Monday, September 22, 2014

Preferred Stock Buyers - Be Sure You're Watching The Right Indicator

Savvy preferred stock buyers, looking for a glimpse of what the future of interest rates looks like, are used to watching Fed announcements regarding the federal funds rate. While doing so was fruitful during the Greenspan Fed years, the post-QE reality faced by today's Fed requires a change in focus for preferred stock investors.

Over the next year or two, preferred stock investors looking for a leading indicator of preferred stock rates and yield should pay attention to information related to the Fed's 'Overnight Fixed-Rate Reverse Repurchase facility.' How the Fed manages this facility is likely to become very important to preferred stock investors...

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