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10-Year Closing in on 1.5% (OP) - Blows Right Past - Near 5% (30 months later) - Whee!
Was just responding to the last poster on the thread who happened to be Sven. Probably several got it right. I didn’t. Never saw 10-year rates reaching near 5% in less than 3 years.
To @Seven’s above point … The Fed was keeping rates artificially low by its massive bond buying - a form of manipulation to use @Sven’s words. And, @Sven saw inflation back than. I’m not sure the Fed had figured that part out yet.
That comes out to about 3.653% yield (not annualized) through Sept 30th. On the plus side, FDIC coverage. On the minus side, early withdrawal penalty and all or nothing withdrawal (i.e. very limited liquidity).
“As of Dec 31, the best rate on a CD in the 10-12 month timeframe may have been 4.90% APY for a 10 month term. https://web.archive.org/web/20221222065208/https://www.depositaccounts.com/cd/1-year-cd-rates.html That comes out to about 3.653% yield (not annualized) through Sept 30th. On the plus side, FDIC coverage. On the minus side, early withdrawal penalty and all or nothing withdrawal (i.e. very limited liquidity). “
Thanks for the number crunching @msf. Always interesting to compare one’s diversified investment portfolio’s performance with a straight-up cash approach. (As you point out, the risks are not commensurate.) Cash will always beat out (well … almost always) a broadly diversified approach during a down equity market. Even with a 0% yield, cash would have handily beaten most diversified portfolios last year.
The longer end of yield curve is moving up since September. Today, the 10 year treasury yield rises to 4.81% from 3.79% as of 1/3/2023. Bonds got crush...
Bought 6 months and 12 months treasuries this week as other T bills matured. Will watch on the sideline on stocks.
I trade only bond funds because of their persistency of trend combined with their lack of volatility. There are exceptions, but since 2000 there has always been a bond category that has beaten the S@P annually. Of course those exceptions are pretty glaring ala 2013, 2017, 2019, 2021, and so far this year. So with an extra $100,000 would just add it to the bond category that is far ahead of the bond pack this year. That would be bank loans/floating rate which I have mentioned previously, Some are already ahead double digits YTD. Aside of March they have been as steady a trender as you could want. They are massively overbought, ripe for a correction, and with fears of rising defaults. But, ( and I have to continually remind myself of this) overbought in Bondland can stay overbought for long periods of time. Then again, this wouldn’t be an investment just a trade. Investment is a foreign term to me. I think the only time I was ever in a position since the 1990s for more than four to six months was in IOFIX in 2020/2021.
Also he mentioned few weeks later that he sold 1/3 of bank loan/ floating rate bond.
The quick rise rise of 10 year treasury yield has impact all bonds. I notice the short term junk bonds have peaked and falling too this week. YTD they were the few pockets of bonds that were up high single digit return. High yield corporate bonds such as TUHYX did well YTD and they also started falling last week. Is this déjà vu again of the brutal 2022 among bonds?
@Derf, 3 stars is a comparison to the rest of the high yield category, which has had a great year but is as risky a bond category as there is. The low volatility RPHYX is definitely mis-categorized, but M* has to put it somewhere.
RPHYX has a total return of 5.3% in the past year. My memory isn't great, but I don't think anyone was buying 1 year CD's at 5.3% last October.
I trade only bond funds because of their persistency of trend combined with their lack of volatility. There are exceptions, but since 2000 there has always been a bond category that has beaten the S@P annually. Of course those exceptions are pretty glaring ala 2013, 2017, 2019, 2021, and so far this year. So with an extra $100,000 would just add it to the bond category that is far ahead of the bond pack this year. That would be bank loans/floating rate which I have mentioned previously, Some are already ahead double digits YTD. Aside of March they have been as steady a trender as you could want. They are massively overbought, ripe for a correction, and with fears of rising defaults. But, ( and I have to continually remind myself of this) overbought in Bondland can stay overbought for long periods of time. Then again, this wouldn’t be an investment just a trade. Investment is a foreign term to me. I think the only time I was ever in a position since the 1990s for more than four to six months was in IOFIX in 2020/2021.
——Also he mentioned few weeks later that he sold 1/3 of bank loan/ floating rate bond.———-
The quick rise rise of 10 year treasury yield has impact all bonds. I notice the short term junk bonds have peaked and falling too this week. YTD they were the few pockets of bonds that were up high single digit return. High yield corporate bonds such as TUHYX did well YTD and they also started falling last week. Is this déjà vu again of the brutal 2022 among bonds?
So what are your plan?
>>>>>September 21 edited September 21 Flag Selling 1/3 of my bank loan OEF position on the close. Ugly day for credit including for a change the floating rate ETFs. If I am wrong will buy back. If this is the beginning of a correction will sell more. Unlike in the past cash is no longer trash.
