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Just wondering : Instead of going with a CD or treasury for two years, investing in equities? As of now one CD for 1 year & 2 Treasuries, 1 year, & 1- 2 year maturities. Currently 7 CD's or Treasures coming due through 5/1/23.
Can anyone see interest bearing instruments bearing close to 5% for much longer ? Fed meeting in Feb. will probably set the plate for 2023.
@Derf, Equities carry different risk from those of CDs and treasuries. Value and dividend oriented stocks may have lowered risk. One thing for sure, tech stocks are still expensive as they continue to fail in meeting earning expectation. If recession strikes, all bets are off.
Right now the yield curve is inverted favoring the shorter end of treasuries over say 2 to 10 year T bills. The sweet spot is at 26 week, yielding 4.6-4.7% at auction. If this pattern holds in coming months, you can consider buying 13 and 26 weeks T bills every two to 4 weeks just as your CDs and treasuries mature.
Many brokered CDs have felled below 4.7% for one year, non-callable. Think many investors are catching to this as these CDs are gone within days.
Let’s hope the inflation has slowed and Jan/Feb 2023 rate hike would stay at 50 bps or evev at 25 bps.
GULP !!! Well, I was hoping for a full on BOND rally in the last week of this year. Oh, well; couldn't expect to recover 13% average losses in plain jane, broad-based bond funds in this last week of this business year, with two holidays and shortened trading periods. Bonds in all durations gave back some gains from recent weeks. Bonds, yields, inflation continue to be discussed in various threads; which will impact bond pricing going forward. I've nothing constructive to add this week; and will await the mood swings of the global cash flows of the big players and their 'bets', going into the New Year of mystery. NOTE: Relative to bonds and no market support in 2022; a 50/50 mix of a broad based U.S. equity index and a broad based U.S. bond index had a combined total return of -16.32 % for 2022. The indexes I used are VITPX and VBMPX ,which are inside a 529 college account.
---Several selected bond funds returns since October 25, 2022. I'll retain this date, as it is a recent inflection point when bonds began to have positive price moves. We'll need to watch if this was just a 'blip'.
NOTE: I've kept the prior dated reports in the beginning of this thread; and have added YTD to this data.
For the WEEK/YTD, NAV price changes, December 26 - December 30, 2022
--- AGG = -1% / -13.02% (I-Shares Core bond etf) widely used bond benchmark, (AAA-BBB holdings) --- MINT = -.01% / -1% (PIMCO Enhanced short maturity, AAA-BBB rated) --- SHY = -.18% / -3.88% (UST 1-3 yr bills) --- IEI = -.58% / -9.5% (UST 3-7 yr notes/bonds) --- IEF = -1% / -15.2% (UST 7-10 yr bonds) --- TIP = -.46% / -12.2% (UST Tips, 3-10 yrs duration, some 20+ yr duration) --- STPZ = -.22% / -4.47% (UST, short duration TIPs bonds, PIMCO) --- LTPZ = -1.1% / -31.7% (UST, long duration TIPs bonds, PIMCO) --- TLT = -2.55% / -31.2% (I shares 20+ Yr UST Bond --- EDV = -3.3% / -39.2% (UST Vanguard extended duration bonds) --- ZROZ = -3.67 / -41.3% (UST., AAA, long duration zero coupon bonds, PIMCO --- TBT = +5.4% / +93.3% (ProShares UltraShort 20+ Year Treasury (about 23 holdings) --- TMF = -7.9/ -72.6% (Direxion Daily 20+ Yr Trsy Bull 3X ETF (about a 3x version of EDV etf) --- BAGIX = -.58% / -13.35% (active managed, plain vanilla, high quality bond fund) *** Other, for reference: --- HYG = -1% / -11% (high yield bonds, proxy ETF) --- LQD = -1.52% / -17.9% (corp. bonds, various quality) --- FZDXX = 4.26% yield (7 day), Fidelity Premium MMKT fund
*** FZDXX yield was .11%, April,2022. The rate of rise in the yield remained flat this week.
From Whitman: “The ship has weather’d every rack …”
Owning bonds / bond funds felt like “bow-shock” aboard ship or plane all year long. The talking heads and market gurus I monitor mostly speak optimistically of a splendid 2023 for longer dated bonds. In particular, Rick Rieder of Blackrock appears to have trouble “containing” himself during interviews on this point. We shall see. I had plans to pull some $$ from PRIHX about now after having held it 3 years or more. But stinks so badly now that I won’t touch it. I’ll let the money “ferment” longer (like fine wine) and hopefully recoup this year’s losses some day.
