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BONDS AAA, a bit twitchy this past week; Update AUG 28
AAA-higher quality BBB bonds have been moving sideways for a few days, and today have no love at all. High yield is so-so. I don't follow muni's or mortgage.
NOTE: Aug 4-6 was the very near term peak in prices for these issues.
So, if this short trend persists, expect losses in your bond sectors.....until. active, real time etf's (scroll down for fixed income)
I've been rotating out of stocks and into flex bond funds of all stripes.
I tend to think that come fall, there will be no safe places to hide, save maybe gold. IIRC, gold is one of those investments which is particularly prone to "works until it doesn't" dynamics.
@catch22, I notice financial, energy, industrial, and materials sectors are advancing. Information and tech are not - think there is a rotation due to better valuation?? Bond ETF such as AGG (similar to BND) and LQD are falling too...
I have observed much the same as my bond proxies are down, for the week, while XLRE, VTI & EPP are my three leaders within my asset compass. For today, what is on the upward move, for my income proxies as I write, are CWF, PFF & HYG.
FWIW - DODBX jumped nearly 1% yesterday while similar funds were flat. I suspect that was a reaction to its overweighting in the financial sectors which benefit from higher interest rates. No - I’m not touting the fund. I wouldn’t wish it upon anybody at this point (though I hold a sizeable chunk).
Of course, should rates continue upward, there’s a chance they might kill the golden goose.
BRK/B has "finally" started to do quite well since the start of August. I bought it in early April thinking Buffet has always put money to work when markets were down, but he didn't. It's lagged the market until recently. It's always been heavy in financials and as hank said about DODBX, that may be what is driving BRK also. I don't plan to add right now but you may be doing the right thing @johnN.
The week was rough for U.S. bond performance. However, the bond and equity markets remain, somewhat, within the functions of the central bank. Barring economic reports near term that are beyond belief to the positive side, I expect enough bond buying (in spite of issuance amounts) support to recover this weeks reversal in positive price trends. Looking at some of the YTD returns at this point of the year; one can't complain too much, eh? I've placed links below that won't take much of your time, related to bonds.
Currently, I glance at data for , but do not track muni's, mortgage or foreign bonds.
A few data views from bondland, for mostly AAA rated bonds:
AUGUST 14 WEEK / YTD
--- MINT = + .02% / +1.2% (Pimco Enhanced short maturity, AAA-BBB rated) --- SHY = - .07% / +3.0% (UST 1-3 yr bills) --- IEI = - .31% /+6.9% (UST 3-7 yr notes/bonds) --- IEF = -.9% /+11% (UST 7-10 yr bonds) --- TIP = -.7% / +8% (UST Tips, 3-10 yrs duration, some 20+ yr duration) --- LTPZ = -3.2% / + 19.7% (UST, long duration TIPs bonds --- TLT = -3.9% /+21.6% (20+ Yr UST Bond --- EDV = -5.4% / +28.3% (UST Vanguard extended duration bonds) --- ZROZ = -6.1% /+29.8% (UST., AAA, long duration zero coupon bonds) ***Other, for reference, not AAA rated: --- HYG = -1.3 / -1.4% (high yield bonds, proxy ETF) --- LQD = -2.4% / +7.7% (corp. bonds, various quality)
Priya Misra, Aug. 12, 3 minute video, bonds, yields and the FED.
Jim Bianco Aug 14, 6 minute video, bonds and broad markets overview
Scott Minerd, short text read, 30 year bond buying opportunity after sell-off
As always, you'll have to be the final judge for the health of your portfolio mix using bonds. Take care, Catch
I appreciate this very much as I am more of an equity guy; but, I do pay attention to the price movement of my income sleeve which is made up of bond and multi sector income funds. For the week it was down -0.24%, for the month it is up +2.49% and for the past 90 days it is up +8.53%.
Following the March/April stock market swoon my income sleeve has performed well, as it also took a hit with my equities, and it is now back to a little above even. Overall, though, my portfolio is up year to date due mostly to my growth funds as my value funds still lag both my income and growth funds. But, I'm seeing my value funds now starting to find some traction as they were the better performers this past week.
Perhaps, a rotation it taking place where some investors are repositioning and moving from overvalued to undervalued funds within their portfolios. Anyway, value was on the move last week as my domestic equity income sleeve was up +0.81% for the week, +4.30% for the month and +11.95% for the past 90 days. My global equity income sleeve has been on the move as well with a weekly gain of +0.90%, +3.39% for the past month, and +18.51% for it's three month period. Hopefully, this will continue and close the distance between my value and my growth funds which have had the better performance thus far this year.
