Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Refused to load, at first. Had to turn off one of my (new) adblockers. Stinky poopy cruddy and fecal. But I swallowed hard and did it.
Wow. That blue dress... Interviewees did not surprise. Sonali Basak quoted BARCLAY'S: we should right now SHORT 5-year Treasuries. Jaypers. No, I don't play in that pool. I'll stick to my known knitting.
TCW's Bryan Whalen: you're not getting compensated to be in junk, given the spread with I.G. Of course, one must slice the bologna a bit thinner than that. Bs and BBs should continue to be fine, without the threat of defaults. Nevertheless, as Sonali Basak notes, people are still "flooding into risk."
Austan Goolsbee, Chicago Fed President. He was pressed and pushed back. Reading between the lines, it seems clear that he's hinting that cuts (plural) will come, and not just one. Further, if unemployment continues to rise, the Fed will have to attend to that aspect of its mandate. He simply refused to spell it out explicitly. Pritzger was quoted, making the point that interest rate cuts are overdue.
Kay Herr: runs JPM core-plus bond ETF. She remarked that the Big Picture is what matters, rather than reacting to a single day's negative action. She favors duration. Soft landing is her base case.
09 Aug, '24 Chaotic week. By the end, Junk made a comeback. Yield curve briefly disinverted. TCW advises to be long DURATION. Ashok Bhatia: high quality BBs look good. Maureen O'Connor: everyone was ready for such a correction. Matt Mish: Credit has outperformed other asset classes. https://www.bloomberg.com/news/videos/2024-08-09/bloomberg-real-yield-08-09-2024
Rate cut: .25 or .50? Brian Rehling says .25, unless there is a huge shock to the labor market. Where to buy? Intermediate-term. No surprise. Olli Rehn, at Jackson Hole. Bank of Finland. Predictable conversation.
I listened to it when it was aired during the day. Did not both the guests prior to the private credit discussion say something to the effect that they would not buy at the current interest levels? If so, that was interesting to me. It is possible it was a confirmation bias on my part as by then I already saw yields for the day went down and I had already cancelled my buy order resting overnight. If yields go down bigly even more next week, then you got at least three people (those two guests and myself) that got it wrong.
Right. McClain says he'd not be buying here, neither short nor long. (Treasuries, right?) Goldberg said "It's tough to chase this rally." Correct.
I bought junk at just the wrong time a couple of years ago. I watched it drop, then rise, while reinvesting dividends. Dead money for 2 years, but now I'm in the black with it. The time to buy was a little while ago. And I've just spread out into a core-plus, higher quality bond fund. If everything goes south with HY, I'll know what to do.
SonalDesai. I always stop to pay attention to her. She says 50 basis points was overkill. Her idea of a neutral rate, looking forward, is 3.75% to 4.00%. ... Enormous fiscal deficits are frightening. She also agrees with the IMF which lately asserted that our latest adventure with inflation had less to do with supply shocks, and more to do with profligate fiscal policy. ... It's a mistake to think we'll get back to pre-covid interest rates. Some see that period of time as the "mark" to measure against. But, no way. OksanaAranov. She thinks 0.5% rate cut is too much, too soon, too....$7T of bonds still sitting on the Fed's balance sheet. (Holy ORK!!!!!). We are still in an era of higher for longer. Agreeing with Desai: these past 10-12 years are the ANOMALY, not the STANDARD by which to compare. And the Fed has never admitted the connection between fiscal policy and the inflation which is now shrinking, but it's not going to 2%--- which is the Fed's goal. The "high 4s" are more normal, which is what she sees in the days ahead, with an eye on the future.
Steven Oh: Circumstances remain supportive of HY bonds. Junk valuations are at best, fair to somewhat overvalued. (Chart: current junk yields are lowest in 28 months.) Junk is completing a 7-week run of gains. Junk default rates have peaked already and are on their way down.
There's an HYG chart you might take a look at. It got past me.
What to do? What to do? Mixed data signals make for iffy decisions about rate expectations, and whether to be short or in the belly, or to go long with bonds.
Further into debt, as promised by both Harris and Trump; one much worse than the other. (But will this country ever wake up and recognize the mountain of debt already hanging over our heads?) S. Basak kept it interesting. Not too much to work with.
Will Trump fire Powell? No. Rate cuts? Fewer. But Kurt Reiman of UBS would like to see more cuts, into and through 2025. By the end of '25, the dollar should be lower.
Then, there is a tactical discussion about spreads and yields. Holiday-shortened week, next week. Thanksgiving.
oksana aranov. economy is chugging along. rate cuts will just set the table for more inflation. november jobs report shows a healthy labor market, and it's been this way for months, apart from the hurricane month in october, of course. the fed doesn't even know where its neutral rate is.
cleveland fed chair hammack says we're at or near the time when rate cuts need to be slowed or stopped.
gargi chaudhuri. no reason to own bonds further out in duration than 5-7 years. own the belly.
investment grade vs. junk are at historic tights. really? my core-plus fund offers me yield of 5.17%. My junk spews at me monthly with 7.33%. more than two percent better. throw enough benjamins in there and the difference is meaningful.