Yes, I'm still holding my bond funds into '23. TUHYX and PRCPX. Same logic as @hank above. I hit a personal, psychological dollar-limit in TUHYX, so I opened up a position in the other one. Still holding financials via PRISX, but at quite a reduced size.... Happy New Year. Overcast here this morning, but no rain predicted. At 8:27, we've got 73 degrees. We live right behind the hospital building, which is behind this church, though that's not "my" church. The hospital has the orange color on its top edge.
2022 - When Stock-Bond Allocations Failed to Protect
The yearend data are in. It was a terrible year for both stocks (the worst since 2008 GFC) and bonds (the worst ever), and so for the 60-40 hybrids (the worst since 1937; #3 worst since the 1928 Great Crash).
Thanks for the chart! Rough year for balanced funds for sure.
Many of my colleagues invested in target date funds and they were surprised by the level of loss they are having. They thought simply everything into one fund would be easier to manage. Some of them are near retirement. Ironically, stable value fund is available in our 401(k) plan.
--- Wednesday, January 4 --- Federal Reserve Bank of Minneapolis President Neel Kashkari said the US central bank has at least another percentage point of interest-rate increases to deliver in 2023 even as inflation, which he compared to Uber surge pricing, shows signs of slowing.
“It will be appropriate to continue to raise rates at least at the next few meetings until we are confident inflation has peaked,” Kashkari said in an essay published Wednesday on Medium.com.
“I have us pausing at 5.4%, but wherever that end point is, we won’t immediately know if it is high enough to bring inflation back down to 2% in a reasonable period of time,”
Catch says, "Good luck with that 2% thingy, and that not too many 'things' become broken during the journey to that place".
---Friday, January 6. There were so many data reports issued this week, that I would need to hire a 'staffer' to keep track. Read the current Bloomberg Real Yield thread for information. Anyhoo, the equity and bond markets were smiling at midday. Perhaps both markets are OD'd (over done) at this time. We'll find what holds, eh? Perhaps none of this matters right now; pending the vote on raising the government debt ceiling to keep the U.S. finances moving along.
-"Predicting the future is always a waste of time; but preparing for it, makes sense", Mark Okada-
Worth a view for your brain cells, the below, with Mark Okada.
A sincere thank you to Devesh Shah @Devo for his fine write regarding TIPS, and VTIP, in particular; in the January commentary, to help us better understand another potential investment path. I've added VTIP to the bond performance list.
---Several selected bond funds returns since October 25, 2022. I'll retain this date, as it is a recent inflection point when bonds began to have positive price moves. We'll need to watch if this was just a 'blip'.
NOTE: I've kept the prior dated reports in the beginning of this thread; and have added YTD to this data.
For the WEEK/YTD, NAV price changes, January 2 - January 6, 2023
***** No love for short term issues this week.....
--- AGG = +2.2% / +2.2% (I-Shares Core bond etf) widely used bond benchmark, (AAA-BBB holdings) --- MINT = +.25% / +.25% (PIMCO Enhanced short maturity, AAA-BBB rated) --- SHY = +.43% / +.43% (UST 1-3 yr bills) --- IEI = +1.4% / +1.4% (UST 3-7 yr notes/bonds) --- IEF = +2.7% / +2.7% (UST 7-10 yr bonds) --- TIP = +1.4% / +1.4% (UST Tips, 3-10 yrs duration, some 20+ yr duration) --- VTIP = +.21% / +.21% (Vanguard Short-Term Infl-Prot Secs ETF) --- STPZ = +.32% / +.32% (UST, short duration TIPs bonds, PIMCO) --- LTPZ = +4.7% / +4.7% (UST, long duration TIPs bonds, PIMCO) --- TLT = +5.6% / +5.6% (I shares 20+ Yr UST Bond --- EDV = +7.5% / +7.5% (UST Vanguard extended duration bonds) --- ZROZ = +8.3 / +8.3% (UST., AAA, long duration zero coupon bonds, PIMCO --- TBT = -10.3% / -10.3% (ProShares UltraShort 20+ Year Treasury (about 23 holdings) --- TMF = +17.2% / +17.2% (Direxion Daily 20+ Yr Trsy Bull 3X ETF (about a 3x version of EDV etf) --- BAGIX = +1.77% / +1.77% (active managed, plain vanilla, high quality bond fund) *** Other, for reference: --- HYG = +2.6% / +2.6% (high yield bonds, proxy ETF) --- LQD = +3% / +3% (corp. bonds, various quality) --- FZDXX = 4.26% yield (7 day), Fidelity Premium MMKT fund
