Weekly Kickoff

Well last week was certainly plenty exciting–as have been most weeks since the last presidential election. The S&P500 traded in a range of 5843 to a high of 5943. A range of less than 2% has been on the low end of the normal range – just maybe investors are learning to ignore presidential tweets–am hoping that is the case.

Interest rates, as measured by the 10 year Treasury, continued in their range of 4.39% to 4.50%s where they have been ‘stuck’ for the last 3 weeks. Economic news that has been fairly decent–certainly not ‘hot’, has been balanced with more tepid government debt auctions and administration chaos. Last week we had the personal consumption expenditures (PCE) was released showing very modest levels of inflation. Consumer sentiment has continued to make gains as folks are adjusting to the ‘tariff’ situation.

This week we have employment numbers on Wednesday (ADP) and Friday (official government numbers). Prior to these numbers we have the JOLTs (job openings and labor turnover) report on Tuesday.

The Fed reserve balance sheet fell by $15 billion last week– kind of a surprise to me , but likely meaning we seen little movement downward for the next few weeks. The balance sheet is down to $6.7 trillion from the peak around $9 trillion –this progress over a period of just over 3 years. The lower the better as it makes for some Fed flexibility for dealing with potential future ‘troubles’.

Last week the average $25 preferred and baby bond moved only a penny–down by 1 penny. Investment grade issues moved 6 cents higher, bankers were down 4 cents, CEF preferreds were up 2 cents with mREIT preferred were off 8 cents. Obviously a pretty steady week.

Last week we had just 1 new preferred issues sold as UMB Financial sold a fixed rate reset issue with an initial coupon of 7.75%. Almost undoubtedly they will use the proceeds to redeem their 7% fixed to floating rate issue on 7/15/2025.