Last week was a somewhat difficult week for the S&P500, although the index is just a tiny bit, around 2%, below an all time record highs. Have we seen the high for this cycle? Of course no one knows, in particular with all that is happening with the Trump administration.
The 10 year Treasury drifted lower last week and closed at 4.42% which was 5 basis points below the close the previous Friday. There is a fear of a return of inflation, pitted against softening economic news, which may be clarified a bit this week when on Friday we have the release of the personal consumption expenditures (PCE) which will point the way for interest rates for a week. Next week we will have the employment numbers released on Friday which will give further hints as to where the economy is going. As you can see below we have lots and lots of economic news so I think we will have lots of movement in equities this week.
The Federal Reserve balance sheet fell by a giant sized $31 billion last week–this followed a few small reduction weeks. It will be interesting to see if the Fed lowers the run-off in the months ahead–if interest rates continue lower likely they will continue the run-off at the $65 billion rate.
Even with interest rates moving lower last week the average $25 preferred and baby bond fell by 7 cents. Investment grade issues were off 4 cents, banks off 8 cents. CEF preferred were up 8 cents with mREIT issues were a penny lower with shippers up 2 cents.
We had 1 new income issue launched last week as Oxford Lane Capital (OXLC) sold a larger issue of 7.95% baby bonds.
Reminder about “Market Rate”
Look to the rate on new issuances – as in Oxford’s 7.95%.
That is the “Market Rate” that the underwriters think is appropriate for the class of risk that the issuer belongs to.
Anything below that is below the “Market Rate”
Hard to believe more chaotic as every day brings anxiety and more suspense to the American public. I remember the last shutdown when S&P drop the USA credit rating because of the shutdown. I got screwed on that mess as most of my $monies$ were in the equity side. Hopefully the Baby Bond market will not implode…Messes are a trail of misery, characteristic of the Trump admin.
I don’t invest based on emotion or political bias. Doesn’t work for me I just stay nimble and react to whatever happens in the market
can we keep the shallow political commentary to a minimum .. as requested by many
Eugene, You wouldn’t happen to be in Iowa would you? The wife is asking.
Let’s keep it apolitical please.
So Payday
Are you saying we are living n a GET SMART episode and he’s not creating chaos, rather he’s an agent of KAOS?
(this is called humor)
The Washington Post has an article today reminding us that the Federal Government will likely be shutting down on March 14th.
https://www.washingtonpost.com/politics/2025/02/22/congress-shutdown-musk-taxes/
During a shut down, employees (and contractors) do not receive their regular paychecks. In past shutdowns, employees get paid later but contractors did not. During the previous Trump administration, the government shut down for five weeks. This shut down may be more chaotic.
Thanks for the reminder Greg, I used to tell Grid I always planned ahead and changed my investing at least a month or two before the deadline then as the time got closer I hoped for a shakeout on prices. I have to be careful about what I wish for. Expect the unexpected.
Brilliant. I really hope we shut down the govt for 6 months or even 12 months. / not sarc
Lets save some money! / sarc
You realize, don’t you, what past and any future shutdowns will cost the government in increased interest rates, not to mention downgrades by the rating agencies.