*** FZDXX yield was .11%, April,2022. The rate of rise in the yield remained flat again this week.
Comments and corrections, please. Remain curious, Catch
I agree the Mark Okada interview was worthwhile. Mr. Okada believes labor shortages will persist leading to higher Fed Funds rates for longer. He was enthusiastic for AAA CLOs and also liked certain high-quality corporate bonds.
Dont' Worry, Be Happy; as the song lyric goes.....at least so far for this young year in BondLand. So many here provide timely information regarding a forms of investing, that it is, at times; difficult to find something else. Thank you. Less work for me, when free time is at a premium.
One supposes the 'debt ceiling' battle could be of consequence. Check the current thread, as provided by Lewis, for more insights. I'm sure many of us will be watching to discover the 'affects'.
Again for this week, please see the Real Yield thread here; as to what some 'pundits' think about 'yields', now and going forward.
I'm sure most are aware of MMKT yields in the standard accounts you hold, and I suppose the yields are similar for most fund houses; with Fidelity's MMKT's having a yield of about 3.9%. Not beating inflation, but a large spread over a standard bank or CU savings or checking account yield. The banks/CU's should be making a decent profit between what they're paying for deposits, versus what they're loaning the money for cars, etc.
An overview of the recent CPI and all related may be found here. Thanks, AndyJ.
Relative to the below performance info for this week: All bond returns in the list were positive this week; however short term and TIPS related were not in favor for positive cash flows. Several bond sectors have YTD returns as good as, or better than some U.S. equity sectors. ----------------------------------------------------------------------------------------------------------------------------------------
---Several selected bond funds returns since October 25, 2022. I'll retain this date, as it is a recent inflection point when bonds began to have positive price moves. We'll need to watch if this was just a 'blip'.
NOTE: I've kept the prior dated reports in the beginning of this thread; and have added YTD to this data.
For the WEEK/YTD, NAV price changes, January 9 - January 13, 2023
***** AGAIN, No love for short term issues this week.....
--- AGG = +.84% / +3% (I-Shares Core bond etf) widely used bond benchmark, (AAA-BBB holdings) --- MINT = +.18% / +.44% (PIMCO Enhanced short maturity, AAA-BBB rated) --- SHY = +.15% / +.58% (UST 1-3 yr bills) --- IEI = +.55% / +1.95% (UST 3-7 yr notes/bonds) --- IEF = +.62% / +3.35% (UST 7-10 yr bonds) --- TIP = +.25% / +1.63% (UST Tips, 3-10 yrs duration, some 20+ yr duration) --- VTIP = +.23% / +.45% (Vanguard Short-Term Infl-Prot Secs ETF) --- STPZ = +.16% / +.48% (UST, short duration TIPs bonds, PIMCO) --- LTPZ = +.07% / +4.8% (UST, long duration TIPs bonds, PIMCO) --- TLT = +1.5% / +7.2% (I shares 20+ Yr UST Bond --- EDV = +2.15% / +9.8% (UST Vanguard extended duration bonds) --- ZROZ = +2.12 / +10.6% (UST., AAA, long duration zero coupon bonds, PIMCO --- TBT = -3.12% / -13.1% (ProShares UltraShort 20+ Year Treasury (about 23 holdings) --- TMF = +4.26% / +22.2% (Direxion Daily 20+ Yr Trsy Bull 3X ETF (about a 3x version of EDV etf) --- BAGIX = +1.02% / +2.81% (active managed, plain vanilla, high quality bond fund) *** Other, for reference: --- HYG = +1.5% / +4.1% (high yield bonds, proxy ETF) --- LQD = +1.72% / +4.8% (corp. bonds, various quality) --- FZDXX = 4.27% yield (7 day), Fidelity Premium MMKT fund
*** FZDXX yield was .11%, April,2022. The rate of rise in the yield remained flat again this week.
Comments and corrections, please. Remain curious, Catch
I posted in early 11/2022 that the turnaround in bonds started....1) Bad losses should turn to a nice rebound 2) we can see the end of rate increase, no need to wait 3) the charts/uptrend gave a clear signal 4) Inflation starts to go down). I went from investing under 1% to 99+%. I also posted that HY Munis is my favorite category and gave ORNAX as an example. Schwab lets you buy Muni funds in IRA while Fidelity doesn't. Basically, since 11/2022, all my money is in HY Muni in 2 funds.
