Are you ready for the week? Economic news is somewhat minimal this week–a least until the official release of jobs numbers on Friday. We can get a good hint of the economy by focusing on the jobs numbers (we also have the ADP jobs numbers on Wednesday). Also we will once again face the tariff issue at least on Tuesday of not all week long.
Last week we saw the S&P500 was off by about 1% last week with a strong bounce coming Friday afternoon which salvaged the week. The coming week we will see tariffs be activated on Tuesday against China, Mexico and
Canada—will they go into effect or will be they be paused? We’ll see as they will likely be extremely important to markets.
The 10 year Treasury fell by a huge 19 basis points last week to close at 4.23% as compare to 4.42% the Friday before. With the employment numbers being released on Friday and other more minor economic reports will likely be scrutinized closely we will see if rates break lower yet.
The Fed balance sheet fell by $31 billion as the Fed continues the balance sheet runoff. With rates falling lately I wouldn’t expect the Fed to be motivated to discontinue stop the run-off.
As might be expected the average $25/share preferred and baby bond rose in price last week–although quite modestly–only 9 cents. Investment grade issues rose 9 cents, banks 9 cents, CEF preferred up 8 cents, mREIT preferred moved 6 cents higher and shippers continue fairly steady and up 2 cents.
Last week we had 1 new income issue come to market as Rithm Property Trust (RPT) brought a very high yield issue to market–priced at 9.875%.
We are fortunate to have the leadership of this weekly report.
IMHO
I expect, going forward, markets are going to be driven less by the economic events listed but increasingly by domestic political actions, tariffs, and geopolitical events.
Even if I’m wrong above, we should expect more volatility.
Take advantage of that volatility to advance your personal investment strategy.
For me, that means stress testing every investment. Am I comfortable with its size and credit quality? (I do hold KRP, but not in a size that its recent drop caused me any concern.)
My second largest individual position today is SH – short SPY.
(Principally a hedge for my common stock holdings)
“If market moves bother you, you don’t have the right asset allocation”
Stormy Weather Westie
If you’re a trader then volatility can be your friend. Geopolitical news is a factor than occasionally portends a crash but most of the time the drop is overdone.
You are correct Martin–at least in my opinion. Hard to trade index options if one has a VIX of 12.
Thanks Westie!!