The S&P500 had a good week last week with a nice gain of 4.6% as the tariff situation is supposedly improving, although no real ‘deals’ have been done and we are about to see empty shelves at stores as container traffic at Los Angeles are dropping sharply. We did have some strong economic news with durable goods orders rising over 9%–but removing transportation orders were actually down.
The 10 year Treasury closed the week at 4.27% after moving in a range 4.25% to 4.41%–luckily it closed toward the low end of the range so maybe we can see a push below 4.20% this week with the right numbers. We have 1st quarter GDP and then the personal consumption expenditures (PCE) number on Wednesday. As well we have employment numbers the end of the week–and even earlier on Wednesday we have the ADP employment numbers. So with all this news we could push lower in rates–and of course we could see rates shoot higher with surprises to forecast.
The Fed balance sheet moved lower by less than a billion dollars last week–although is 3 weeks in a row when the balance sheet has been essentially flat so likely we see a large drop next week. Certainly this flat balance has been supportive of modestly lower interest rates during this time.
Last week was a good week for the average $25 preferred and baby bond as the average price rose by 33 cents. Investment grade issues rose 32 cents, banks rose 34 cents, mREIT issues moved 40 cents higher. CEF preferreds were up just 5 cents and shippers moved only 6 cents higher.
I just sold a bunch of the “deals” I bought in a flurry post liberation day.
Think we might have another leg down. Too many (on both Wall St. and Main St. conditioned to and expecting a bounce (including me, who I sometime also use as a contrarian indicator).
Dan—I have a feeling that common stocks are in for a big move down–I think we will see tariffs start to bite with potential inflationary numbers hit in May–markets maybe aren’t taking this threat serious enough as of yet.
A lot of the index’s ( S&P 500, Nasdaq ) etc are tech heavy which is a large part of our economy compared to manufacturing.
This is one area I am looking at for deals that combine growth along with a dividend hoping some go on sale.
https://seekingalpha.com/news/4436088-notable-healthcare-headlines-for-the-week-merck-roche-and-bausch-health-in-focus
One not included here is LLY which announced an oral weight loss and diabetic pill this past week. But the P/E and price have a long way to fall.
Just to give folks an idea as to how horrible the Corp. Bond market is for good quality issues this morning Alphabet/Google came out with a new bond issue. The 30 Year has a yield of 5.6% & the 40 year has a yield of 5.7%. I refuse to tie my money up for that paltry yield which is taxable.