@FD1000 - Here’s what I wrote in this same thread on 1/1/23 …
”The talking heads and market gurus I monitor mostly speak optimistically of a splendid 2023 for longer dated bonds. In particular, Rick Rieder of Blackrock appears to have trouble ‘containing’ himself during interviews on this point.”
So I and Rieder might have gotten out in front of your freaking genius prediction. Can’t tell here what date you made your call. Your reference to date currently reads: “I posted in early 11/2022”. The number “11” would indicate late in 2022 (not early). No longer share my own market views, so can’t give my take on the present investment environment. But Rick Rieder, referenced above, is a pretty sharp bond dude.
Should add:
- The issue of whether someone investing for retirement wants to allocate 100% of their long-term money into government bonds (or any other type of bond) remains an open question - and something I’m not going to comment on.
- A mere mere 2.5 weeks into a new year is a very short time to assess that year’s total performance of any asset class.
I posted in early 11/2022 that the turnaround in bonds started....1) Bad losses should turn to a nice rebound 2) we can see the end of rate increase, no need to wait 3) the charts/uptrend gave a clear signal 4) Inflation starts to go down). I went from investing under 1% to 99+%. I also posted that HY Munis is my favorite category and gave ORNAX as an example. Schwab lets you buy Muni funds in IRA while Fidelity doesn't. Basically, since 11/2022, all my money is in HY Muni in 2 funds.
thx @Davidrmoran / So he posted the prediction in early November of last year? (Didn’t seem that far back). ORNAX bottomed on October 27, 2022. A very good call on FD’s part if the early November date is correct ? ?
Here’s what FD1000 wrote 1/2/2023 - “I will invest hugely in bond OEFs in 2023, as I have done in the last several years.But, I must see an uptrend to be invested. I think 2023 will be a good year. You can make several % more in managed bond fund, this is where they shine. Think DODIX for higher rated bonds, HY Munis and good Multi (where I find my best ideas). I made 9.7% in 2022, mostly in 3 HY munis trades. See ORNAX (chart). The 3 trades were several days in May + July and several weeks in Nov. All are based on T/A.”
Looking at his January 2 post it appears FD is claiming that he invested in ORNAX 2 months earlier (about when it turned up). Is anyone looking for that early November ‘22 post by FD? I can’t seem to dig it up.
@FD1000 - I don’t visit other boards. MFO is the best by far.
So if you want to claim credit here for predictions you made months earlier it seems only reasonable that you also post those predictions here at the time you make them.
And the MFO post you just put up is nearly 3 years old (February 2020).
@FD1000 - I don’t visit other boards. MFO is the best by far.
So if you want to claim credit here for predictions you made months earlier it seems only reasonable that you also post those predictions here at the time you make them.
I left that other board after a short period, myself: censorship.
Stuck In The Middle With You, Stealers Wheel, 1972, a partial lyric for Congress.
'Clowns to the left of me Jokers to the right Here I am stuck in the middle with you'
While it would be highly likely that a debt ceiling impasse would affect bonds of all flavors, no secret with this thought, I suspect; one may wonder what the path will be until the dust settles. Bond holdings at this house will remain, as we can't guess what will be. The vast majority of Congress enjoy the debt, eh? Spending OPM (other peoples money) is ultimate power of high political office; 'a look what I've done for you', even if it's a 'bridge to nowhere'.
--- Wednesday, BOJ.....has been fiddling with yield curve since Dec. of 2022. They wanted to maintain a base yield on the BOJ 10 year bond. This attempt has kinda gone 'poof' as global traders have other concerns for inflation in Japan. The thinking has been that a higher10 year yield would repatriate Japanese monies, as well as other potential monies into the Japanese bond market; which would draw these monies away for other foreign bond investments, which would include the U.S. bond market. Well, today finds a large downward move in U.S. yields, as folks apparently want UST and related again, and/or still.