Edit. Make that 40%.<<<<<<<<
I try to post my exits before the fact and sold 40% before the close as shown from my post above. That ugly day for credit on the 21st was a harbinger for what was to come and the top for bank loans - at least so far. The leveraged loan index has been down almost every day since and sold more till I was all in cash. It hasn’t been pretty for bank loans. As with anything they go down a heck of a lot quicker than they go up.
@junkster, as imperfect as it may be, I use BKLN ETF as proxy for BL/FR funds. It peaked on Sept 15th and has been trending downward ever since. Are there better alternatives? I hold majority of BL/FR in PRWCX. The fund holds about 10-15 % BL and the rest of bonds are in treasury.
@junkster, as imperfect as it may be, I use BKLN ETF as proxy for BL/FR funds. It peaked on Sept 15th and has been trending downward ever since. Are there better alternatives? I hold majority of BL/FR in PRWCX. The fund holds about 10-15 % BL and the rest of bonds are in treasury.
@Sven, not a bad proxy as I use it intraday along with two other bank loan ETFs. But I also use it with the previous day’s NAV to get an idea on how the open end will be priced end of day. I also use the end of the day Morningstar LSTA US Leveraged Loan 100 Index. That index peaked on September 20. It is only down around 0.65% from the top but a far cry from the trend of up, up, and up since the end of May. I could reload on bank loans if they approach the highs but in no hurry. There are some problems out there like banks and the junk corporate bond market. If the latter finally gets hit that could usher in all sorts of credit issues.
Comments
Thanks @MikeM
Was just responding to the last poster on the thread who happened to be Sven. Probably several got it right. I didn’t. Never saw 10-year rates reaching near 5% in less than 3 years.
To @Seven’s above point … The Fed was keeping rates artificially low by its massive bond buying - a form of manipulation to use @Sven’s words. And, @Sven saw inflation back than. I’m not sure the Fed had figured that part out yet.
Forgot to mention, now THREE STAR !!!
RPHIX +3.53% (ST-HY) 10/2/23 (edit/add: also, 10/3/23)
USFR +3.93% (Ultra-ST)
ICSH +3.90% (Ultra-ST)
IEF -4.19% (T-Notes 7-10 yrs)
https://web.archive.org/web/20221222065208/https://www.depositaccounts.com/cd/1-year-cd-rates.html
That comes out to about 3.653% yield (not annualized) through Sept 30th. On the plus side, FDIC coverage. On the minus side, early withdrawal penalty and all or nothing withdrawal (i.e. very limited liquidity).
Fidelity was only offering 4.55%-4.60% APY (vs. 4.90%) on CDs between 9 and 12 months.
https://web.archive.org/web/20221231183954/https://fixedincome.fidelity.com/ftgw/fi/FILanding
My momma told me ...
... you'd better shop around.
https://web.archive.org/web/20221222065208/https://www.depositaccounts.com/cd/1-year-cd-rates.html
That comes out to about 3.653% yield (not annualized) through Sept 30th. On the plus side, FDIC coverage. On the minus side, early withdrawal penalty and all or nothing withdrawal (i.e. very limited liquidity). “
Thanks for the number crunching @msf. Always interesting to compare one’s diversified investment portfolio’s performance with a straight-up cash approach. (As you point out, the risks are not commensurate.) Cash will always beat out (well … almost always) a broadly diversified approach during a down equity market. Even with a 0% yield, cash would have handily beaten most diversified portfolios last year.
Bought 6 months and 12 months treasuries this week as other T bills matured. Will watch on the sideline on stocks.
(Which of mine fell the LEAST today? TS Tenaris: +0.26%. Oil Country Tubular Goods.)
Also he mentioned few weeks later that he sold 1/3 of bank loan/ floating rate bond.
The quick rise rise of 10 year treasury yield has impact all bonds. I notice the short term junk bonds have peaked and falling too this week. YTD they were the few pockets of bonds that were up high single digit return. High yield corporate bonds such as TUHYX did well YTD and they also started falling last week. Is this déjà vu again of the brutal 2022 among bonds?
So what are your plan?
RPHYX has a total return of 5.3% in the past year. My memory isn't great, but I don't think anyone was buying 1 year CD's at 5.3% last October.
I'm not complaining as I do own a small slice of RPHYX.
I see Buffalo kicked the snot out of Miami ! Maybe , just maybe it's their year to take the Lombardi trophy home ?!
A star is just a star, Derf
>>>>>September 21 edited September 21 Flag
Selling 1/3 of my bank loan OEF position on the close. Ugly day for credit including for a change the floating rate ETFs. If I am wrong will buy back. If this is the beginning of a correction will sell more. Unlike in the past cash is no longer trash.
Edit. Make that 40%.<<<<<<<<
I try to post my exits before the fact and sold 40% before the close as shown from my post above. That ugly day for credit on the 21st was a harbinger for what was to come and the top for bank loans - at least so far. The leveraged loan index has been down almost every day since and sold more till I was all in cash. It hasn’t been pretty for bank loans. As with anything they go down a heck of a lot quicker than they go up.