At 5 a.m. (central) the 10 year treasury is trading with a yield of 4.38%–I expected this level to be hit, but not until next year. These falling rates have certainly been profitable for income investors this week and it is hard to argue with green in the portfolios, but I wish I had a little heavier weighting to preferreds in my holdings. It is simply impossible to to time markets perfectly and I am not unhappy holding a quite a bunch of 5.5-5.7% CDs.
Yesterday I got the number I was hoping for in the initial jobless claims. The 231,000 versus forecast of 222,000 was just right – rising but not plunging. Numbers like these add to the argument for a continued ‘no hike’ environment from the Fed for December. With good CPI, PPI and slightly softening employment it would be tough to raise the Fed Funds rate. We see the personal consumption expenditure (PCE) number on November 30th – a decent number there and the rate hike decision for December will be locked in at NO HIKE(if it isn’t already).
I’ve been noticing lately that all of the CLO owning finance company’s have been reporting rising net asset values (NAV)–always good to see. Looking at the balance sheet of Oxford Lane Capital (OXLC) I am impressed with the coverage ratios for baby bond holders–and to a less degree with their term preferreds. Here is the Oxford Lane semi-annual report from last week. Maybe this is area for some investment. To garner a yield 1% above the OXLC yields Eagle Point Credit released their most recent report this week and while inferior to OXLC a bit still decent-the report is here.
Today I don’t know if I will do any buying–if I do it would be an add to a current position. As I posted previously I lightened up on my small bank holdings–but still have a few remaining which I had intended to sell, but may reverse course and buy more–Bridgewater Bank (BWB) 5.875% preferred is trading at a 9.44% current yield and looks pretty darned lucrative. BWB is a smaller ($4 billion) Minnesota bank which is very well run. Like most banks they have had a squeeze on the net interest margin, but this is correcting. Their bad loans have essentially been zilch-stellar management. The updated laundry list of preferreds and baby bonds I hold is here.