--- Wednesday, weaker retail sales and PPI data. As well as thoughts 'again' about a mild U.S. recession.
--- Wednesday. For a small dot of time in the investing time frame, IG bonds performed as they 'should' when equity takes a 'whack'.
Read the current Real Yield thread for other details, that may or may not provide any clarity.
The other days of the week found me away from the 'desk'.
Relative to the below performance info for this week: Most bond returns in the list were positive this week; with a few longer term duration with profit taking(?) . Several bond sectors remain with YTD returns as good as, or better than some U.S. equity sectors. ----------------------------------------------------------------------------------------------------------------------------------------
---Several selected bond funds returns since October 25, 2022. I'll retain this date, as it is a recent inflection point when bonds began to have positive price moves. We'll need to watch if this was just a 'blip'.
NOTE: I've kept the prior dated reports in the beginning of this thread; and have added YTD to this data.
For the WEEK/YTD, NAV price changes, January 16 - January 20, 2023
***** AGAIN, this week, FZDXX, MMKT yield has remained at 4.27% for one month. The core Fidelity MMKT's have continued a slow creep upward to about 3.95%. The holdings of these different funds account for the variances at this time.
--- AGG = +.17% / +3.2% (I-Shares Core bond etf) widely used bond benchmark, (AAA-BBB holdings) --- MINT = +.23% / +.44% (PIMCO Enhanced short maturity, AAA-BBB rated) --- SHY = +.15% / +.67% (UST 1-3 yr bills) --- IEI = +.2% / +2.16% (UST 3-7 yr notes/bonds) --- IEF = +.18% / +3.5% (UST 7-10 yr bonds) --- TIP = +.44% / +2.08% (UST Tips, 3-10 yrs duration, some 20+ yr duration) --- VTIP = +.26% / +.71% (Vanguard Short-Term Infl-Prot Secs ETF) --- STPZ = +.3% / +.78% (UST, short duration TIPs bonds, PIMCO) --- LTPZ = +.61% / +5.43% (UST, long duration TIPs bonds, PIMCO) --- TLT = -.52% / +6.7% (I shares 20+ Yr UST Bond --- EDV = -1% / +8.7% (UST Vanguard extended duration bonds) --- ZROZ = -1.67 / +8.8% (UST., AAA, long duration zero coupon bonds, PIMCO --- TBT = +.92% / -12.3% (ProShares UltraShort 20+ Year Treasury (about 23 holdings) --- TMF = -2.15% / +19.6% (Direxion Daily 20+ Yr Trsy Bull 3X ETF (about a 3x version of EDV etf) --- BAGIX = +.2% / +3.02% (active managed, plain vanilla, high quality bond fund) *** Other, for reference: --- HYG = -.6% / +3.5% (high yield bonds, proxy ETF) --- LQD = +.07% / +4.9% (corp. bonds, various quality) --- FZDXX = 4.27% yield (7 day), Fidelity Premium MMKT fund
*** FZDXX yield was .11%, April,2022. The rate of rise in the yield remained flat again this week.
Comments and corrections, please. Remain curious, Catch
Is there a particular spot in the 10-year treasury yield that might be advantageous for buying or selling if one were predisposed to timing? (speaking of investment grade intermediate term bonds). ISTM perhaps 3.5% might be in the ballpark - the “sweet spot” so to speak.
In December the 10-year peaked around 4.33% but then receded to under 3.4% early this month. Interestingly, that drop in rates to below 3.4% appeared to spark some interest in buying on the board / likely elsewhere. But then late in the week it spiked back up sharply to 3.48%. That degree of fluctuation in rates may not sound like much, but can lead to significant gains or losses for anyone “playing” the bond market.
I submit the question merely as a curiosity. Not seeking or offering investment advice.
@hank This is a one year chart of the 10 year UST. You may hover the cursor on the graph line to see the yield displayed for a date(s) area. You may also change the 250 day range at the bottom right of the chart with a 'right click' onto the 250 day. This will provide several range choices, or double click the 250 days and enter the number of days you want to display. BUT, I can't pick a particular 'yield sweet spot'; other than what appeared to be and is still in place for a short term top in the yield around October 25 that has held for 3 months. Going forward and for how long will the yield decrease??? Magic 8 Ball cracked. The IEF etf is the closest fit for 10 year UST, at least relative to an easily traded etf. IEF has a return of 5.94% since October 25, 2022.
