Well last week we got through the FOMC meeting with no change in the Fed funds rate, as expected. Equities were pretty tame and interest rates continue in the same relatively tight range. This week we have the personal consumption expenditure (PCE) on Friday, which one would think might be the big driver on the week, but now we have other potential worries with the Iran situation –who knows what this will bring? At this moment (7 p.m. central) equity futures are down somewhat–but not what one might believe–NO ONE knows the reactions that will occur and with the never ending ‘buy the dip’ crowd anything is possible. Additionally crude oil is up $1.50-$2.00 right now which is mild given the threat from Iran.
The S&P500 moved in a fairly tight range of 5942 to 6051 closing near the low at 5968 in a 4 day trading week as markets were closed on Thursday.
The 10 year Treasury moved in a range of 4.35% – 4.45% closing the week around 4.38%. Nothing new and different here as this tight range has been maintained since early May resulting in minimal movement in income securities over the last 2 months. As mentioned above we have the personal consumption expenditures (PCE) with inflation indicators being released on Friday–of course this could move markets, but the Middle East situation takes center stage. We’ll see if bonds are ‘safe haven’ investments this week or if after decades and decades of being safe havens global investors are turning elsewhere.
The Fed balance sheet grew by $4 billion again last week which is the 2nd week of increases–since policy announced has remained unchanged we can assume the balance sheet will move lower in a larger way in the next 2 weeks.
The average $25 preferred and baby bond moved higher by 9 cents as we moved past one of the busiest ex-dividend weeks. Investment grade issues moved 11 cents higher, banks were 8 cents higher and mREITs were up 4 cents.