Take care ... stay safe ... and, thanks for the update on bonds.
@catch22, thank you for the update on bonds and other links. I interpret last week's pullback on bonds is just a pause since March's low. Given the recession, Fed is keeping rates near zero and likely for sometime. My bonds are of high quality with short-intermediate term duration. Sold all long term treasury back with a nice gain when Fed lowered the rate and buying all strips of bonds.
My income sleeve made a little money yesterday (8/17) being up +0.08% but is down -0.17% for the rolling five day period. I had one fund that was down and that was Pimco Income with the others being flat to up for the day. For the day the portfolio as a whole was up +0.30% while the S&P 500 Index was up +0.27% and for the rolling five day period the portfolio is up +0.49%. And, do +0.49% every week and that equates to a little better than +25% for a 52 week period or a little better than +2% per month. Based upon my asset allocation currently of 15/45/40 (Cash/Bonds/Stocks) I'm only looking for an average annual return, from my funds, in the 6% to 8% range. So, overall yesterday, on average, was better than a normal day for me. Currently, my ten year annual average total return is +9.86% which includes profits made from my equity spiff positions. So, buying the dips and selling the rips through special investment positions, from time to time, has added alpha to my overall portfolio returns.
Thus, I plan to keep on using Old_Skeet's Market Barometer which drives a suggested equity weighting for me within my asset allocation. With stock market valuations being scored as elevated, by the barometer, this suggested weighting is currently 40% for my stock allocation, which I am presently at.
I posted on M*that I made big changes to my portfolio. Since the end of last week I had problem finding bond funds I like. I had a huge % in GWMEX since May but sold everything and the rest too. Bought something, this probably will be a short term trade, the rest is in cash. I made a lot more than my needs this year.
AAA bonds found some "lovers" this past week. For a week compare, if you choose; review the week return at the start of this thread and compare to the below returns.
Well, we investors have the "FED kick" still in place from March, and may invest, with this in mind, where one feels comfortable. At least relative to U.S. investment sectors, hopefully your positions are still seeing profits.
--- From March: The Federal Reserve kick-started the rebound into risk assets by pledging $3 trillion in unprecedented monetary support, going so far as to buy corporate bonds. That led to many investors repeating the mantra: "Don't fight the Fed" as they swooped in to follow the central bank's lead.
Those tiny, tiny yield numbers. Tis is easy enough to read in print or view on the tv screen those yield numbers. However, even in a weeks time; the yield numbers may reflect large percent moves. This past week wouldn't seem like much in the 10 year Treasury yield, being .71% on Aug. 14 (near term high) and at .64% on Aug. 21, so if one glanced on the 14th and again on the 21st and kinda forgot about the numbers; you need to keep in mind that the change is almost a 10% change. If this number were a SP500 number, it would be the news of the week. Now, this 10% change is not fully reflected into performance changes for AAA bonds; but is reflected into a positive direction for price performance, which is where the money is made.
Overview: AAA, safe haven bonds appeared to be more in line with normal performance and movement when investors become a bit twitchy with other market sectors (being overbought/too expensive ???) Do I know if this will persist ???? .......NOPE. Not unlike you, I can only watch price movements and attempt to discover the mood of the equity(s) markets and how this becomes reflected towards AAA bonds. The below is an OMG for those who ponder and wonder about the world of bonds relative to safe havens and/or market expectations from the big players.
4 days ago - Germany's longest-maturity bonds saw demand rise to an all-time high as investors seeking alternatives to dollar assets bought the nation's highest-yield notes. Bids for the nation's 30-year notes outstripped supply by 2.9 times, the highest since at least 1997, according to data compiled by Bloomberg.
Personal note: the yield on this 30 year bund was at -.05% at the time of the auction.
I should have previously included performance for AGG, as a gauge, which is now included in the below list. The AGG, formerly known as the Bloomberg Barclays Aggregate Bond Index, is an index used by bond traders, mutual funds, and ETFs as a benchmark to measure their relative performance. The index is broadly considered to be the best total market bond index, as it is used by more than 90% of investors in the United States.
Currently, I glance at data for , but do not track muni's, mortgage or foreign bonds.