Yield spreads between Vanguard High-Yield Corporate and Vanguard Interm-Term U.S. Treasury (starting in 1998) are compared in the M* Fund Investor newsletter each month.
The Market is virtually certain of a .25% rate cut this month from The Fed. Rick Rieder: back end of the curve is not worth it. Expect volatility.
Do we get a cut, and, as has been the case, do yields keep going HIGHER? The front end should stay put, or "pegged." The long end will be range-bound in the 1st quarter of '25, perhaps up to 4.5%.
"Fiscal adventurism" coming next year. Watch for the prospect of pressure on the labor force if deportations get going. The WORD will be uncertainty.... What about overseas developed bonds? Europe, especially: fiscal expansionism won't be "the story." Austerity to any degree is the opposite of what we should expect HERE. Currency hedge with Gilts and in Japan are relatively attractive.
Past week was 2nd-busiest of the year with credit issuance. TD (fresh off a not very old news story about it being lax to prevent money laundering---) was one of the "leaders." Tighter spreads will continue and be even more pronounced. Triple-Cs GAINED for a 4th week. Credit spreads are at a 3-year low.
20 Dec. 2024. Not much to say from me, this time. Good conversations, but no surprises. Junk still looks good. Also leveraged loans, bank loans. Stay very short on duration.
Comments
https://www.bloomberg.com/news/videos/2024-04-19/bloomberg-real-yield-04-19-2024
https://www.bloomberg.com/real-yield
https://www.bloomberg.com/news/videos/2024-05-17/bloomberg-real-yield-05-17-2024
https://www.bloomberg.com/news/videos/2024-06-21/bloomberg-real-yield-06-21-2024-video
https://www.bloomberg.com/news/videos/2024-06-28/bloomberg-real-yield-06-28-2024
https://www.bloomberg.com/news/videos/2024-07-12/bloomberg-real-yield-07-12-2024
Refused to load, at first. Had to turn off one of my (new) adblockers. Stinky poopy cruddy and fecal. But I swallowed hard and did it.
Wow. That blue dress...
Interviewees did not surprise. Sonali Basak quoted BARCLAY'S: we should right now SHORT 5-year Treasuries. Jaypers. No, I don't play in that pool. I'll stick to my known knitting.
https://www.bloomberg.com/news/videos/2024-07-26/bloomberg-real-yield-07-26-2024
TCW's Bryan Whalen: you're not getting compensated to be in junk, given the spread with I.G. Of course, one must slice the bologna a bit thinner than that. Bs and BBs should continue to be fine, without the threat of defaults. Nevertheless, as Sonali Basak notes, people are still "flooding into risk."
https://www.bloomberg.com/news/videos/2024-08-02/bloomberg-real-yield-08-02-2024
Austan Goolsbee, Chicago Fed President. He was pressed and pushed back. Reading between the lines, it seems clear that he's hinting that cuts (plural) will come, and not just one. Further, if unemployment continues to rise, the Fed will have to attend to that aspect of its mandate. He simply refused to spell it out explicitly. Pritzger was quoted, making the point that interest rate cuts are overdue.
Kay Herr: runs JPM core-plus bond ETF. She remarked that the Big Picture is what matters, rather than reacting to a single day's negative action. She favors duration. Soft landing is her base case.
Chaotic week. By the end, Junk made a comeback. Yield curve briefly disinverted.
TCW advises to be long DURATION.
Ashok Bhatia: high quality BBs look good.
Maureen O'Connor: everyone was ready for such a correction.
Matt Mish: Credit has outperformed other asset classes.
https://www.bloomberg.com/news/videos/2024-08-09/bloomberg-real-yield-08-09-2024
To me, there's nothing to write home about. HY yields at lowest now, YTD? That's the assertion. But my junk stuff defies that claim... And share prices have slowly crept upward this week, too.
https://www.bloomberg.com/news/videos/2024-08-16/bloomberg-real-yield-08-16-2024
23 aug, '24.
Rate cut: .25 or .50? Brian Rehling says .25, unless there is a huge shock to the labor market. Where to buy? Intermediate-term. No surprise. Olli Rehn, at Jackson Hole. Bank of Finland. Predictable conversation.
06 Sept, 2024:
https://www.bloomberg.com/news/videos/2024-09-06/bloomberg-real-yield-09-06-2024
.25 or .50 from The Fed? Also, Private Credit. Unexciting to me.
https://www.bloomberg.com/news/videos/2024-09-13/bloomberg-real-yield-09-13-2024
Goldberg said "It's tough to chase this rally." Correct.
