Interest Rates and Stocks Fall

July 8, 2014  11 am

As we suspected might happen the 10 year treasury after hitting a intraday high of 2.67% last week after the strong employmente report has drifted back down to 2.56% (at this moment).  No one believes the improving economy.  When we wrote last week that even we were feeling ‘bullish’ on stocks it was a good warning that they would likely sell off.  Of course we took no action on our bullish feeling–bunches of common stocks aren’t our thing, but we do have to resist jumping in on occassion.

We do note that with the SP500 off almost a percentage point that MLPs are off a 1%, but REITs have hung in there well with only a 20 basis point move lower.  The moves lower the last few days have moved our YTD gain down to 8.9%–not a surprise–you can’t run ‘hot’ continually.

A short note on one of our favorite holdings–Independence Realty Trust (ticker IRT).  This is a tiny apartment REIT which we briefly touched on when writing on July 1, 2014.  The shares were up 5% in June and are up another 6% since we touched on them last week.  The current yield has now fallen to 7% with the share price rising—thus we would be surprised if there was much for further capital gains at this point in time.