A few data views from bondland, for mostly AAA rated bonds:
AUGUST 21 WEEK / YTD
--- AGG = +.4% / +7.1% (widely used bond benchmark)
--- MINT = + .03% / +1.23% (Pimco Enhanced short maturity, AAA-BBB rated) --- SHY = + .01% / +2.96% (UST 1-3 yr bills) --- IEI = + .16% /+7.1% (UST 3-7 yr notes/bonds) --- IEF = +.6% /+11.6% (UST 7-10 yr bonds) --- TIP = +.6% / +8.7% (UST Tips, 3-10 yrs duration, some 20+ yr duration) --- LTPZ = +1.9% / + 22% (UST, long duration TIPs bonds --- TLT = +1.9% /+23.8% (20+ Yr UST Bond --- EDV = +2.5% / +31.6% (UST Vanguard extended duration bonds) --- ZROZ = +2.8 /+33.5% (UST., AAA, long duration zero coupon bonds) ***Other, for reference, not AAA rated: --- HYG = +.8 / -.7% (high yield bonds, proxy ETF) --- LQD = +.8% / +8.5% (corp. bonds, various quality)
This week, well; the "love" is a bit on the edge. A bit twitchy in some sectors, overpriced perhaps; not unlike sectors in equity. Whata-ya-gonna-do ???
In the "old days" one could have at least a small amount of assurance, that if the equity markets started or were going to hell in a hand basket; that quality bond holdings would likely be a positive ballast for one's portfolio. The machinations of central banks right now is so fully overwhelming in all aspects of capital markets that I find it more difficult with how to deal with the "perversion" of reality markets. This week's "Jackson Hole" conference placed some guidance by Chairman Powell. What you or the "pundits" make of the pronouncements likely finds a large range of where the equity/bond markets travel in the future. The past 3 weeks of data in this thread show the amount of volatility within some bond sectors.
A few blips below, that may or may not be of value:
Lastly, if you remain curious about bonds; you have a defined list of etf's below to help you gauge which areas are having momentum; either positive or negative.
I'm going HIATUS with further posting.
I should have previously included performance for AGG, as a gauge, which is now included in the below list. The AGG, formerly known as the Bloomberg Barclays Aggregate Bond Index, is an index used by bond traders, mutual funds, and ETFs as a benchmark to measure their relative performance. The index is broadly considered to be the best total market bond index, as it is used by more than 90% of investors in the United States.
Currently, I glance at data for , but do not track muni's, mortgage or foreign bonds.
A few data views from bondland, for mostly AAA rated bonds: AUGUST 28 WEEK / YTD .....Data M* performance
--- AGG = -.48% / +6.6% (widely used bond benchmark)
--- MINT = + .06% / +1.29% (Pimco Enhanced short maturity, AAA-BBB rated) --- SHY = + .02% / +2.98% (UST 1-3 yr bills) --- IEI = - .07% /+7% (UST 3-7 yr notes/bonds) --- IEF = -.61% /+11% (UST 7-10 yr bonds) --- TIP = +.29% / +9% (UST Tips, 3-10 yrs duration, some 20+ yr duration) --- LTPZ = -.7% / +21.1% (UST, long duration TIPs bonds --- TLT = -3.1% /+20.1% (20+ Yr UST Bond --- EDV = -4% / +26.3% (UST Vanguard extended duration bonds) --- ZROZ = -4.4 /+27.4% (UST., AAA, long duration zero coupon bonds) ***Other, for reference, not AAA rated: --- HYG = +.5 / -.2% (high yield bonds, proxy ETF) --- LQD = -1.1% / +7.3% (corp. bonds, various quality)
Thanks Catch. Based on my few bond holdings, the mid-grade (AA/BBB) corporate stuff a bit out on the curve (5+ years) got whacked a bit due to uptick in rates. Shorter term stuff (1-3 years) seemed to hold up better. Foreign (investment grade) bonds held up better. Perhaps the dollar fell some more. The good news is, as bond prices fall yields usually rise. Leon Cooperman, whom I posted last week, calls bonds today “return free risk.” But as for risk ... it’s more than just bonds IMHO.
Comments
I tend to think that come fall, there will be no safe places to hide, save maybe gold. IIRC, gold is one of those investments which is particularly prone to "works until it doesn't" dynamics.
Seems everyone backing up a bit from gld slv and bonds, maybe over priced...
Of course, should rates continue upward, there’s a chance they might kill the golden goose.
Currently, I glance at data for , but do not track muni's, mortgage or foreign bonds.
