hurt. It is not often that low prices and poor crop conditions go hand in hand, but in this case Minnesota is an island of crops being way behind while the large producer states have bumper crops.

Last week the S&P500 closed at 5648 after trading in a range of 5560-5652. This less than 2 percent range was pretty tame given the debate over interest rates and the anticipation of, and discussion, surrounding interest rate cuts. Last weeks close was just a few basis points above the close the previous week. Looking at the futures this morning it looks like the September kickoff will be weak as the S&P500 is off over 1/2%–whether it holds is anyone’s quess.

The 10 year treasury traded up in yield last week at 3.91%–and it is at the same level this morning. This level is up 10 basis points from the close the previous week. This week we have what to me is the most important data points relative to the economy with the ADP employment number Thursday and the official government employment numbers on Friday. As I mentioned before these numbers will give us solid insight into whether the FOMC cuts 1/4% or 1/2% at the September 17-18 FOMC meeting.

The Fed balance sheet assets fell by $17 billion last week on the continual march down to $7 trillion.

The average $25 preferred and baby bond price was quiet last week with the average share price off 4 cents. Investment grade issues were down 6 cents, banks up 2 cents, mREIT preferreds up 7 cents and shippers off a dime.