Oh no! Just tossed out a guessing game if anyone has an opinion. If one was trying to trade the 10-year or other bond (or related fund) of high quality / intermediate duration, where on the rate curve would they be inclined to buy and at what rate would they be inclined to sell? My question assumes bonds will stay in some sort of trading range for a considerable length of time. Of course, that assumption might not be correct. Could be a “one-way street” (up or down) for rates, I suppose.
The instrument used? Yes, it would likely be an ETF of some sort. Mutual funds wouldn’t work as well because of trading restrictions / fees - though if held directly at some fund houses you probably could trade on a 30-day basis without running amuck of the rules. Would depend in part on the amount. They’re most concerned with the big players.
Thanks @catch22 for all your excellent reporting on bonds.
For Treasuries, I chose TIPS. At SCHP. Schwab. Rock bottom ER. 12-month yield is 7.2%, but what is the average duration in the fund? Ah, that's the key.
There's a goodly chunk of 1-3 years in there, followed closely by a slightly smaller chunk at 3-5 years. So, no one there is betting the farm on the long stuff, though there is a tranche, much smaller, at 10-20 years. And in between a not small portion with 5-7 year maturities. Guess they wanted to cover the waterfront. OK by me. Spread it out, some. Flexibility, yes? AAA-rated, of course.
But I can't find a portfolio turnover statistic. This is very new money for us--- just got in a week or two ago.
@Crash SCHP portfolio tab at M* Scroll down to the 'holdings' area for turnover, which is reported at 19%. This is within the normal range for similar funds with less than 50 holdings, with varying maturies.
Comments
Today, there are many choices. If you willing to go a bit longer in duration, treasury bills are yielding a bit more. As of 12/23/22, the 13 weeks (4.34%), 26 weeks (4.67%) and 52 weeks (4.66%).
https://home.treasury.gov/resource-center/data-chart-center/interest-rates/TextView?type=daily_treasury_yield_curve&field_tdr_date_value_month=202212
Brokered CDs are offered attractive yields too at your brokerages.
Currently 7 CD's or Treasures coming due through 5/1/23.
Can anyone see interest bearing instruments bearing close to 5% for much longer ?
Fed meeting in Feb. will probably set the plate for 2023.
Just my 2 cents, Derf
Equities carry different risk from those of CDs and treasuries. Value and dividend oriented stocks may have lowered risk. One thing for sure, tech stocks are still expensive as they continue to fail in meeting earning expectation. If recession strikes, all bets are off.
Right now the yield curve is inverted favoring the shorter end of treasuries over say 2 to 10 year T bills. The sweet spot is at 26 week, yielding 4.6-4.7% at auction. If this pattern holds in coming months, you can consider buying 13 and 26 weeks T bills every two to 4 weeks just as your CDs and treasuries mature.
Many brokered CDs have felled below 4.7% for one year, non-callable. Think many investors are catching to this as these CDs are gone within days.
Let’s hope the inflation has slowed and Jan/Feb 2023 rate hike would stay at 50 bps or evev at 25 bps.
NOTE: Relative to bonds and no market support in 2022; a 50/50 mix of a broad based U.S. equity index and a broad based U.S. bond index had a combined total return of -16.32 % for 2022. The indexes I used are VITPX and VBMPX ,which are inside a 529 college account.
---Several selected bond funds returns since October 25, 2022. I'll retain this date, as it is a recent inflection point when bonds began to have positive price moves. We'll need to watch if this was just a 'blip'.
NOTE: I've kept the prior dated reports in the beginning of this thread; and have added YTD to this data.
