Interest Rates Creeping Higher

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After hitting a low yield of around 1.67% last week the 10 year treasury has popped up to 2% today. So far the 33 basis point rise hasn’t had visible damage in a major way except for to the utilities, which have been overheated. It should be recognized that preferred stocks and exchange traded debt have fallen off as well–but just in a tiny way. As measured as a total universe preferred stocks have fallen 1/4% in the last week–so on an average $25 share about 6 cents has been lost. The good part is the psycological affects on us conservative investors is that a 6 cent loss doesn’t bother us at all. We hope that this moderate rise continues–by mid to late year we could be looking at some nice yields on some preferreds and debt.

Today we are buying TCCB – the new Triangle Capital 6.375% Notes–mainly for its 2022 maturity.   Beyond this purchase our plan is to pretty much sit tight–waiting for more short duration instruments to be issued. We will be happy to continue to hold a reasonably high level of cash as it may come in handy mid to late year to lock down some higher yields.

 

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