Doves’ Dreams Come True In October Jobs Report
The US economy added 150,000 jobs in October and hiring was slower than initially reported during the prior two months.
That's according to Friday's payrolls report which was amenable to a "Goldilocks" interpretation, or if not, it was at least a boon to doves and bond bulls.
Consensus expected 180,000 from the headline print. The range of estimates, from more than five-dozen economists, was 20,000 to 235,000.
Revisions subtracted 39,000 from September's scorching-hot headline, and 62,000 f
I’m starting to sense the bond animal spirits awakening after All Hallows’ Day.
Mine sure are. Yesterday I moved 25% of my cash into a major commitment to a 40% increase in my portfolio of individual issues of muni-bonds. These were insured, AA rated, paying me a net 50% more than my T-bill money fund with ten years of call protection and selling at par. I got the spirits. Whee.
Thoughts on preferreds? Looking over the big US bank preferreds, I see YTM/YTCs 6%+, big duration bet, priced well under par, interest taxed at capital gain rates. I don’t usually look at other types of issuers, but foreign bank preferreds might be interesting too.
I looked at the aftertax yield of various assets, in the contacts of my high-tax state/county. At current prices, for highest tax bracket investors, the highest AT YTM is in aforesaid preferreds, with own-state municipals in second place. Other-state munis and T-bills are third. Treasury and agency coupon are fourth. I only looked at A- and better, medium duration, bonds. Corporates and dividends can be competitive, depending on the issue.
Context, not contact
Stand aside! It looks like the Algos and CTAs are marching in.
Like the hammers in Pink Floyd’s epic “The Wall.”
Like the Apple Bonkers and Glovey Dovey in the Yellow Submarine…