For the WEEK/YTD, NAV price changes, December 26 - December 30, 2022
--- AGG = -1% / -13.02% (I-Shares Core bond etf) widely used bond benchmark, (AAA-BBB holdings)
--- MINT = -.01% / -1% (PIMCO Enhanced short maturity, AAA-BBB rated)
--- SHY = -.18% / -3.88% (UST 1-3 yr bills)
--- IEI = -.58% / -9.5% (UST 3-7 yr notes/bonds)
--- IEF = -1% / -15.2% (UST 7-10 yr bonds)
--- TIP = -.46% / -12.2% (UST Tips, 3-10 yrs duration, some 20+ yr duration)
--- STPZ = -.22% / -4.47% (UST, short duration TIPs bonds, PIMCO)
--- LTPZ = -1.1% / -31.7% (UST, long duration TIPs bonds, PIMCO)
--- TLT = -2.55% / -31.2% (I shares 20+ Yr UST Bond
--- EDV = -3.3% / -39.2% (UST Vanguard extended duration bonds)
--- ZROZ = -3.67 / -41.3% (UST., AAA, long duration zero coupon bonds, PIMCO
--- TBT = +5.4% / +93.3% (ProShares UltraShort 20+ Year Treasury (about 23 holdings)
--- TMF = -7.9/ -72.6% (Direxion Daily 20+ Yr Trsy Bull 3X ETF (about a 3x version of EDV etf)
--- BAGIX = -.58% / -13.35% (active managed, plain vanilla, high quality bond fund)
*** Other, for reference:
--- HYG = -1% / -11% (high yield bonds, proxy ETF)
--- LQD = -1.52% / -17.9% (corp. bonds, various quality)
--- FZDXX = 4.26% yield (7 day), Fidelity Premium MMKT fund
*** FZDXX yield was .11%, April,2022. The rate of rise in the yield remained flat this week.
Remain curious,
Catch
From Whitman: “The ship has weather’d every rack …”
Owning bonds / bond funds felt like “bow-shock” aboard ship or plane all year long. The talking heads and market gurus I monitor mostly speak optimistically of a splendid 2023 for longer dated bonds. In particular, Rick Rieder of Blackrock appears to have trouble “containing” himself during interviews on this point. We shall see. I had plans to pull some $$ from PRIHX about now after having held it 3 years or more. But stinks so badly now that I won’t touch it. I’ll let the money “ferment” longer (like fine wine) and hopefully recoup this year’s losses some day.
You really need a sense of humor to invest today.
ALOHA!
The yearend data are in. It was a terrible year for both stocks (the worst since 2008 GFC) and bonds (the worst ever), and so for the 60-40 hybrids (the worst since 1937; #3 worst since the 1928 Great Crash).
https://ybbpersonalfinance.proboards.com/post/883/thread
Many of my colleagues invested in target date funds and they were surprised by the level of loss they are having. They thought simply everything into one fund would be easier to manage. Some of them are near retirement. Ironically, stable value fund is available in our 401(k) plan.
--- Wednesday, January 4
--- Federal Reserve Bank of Minneapolis President Neel Kashkari said the US central bank has at least another percentage point of interest-rate increases to deliver in 2023 even as inflation, which he compared to Uber surge pricing, shows signs of slowing.
“It will be appropriate to continue to raise rates at least at the next few meetings until we are confident inflation has peaked,” Kashkari said in an essay published Wednesday on Medium.com.
“I have us pausing at 5.4%, but wherever that end point is, we won’t immediately know if it is high enough to bring inflation back down to 2% in a reasonable period of time,”
Catch says, "Good luck with that 2% thingy, and that not too many 'things' become broken during the journey to that place".
---Friday, January 6. There were so many data reports issued this week, that I would need to hire a 'staffer' to keep track. Read the current Bloomberg Real Yield thread for information. Anyhoo, the equity and bond markets were smiling at midday. Perhaps both markets are OD'd (over done) at this time. We'll find what holds, eh? Perhaps none of this matters right now; pending the vote on raising the government debt ceiling to keep the U.S. finances moving along.
-"Predicting the future is always a waste of time; but preparing for it, makes sense", Mark Okada-
Worth a view for your brain cells, the below, with Mark Okada.
Mark Okada, IG Bonds, Thursday, January 5, 8:38 minutes video
A sincere thank you to Devesh Shah @Devo for his fine write regarding TIPS, and VTIP, in particular; in the January commentary, to help us better understand another potential investment path. I've added VTIP to the bond performance list.
---Several selected bond funds returns since October 25, 2022. I'll retain this date, as it is a recent inflection point when bonds began to have positive price moves. We'll need to watch if this was just a 'blip'.
NOTE: I've kept the prior dated reports in the beginning of this thread; and have added YTD to this data.