A few data views from bondland, for mostly AAA rated bonds:
AUGUST 14 WEEK / YTD
--- MINT = + .02% / +1.2% (Pimco Enhanced short maturity, AAA-BBB rated)
--- SHY = - .07% / +3.0% (UST 1-3 yr bills)
--- IEI = - .31% /+6.9% (UST 3-7 yr notes/bonds)
--- IEF = -.9% /+11% (UST 7-10 yr bonds)
--- TIP = -.7% / +8% (UST Tips, 3-10 yrs duration, some 20+ yr duration)
--- LTPZ = -3.2% / + 19.7% (UST, long duration TIPs bonds
--- TLT = -3.9% /+21.6% (20+ Yr UST Bond
--- EDV = -5.4% / +28.3% (UST Vanguard extended duration bonds)
--- ZROZ = -6.1% /+29.8% (UST., AAA, long duration zero coupon bonds)
***Other, for reference, not AAA rated:
--- HYG = -1.3 / -1.4% (high yield bonds, proxy ETF)
--- LQD = -2.4% / +7.7% (corp. bonds, various quality)
Priya Misra, Aug. 12, 3 minute video, bonds, yields and the FED.
Jim Bianco Aug 14, 6 minute video, bonds and broad markets overview
Scott Minerd, short text read, 30 year bond buying opportunity after sell-off
As always, you'll have to be the final judge for the health of your portfolio mix using bonds.
Take care,
Catch
Thanks for the update on bonds.
I appreciate this very much as I am more of an equity guy; but, I do pay attention to the price movement of my income sleeve which is made up of bond and multi sector income funds. For the week it was down -0.24%, for the month it is up +2.49% and for the past 90 days it is up +8.53%.
Following the March/April stock market swoon my income sleeve has performed well, as it also took a hit with my equities, and it is now back to a little above even. Overall, though, my portfolio is up year to date due mostly to my growth funds as my value funds still lag both my income and growth funds. But, I'm seeing my value funds now starting to find some traction as they were the better performers this past week.
Perhaps, a rotation it taking place where some investors are repositioning and moving from overvalued to undervalued funds within their portfolios. Anyway, value was on the move last week as my domestic equity income sleeve was up +0.81% for the week, +4.30% for the month and +11.95% for the past 90 days. My global equity income sleeve has been on the move as well with a weekly gain of +0.90%, +3.39% for the past month, and +18.51% for it's three month period. Hopefully, this will continue and close the distance between my value and my growth funds which have had the better performance thus far this year.
Take care ... stay safe ... and, thanks for the update on bonds.
Old_Skeet
My income sleeve made a little money yesterday (8/17) being up +0.08% but is down -0.17% for the rolling five day period. I had one fund that was down and that was Pimco Income with the others being flat to up for the day. For the day the portfolio as a whole was up +0.30% while the S&P 500 Index was up +0.27% and for the rolling five day period the portfolio is up +0.49%. And, do +0.49% every week and that equates to a little better than +25% for a 52 week period or a little better than +2% per month. Based upon my asset allocation currently of 15/45/40 (Cash/Bonds/Stocks) I'm only looking for an average annual return, from my funds, in the 6% to 8% range. So, overall yesterday, on average, was better than a normal day for me. Currently, my ten year annual average total return is +9.86% which includes profits made from my equity spiff positions. So, buying the dips and selling the rips through special investment positions, from time to time, has added alpha to my overall portfolio returns.
Thus, I plan to keep on using Old_Skeet's Market Barometer which drives a suggested equity weighting for me within my asset allocation. With stock market valuations being scored as elevated, by the barometer, this suggested weighting is currently 40% for my stock allocation, which I am presently at.
I wish all ... "Good Investing."
Old_Skeet
Well, we investors have the "FED kick" still in place from March, and may invest, with this in mind, where one feels comfortable. At least relative to U.S. investment sectors, hopefully your positions are still seeing profits.
--- From March: The Federal Reserve kick-started the rebound into risk assets by pledging $3 trillion in unprecedented monetary support, going so far as to buy corporate bonds. That led to many investors repeating the mantra: "Don't fight the Fed" as they swooped in to follow the central bank's lead.
Those tiny, tiny yield numbers. Tis is easy enough to read in print or view on the tv screen those yield numbers. However, even in a weeks time; the yield numbers may reflect large percent moves. This past week wouldn't seem like much in the 10 year Treasury yield, being .71% on Aug. 14 (near term high) and at .64% on Aug. 21, so if one glanced on the 14th and again on the 21st and kinda forgot about the numbers; you need to keep in mind that the change is almost a 10% change. If this number were a SP500 number, it would be the news of the week. Now, this 10% change is not fully reflected into performance changes for AAA bonds; but is reflected into a positive direction for price performance, which is where the money is made.
Overview: AAA, safe haven bonds appeared to be more in line with normal performance and movement when investors become a bit twitchy with other market sectors (being overbought/too expensive ???) Do I know if this will persist ???? .......NOPE. Not unlike you, I can only watch price movements and attempt to discover the mood of the equity(s) markets and how this becomes reflected towards AAA bonds. The below is an OMG for those who ponder and wonder about the world of bonds relative to safe havens and/or market expectations from the big players.
