Here we go again—it could be a relatively quiet week, although we do have FOMC minutes being released on Wednesday and this can always set off fireworks-one never knows.
The S&P500 moved higher last week by 3/4% and now just a tiny amount below a record level. This week is starting off looking some higher, but the future market gains can evaporate quickly.
The 10 year Treasury closed last week at 4.47% (down 2 basis points from the previous Friday). At this moment (5:30 central) the 10 year is at 4.52%–up 5 basis points. As noted the economic news is somewhat light this week, but we don’t know what kind of curve balls that the new administration will throw at the market. My thoughts are that the 10 year will continue in the relatively modest range until we get to next week when we have the PCE being released–we’ll see which way rates get pushed.
The Fed balance sheet grew by $3 billion last week–a rare increase which will be offset by falls in the weeks ahead no doubt. The chart of the balance sheet levels is an interesting chart–falling back front the highs quite dramatically.
The average $25 preferred and baby bond rose by 7 cents. Investment grade issues moved 15 cents higher with banks up a dime, mREIT issues up 6 cents and shippers continue to hover around the $25 area and down 3 cents.
Hi team, thoughts on GAMCO Global Gold, Nat Res & Inc Trust, 5% Series B Cumul Preferred Shares? Currently yielding 6%, A-1 rated w/ 917% asset coverage.
Well covered by restricted leverage so it should be low risk. Their common is more volatile but also relatively safe from default. Preferred dividends are mostly qualified but not guaranteed to be. If interest rates rise they lose value but keep paying the dividends if you hold. I’d rather be here than in a CD these days. Also consider various Gabelli funds they are similar.
Thanks Martin and that’s just what I was looking for here a very safe CD alternative, non-callable, with enough discount to par to provide some upside if we hit a recession/lower rate environment.
Less popular than lower fixed income, price could go down with rising rates. But could also go up with falling rates. If it’s an even money bet I’m fine with it even for a short term hold. Win a few lose a few, collect the divvies.
I like the thought on even money bet.
Also weary the FED market manipulators are effectively pushing investors into duration when we all probably should be floating. However at least long-term rates are more market driven.
Just worried overall way too much of my portfolio is floating given the 3rd largest economy in the world (the U.S. government) is attempting to be right sized. Whether this effort succeeds or fails one must at least marvel at the novel attempt.
Speaking of Gabelli preferreds, I wonder if Gabelli is going to offer holders of GLU-B another extension of the put provision or change in coupon as they have been doing? Right now, it’s a 5.20% coupon (raised once voluntarily by Gabelli to keep people in) with the final put period ending 6/26/25, ALSO extended once I believe but maybe twice…. These are changes you will not see in the original prospectus, but allowable because they were enhancing, shareholder friendly actions not detracting to shareholders. At 50.52, it’s not particularly attractive right now, but I’ll continue to hold…
For what its worth I got 5 emails this morning from Schwab on 5 new Corp. Bond Issues coming out. Everyone of them horrible coupons. Even their 30 years were horrible.
Chuck, I received those same emails. Where did you see the coupon %? I clicked on link and all I see is a blanked out prelim prospectus. I’m sure dummy me can’t see something right in front of me though.
I’ve always had to call the Schwab Fixed Income Desk to get the coupons.
rocks, that’s what I was afraid of. maybe simpler thing (based on Chuck P’s post), is to assume crap coupons and save time by not bothering? Has anything looked enticing to you when you made those calls?
pig-
There was one instance where I missed a good coupon, otherwise waste of time calling. Now, I look at the name and try to guess whether it’s worth the call. Looking on FINRA doesn’t help…just the prelim.
NO Pig Pile; YOU ARE “NOT” DUMB. You have to call their bond dept. then they will go thru all the damn “gyrations” with you. To be brutally honest with YOU I hate how they do business. They always quote the 5, 10, or 30 YEAR and then together we have to add up the differences to get the damn coupon. Its a PAIN in all honesty. As an example one of the 5 new issues was from “EXELON CORP” a pretty large utility. I was quoted a 6.10% for their 30 year but at the end of the conversation the Schwab Rep always say the exact same BS which is this—-Now Chuck I want to make you aware that this is subject to possible tightening up at the end. CODE for it may be a little less than the 6.10%—-I HATE BONDS!!!!!! LOL. I must tell you I own mostly bonds in my portfolio as I’ve been at this now for 50 years!!! My point is I HATE THEIR GAMESMANSHIP with BONDS.
I really liked the online bond purchasing with TD Ameritrade. I wish Schwab had continued it. I’m not going to spend time on the phone to do my purchases.
Chuck, msg received. Yes I do my utmost not to have to call them. Will wait to see how these flush out.
Chuck – How do you perceive this to be different than how a new issue of stock might be handled? In an IPO, they float an expected price for the shares. They accumulate a “book” of interested parties…. If the “book” gets overloaded with buyers, they might raise the price before it reaches a final price. And of course it could go the other way was well, where buy interest doesn’t show up and they have to lower the price to bring in more….. This is what they are doing on what you’re describing and as much as I have my issues with Schwab, it’s not their fault – they are the messengers when the underwriters managing the deal alter the final price.
Another example, how often do sharp eyed III’ers identify upcoming new issues to the benefit of all of us and someone else might fill in the details of the price talk? ultimately the issue gets priced lower (coupon ends up less) than the original price talk if the amount of buy interest grow too large. It happens all the time and not only in the bond world. It’s how things get done and refined during the underwriting process.
Yes, bonds and CD’s are pretty much off my radar screen anymore, just too low, might as well hide out in the MM at 4.2% for awhile.
Off to the office. Working just a couple days a week now just doing call outs looking for new customers and following up on previous quotes. This has given me the opportunity to read how the market is doing to a certain extent. We will see if green shoots are starting to come out.
EIC earnings release 2/20
Thanks Craig–looking forward to it and expecting solid results.