Last week was a fairly quiet week in the equity markets. The S&P500 moved in a range of 6033 to 6100–closing at 6090, which was a gain of right about 1% from the close the previous Friday. Even the all important employment reports couldn’t move markets very much, but green of any magnitude is good, although the ‘feeling’ that markets are due for a setback is pretty strong. But there remains plenty of money available to drive markets much higher whether they go higher is anyone’s guess—but the ‘smart people’ continue to forecast markets moving higher in 2025.
The 10 year Treasury moved in a range of 4.15% to 4.27% last week, closing the week at the low which was a close 3 basis points below the close the previous Friday. It remains to be seen whether these yields continue to trend lower (now off 28 basis points since the elections. Even with the Fed FOMC likely to cut interest rates in December in the end the marketplace will determine longer term interest rates and now it appears there is a great confidence that the Congress will cut spending. We shall see in a few months. This week we have the consumer price index (CPI) being released on Wednesday with the PPI coming Thursday.
The Federal Reserve balance sheet assets fell by $10 billion last week–now at $6.895 trillion. With interest rates most recently starting to fall again it seems wise to continue the runoff–but it is just a ‘tool’ that can be used to affect interest rates. The runoff can be lowered or raised as conditions dictate. We may see a lowering of the runoff during the first half of 2025 instead of Fed Funds interest rates cuts as
Last week–simply spite of interest rates falling slightly the average $25 preferred and/or baby bond price fell by 10 cents. Investment grade issues fell by 13 cents, banking issues fell 17 cents with CEF preferreds off 5 cents and mREIT preferred fell by 8 cents. The ocean shipping company’s preferreds did what they have done for months and moved just a little at up 4 cents.
Last week we had a couple of new income issues priced. Ready Capital (RC) priced to a new baby bond with a coupon of 9% while Eagle Point Credit (ECC) priced a new bond at 7.75%.