I bought junk at just the wrong time a couple of years ago. I watched it drop, then rise, while reinvesting dividends. Dead money for 2 years, but now I'm in the black with it. The time to buy was a little while ago. And I've just spread out into a core-plus, higher quality bond fund. If everything goes south with HY, I'll know what to do.
https://www.bloomberg.com/news/videos/2024-09-20/bloomberg-real-yield-09-20-2024
Sonal Desai. I always stop to pay attention to her. She says 50 basis points was overkill. Her idea of a neutral rate, looking forward, is 3.75% to 4.00%. ... Enormous fiscal deficits are frightening. She also agrees with the IMF which lately asserted that our latest adventure with inflation had less to do with supply shocks, and more to do with profligate fiscal policy. ... It's a mistake to think we'll get back to pre-covid interest rates. Some see that period of time as the "mark" to measure against. But, no way.
Oksana Aranov. She thinks 0.5% rate cut is too much, too soon, too....$7T of bonds still sitting on the Fed's balance sheet. (Holy ORK!!!!!). We are still in an era of higher for longer. Agreeing with Desai: these past 10-12 years are the ANOMALY, not the STANDARD by which to compare. And the Fed has never admitted the connection between fiscal policy and the inflation which is now shrinking, but it's not going to 2%--- which is the Fed's goal. The "high 4s" are more normal, which is what she sees in the days ahead, with an eye on the future.
Steven Oh: Circumstances remain supportive of HY bonds. Junk valuations are at best, fair to somewhat overvalued. (Chart: current junk yields are lowest in 28 months.) Junk is completing a 7-week run of gains. Junk default rates have peaked already and are on their way down.
There's an HYG chart you might take a look at. It got past me.
https://www.bloomberg.com/news/videos/2024-10-11/bloomberg-real-yield-10-11-2024
What to do? What to do? Mixed data signals make for iffy decisions about rate expectations, and whether to be short or in the belly, or to go long with bonds.
Further into debt, as promised by both Harris and Trump; one much worse than the other. (But will this country ever wake up and recognize the mountain of debt already hanging over our heads?)
S. Basak kept it interesting. Not too much to work with.
https://www.bloomberg.com/news/videos/2024-10-18/bloomberg-real-yield-10-18-2024-video
...Good idea for bond investors to extend duration, but not out to the far end.
Suggested: single-B Loans. "Not for upside, but for Carry."
Rate cuts? Unknowns re: Trump policies.
Vonnie Quinn is in as guest host. I'm Irish, but her brogue drives me up the wall. "What? What did you say???"
https://www.bloomberg.com/news/videos/2024-11-22/bloomberg-real-yield-11-22-2024-video
Will Trump fire Powell? No. Rate cuts? Fewer. But Kurt Reiman of UBS would like to see more cuts, into and through 2025. By the end of '25, the dollar should be lower.
Then, there is a tactical discussion about spreads and yields.
Holiday-shortened week, next week. Thanksgiving.
oksana aranov. economy is chugging along. rate cuts will just set the table for more inflation. november jobs report shows a healthy labor market, and it's been this way for months, apart from the hurricane month in october, of course. the fed doesn't even know where its neutral rate is.
cleveland fed chair hammack says we're at or near the time when rate cuts need to be slowed or stopped.
gargi chaudhuri. no reason to own bonds further out in duration than 5-7 years. own the belly.
investment grade vs. junk are at historic tights.
really? my core-plus fund offers me yield of 5.17%. My junk spews at me monthly with 7.33%. more than two percent better. throw enough benjamins in there and the difference is meaningful.
(starting in 1998) are compared in the M* Fund Investor newsletter each month.
Current
(11-30-24) 1.95
Last Month
(10-31-24) 2.12
A Year Ago
(11-30-23) 2.74
High
10.71
Low
1.96
Average
3.74
https://www.bloomberg.com/news/videos/2024-12-13/bloomberg-real-yield-12-13-2024-video
The Market is virtually certain of a .25% rate cut this month from The Fed.
Rick Rieder: back end of the curve is not worth it. Expect volatility.
Do we get a cut, and, as has been the case, do yields keep going HIGHER? The front end should stay put, or "pegged." The long end will be range-bound in the 1st quarter of '25, perhaps up to 4.5%.
"Fiscal adventurism" coming next year. Watch for the prospect of pressure on the labor force if deportations get going. The WORD will be uncertainty.... What about overseas developed bonds? Europe, especially: fiscal expansionism won't be "the story." Austerity to any degree is the opposite of what we should expect HERE. Currency hedge with Gilts and in Japan are relatively attractive.
Past week was 2nd-busiest of the year with credit issuance. TD (fresh off a not very old news story about it being lax to prevent money laundering---) was one of the "leaders." Tighter spreads will continue and be even more pronounced. Triple-Cs GAINED for a 4th week. Credit spreads are at a 3-year low.
Not much to say from me, this time. Good conversations, but no surprises. Junk still looks good. Also leveraged loans, bank loans. Stay very short on duration.