FED Pumps Up the Interest Rate Complex

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Today provided a bit of a respite to income investors as the 10 year treasury saw its yield drop by 6 basis points–of course this didn’t happen until the FOMC released their minutes which promised patience in rate hikes. As has become normal the FED manipulates the markets any chance they get–we have lost any hope that markets will be allowed to operate without the FED manipulation on a non stop basis. Unfortunately, it is not just the FED, but all the thiefs and crooks that operate off the statements that rub us totally wrong. There should be little doubt that this is just a little game by a few to scalp off a little profit at the expense of others. Oh well nothing can be done about the games that are played on Wall Street so we will just move ahead.

The key items on the global scene continue to be the Greece situation and the status of the European and Asian economies. Interest rates moved up in the last week or so based upon the observation and prediction that the European economies are starting to gain a little bit of traction. Of course we haven’t seen this happen yet so it remains to be seen what really happens. This will be the driver of the 10 year treasury yield–for now it is the #1 factor for our interest rates – there isn’t much expected domestically that will be a current driving factor for interest rates.

Earlier today, prior to the Fed inspired interest rate rally, we noted that REITs were once again down about 1/2% before turning and closing up about 3/4%. Preferreds were taking the same shellacking before turning and recouping part of the losses. Again, the models performed well and we are on hold as far as further buys or sells, but we are leaning toward moving some more perpetual preferreds out of the models next week. This is just the ongoing move to short durations.

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1 interesting item we noted today was that of all the preferred issues outstanding of PS Business Parks and Public Storage (18 issues in total) only 1 issue was up today and 17 were down. We attach no specific significance to this occurring, except for the general downward pressure on perpetual preferred issues.

 

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