The Standard and Poor’s 500 rose by just shy of 1% last week which puts the index about 2% below all time highs.
The 10 year treasury ended the week at 1.58% after trading as low as 1.55% and as high as 1.62%. Investors yawned as the latest reading of consumer prices shot higher–as measured by the PCE (Personal Consumption Expenditures). The index rose to 3.6%–the highest level since 2008. Of course the argument continues as to whether this rate is ‘transitory’ or not and whether it will calm down in the months ahead.
The Federal Reserve balance sheet fell by $18 billion last week – nothing new – a stairstep pattern higher–there are no surprises in this number anymore as the goal is $120 billion per month in quantitative easing. The Federal Reserve insists on jamming more and more money into the system while banks try to give it back to the Fed. There is a maddening cycle of QE causing banks to use reverse repos to unload cash on an overnight basis and taking the bonds back from the Fed which the Fed had just bought as collateral. Fridays overnight reverse repo was at $479 billion.
The average $25 preferred stock and baby bond rose by tiny amounts last week–a gain of a 3 cents. Investment grade rose by 2 cents, bank preferreds by 4 cents, mREIT preferreds absolutely flat.
Last week we had just 1 new income issue price.
Arbor Realty Trust (ABR) priced a new issue of perpetual preferred stock with a coupon of 6.375%. The company is using the proceeds to redeem all 3 of their older high yield preferred’s.
The new issue is trading on the OTC grey market under temporary ticker ABRRP and closed on Friday at $25.64.