Weekly Kickoff

Already at 8 pm (central) we have the equity futures market way up–1% – 1.5% after so called progress was made in U.S. – Chinese trade talks. Honestly I would be surprised if this tussle was resolved anytime soon given than no trade issues have been totally resolved yet with anyone let alone China. But as I always say better up than down with equities since we are likely to get a boost with preferreds and baby bonds with strong equities assuming a flattish 10 year treasury.

Last week the S&P500 was off by about 1/2%–essentially unchanged. I don’t consider 1/2% changes to be meaningful in fact over the course a week a change of even 1% is not a big concern. Remember that most of the time that small changes day to day in equities and interest rates won’t do heavy damage to most portfolio holdings–yet speedy moves up or down can hurt (or help) all of us.

The 10 year treasury closed the week at 4.38% which was about 6 basis points higher than the close the Friday before—the range was 4.26% to 4.40%. Given that the range was 14 basis points in a week in which the FOMC met with a Jay Powell news conference this is a relatively tight range. The Chair didn’t really surprise anyone with the meeting results as everyone expected no change in rates and that the Fed has inflation worries.

This week we have more important economic news being released–consumer prices (CPI) on Tuesday, followed up on Thursday with producer prices (PPI). Obviously this will give us early warnings on tariff effects–although maybe not

The Federal Reserve Balance Sheet rose by about $1 billion last week after a relatively big fall the previous week.

Last week the average $25/share preferred and/or baby bond was off 5 cents with investment grade issues unchanged, banking issues down 4 cents CEF Preferreds up 7 cents, mREITs down 4 cents and shipping issues up 11 cents.