4 days ago - Germany's longest-maturity bonds saw demand rise to an all-time high as investors seeking alternatives to dollar assets bought the nation's highest-yield notes. Bids for the nation's 30-year notes outstripped supply by 2.9 times, the highest since at least 1997, according to data compiled by Bloomberg.
I should have previously included performance for AGG, as a gauge, which is now included in the below list.
The AGG, formerly known as the Bloomberg Barclays Aggregate Bond Index, is an index used by bond traders, mutual funds, and ETFs as a benchmark to measure their relative performance. The index is broadly considered to be the best total market bond index, as it is used by more than 90% of investors in the United States.
Currently, I glance at data for , but do not track muni's, mortgage or foreign bonds.
A few data views from bondland, for mostly AAA rated bonds:
AUGUST 21 WEEK / YTD
--- AGG = +.4% / +7.1% (widely used bond benchmark)
--- MINT = + .03% / +1.23% (Pimco Enhanced short maturity, AAA-BBB rated)
--- SHY = + .01% / +2.96% (UST 1-3 yr bills)
--- IEI = + .16% /+7.1% (UST 3-7 yr notes/bonds)
--- IEF = +.6% /+11.6% (UST 7-10 yr bonds)
--- TIP = +.6% / +8.7% (UST Tips, 3-10 yrs duration, some 20+ yr duration)
--- LTPZ = +1.9% / + 22% (UST, long duration TIPs bonds
--- TLT = +1.9% /+23.8% (20+ Yr UST Bond
--- EDV = +2.5% / +31.6% (UST Vanguard extended duration bonds)
--- ZROZ = +2.8 /+33.5% (UST., AAA, long duration zero coupon bonds)
***Other, for reference, not AAA rated:
--- HYG = +.8 / -.7% (high yield bonds, proxy ETF)
--- LQD = +.8% / +8.5% (corp. bonds, various quality)
Well, enjoy and be careful.
Regards,
Catch
In the "old days" one could have at least a small amount of assurance, that if the equity markets started or were going to hell in a hand basket; that quality bond holdings would likely be a positive ballast for one's portfolio. The machinations of central banks right now is so fully overwhelming in all aspects of capital markets that I find it more difficult with how to deal with the "perversion" of reality markets. This week's "Jackson Hole" conference placed some guidance by Chairman Powell. What you or the "pundits" make of the pronouncements likely finds a large range of where the equity/bond markets travel in the future. The past 3 weeks of data in this thread show the amount of volatility within some bond sectors.
A few blips below, that may or may not be of value:
--- EXPLAINER, new Fed policy
--- Fed can't talk the U.S. economy into inflation
Lastly, if you remain curious about bonds; you have a defined list of etf's below to help you gauge which areas are having momentum; either positive or negative.
I'm going HIATUS with further posting.
I should have previously included performance for AGG, as a gauge, which is now included in the below list.
The AGG, formerly known as the Bloomberg Barclays Aggregate Bond Index, is an index used by bond traders, mutual funds, and ETFs as a benchmark to measure their relative performance. The index is broadly considered to be the best total market bond index, as it is used by more than 90% of investors in the United States.
Currently, I glance at data for , but do not track muni's, mortgage or foreign bonds.
A few data views from bondland, for mostly AAA rated bonds:
AUGUST 28 WEEK / YTD .....Data M* performance
--- AGG = -.48% / +6.6% (widely used bond benchmark)
--- MINT = + .06% / +1.29% (Pimco Enhanced short maturity, AAA-BBB rated)
--- SHY = + .02% / +2.98% (UST 1-3 yr bills)
--- IEI = - .07% /+7% (UST 3-7 yr notes/bonds)
--- IEF = -.61% /+11% (UST 7-10 yr bonds)
--- TIP = +.29% / +9% (UST Tips, 3-10 yrs duration, some 20+ yr duration)
--- LTPZ = -.7% / +21.1% (UST, long duration TIPs bonds
--- TLT = -3.1% /+20.1% (20+ Yr UST Bond
--- EDV = -4% / +26.3% (UST Vanguard extended duration bonds)
--- ZROZ = -4.4 /+27.4% (UST., AAA, long duration zero coupon bonds)
***Other, for reference, not AAA rated:
--- HYG = +.5 / -.2% (high yield bonds, proxy ETF)
--- LQD = -1.1% / +7.3% (corp. bonds, various quality)
Well, enjoy and be careful.
Regards,
Catch