For the WEEK/YTD, NAV price changes, January 2 - January 6, 2023
***** No love for short term issues this week.....
--- AGG = +2.2% / +2.2% (I-Shares Core bond etf) widely used bond benchmark, (AAA-BBB holdings)
--- MINT = +.25% / +.25% (PIMCO Enhanced short maturity, AAA-BBB rated)
--- SHY = +.43% / +.43% (UST 1-3 yr bills)
--- IEI = +1.4% / +1.4% (UST 3-7 yr notes/bonds)
--- IEF = +2.7% / +2.7% (UST 7-10 yr bonds)
--- TIP = +1.4% / +1.4% (UST Tips, 3-10 yrs duration, some 20+ yr duration)
--- VTIP = +.21% / +.21% (Vanguard Short-Term Infl-Prot Secs ETF)
--- STPZ = +.32% / +.32% (UST, short duration TIPs bonds, PIMCO)
--- LTPZ = +4.7% / +4.7% (UST, long duration TIPs bonds, PIMCO)
--- TLT = +5.6% / +5.6% (I shares 20+ Yr UST Bond
--- EDV = +7.5% / +7.5% (UST Vanguard extended duration bonds)
--- ZROZ = +8.3 / +8.3% (UST., AAA, long duration zero coupon bonds, PIMCO
--- TBT = -10.3% / -10.3% (ProShares UltraShort 20+ Year Treasury (about 23 holdings)
--- TMF = +17.2% / +17.2% (Direxion Daily 20+ Yr Trsy Bull 3X ETF (about a 3x version of EDV etf)
--- BAGIX = +1.77% / +1.77% (active managed, plain vanilla, high quality bond fund)
*** Other, for reference:
--- HYG = +2.6% / +2.6% (high yield bonds, proxy ETF)
--- LQD = +3% / +3% (corp. bonds, various quality)
--- FZDXX = 4.26% yield (7 day), Fidelity Premium MMKT fund
*** FZDXX yield was .11%, April,2022. The rate of rise in the yield remained flat again this week.
Comments and corrections, please.
Remain curious,
Catch
Mr. Okada believes labor shortages will persist leading to higher Fed Funds rates for longer.
He was enthusiastic for AAA CLOs and also liked certain high-quality corporate bonds.
So many here provide timely information regarding a forms of investing, that it is, at times; difficult to find something else. Thank you. Less work for me, when free time is at a premium.
One supposes the 'debt ceiling' battle could be of consequence. Check the current thread, as provided by Lewis, for more insights. I'm sure many of us will be watching to discover the 'affects'.
Again for this week, please see the Real Yield thread here; as to what some 'pundits' think about 'yields', now and going forward.
I'm sure most are aware of MMKT yields in the standard accounts you hold, and I suppose the yields are similar for most fund houses; with Fidelity's MMKT's having a yield of about 3.9%. Not beating inflation, but a large spread over a standard bank or CU savings or checking account yield. The banks/CU's should be making a decent profit between what they're paying for deposits, versus what they're loaning the money for cars, etc.
An overview of the recent CPI and all related may be found here. Thanks, AndyJ.
Relative to the below performance info for this week: All bond returns in the list were positive this week; however short term and TIPS related were not in favor for positive cash flows. Several bond sectors have YTD returns as good as, or better than some U.S. equity sectors.
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---Several selected bond funds returns since October 25, 2022. I'll retain this date, as it is a recent inflection point when bonds began to have positive price moves. We'll need to watch if this was just a 'blip'.
NOTE: I've kept the prior dated reports in the beginning of this thread; and have added YTD to this data.
For the WEEK/YTD, NAV price changes, January 9 - January 13, 2023
***** AGAIN, No love for short term issues this week.....
--- AGG = +.84% / +3% (I-Shares Core bond etf) widely used bond benchmark, (AAA-BBB holdings)
--- MINT = +.18% / +.44% (PIMCO Enhanced short maturity, AAA-BBB rated)
--- SHY = +.15% / +.58% (UST 1-3 yr bills)
--- IEI = +.55% / +1.95% (UST 3-7 yr notes/bonds)
--- IEF = +.62% / +3.35% (UST 7-10 yr bonds)
--- TIP = +.25% / +1.63% (UST Tips, 3-10 yrs duration, some 20+ yr duration)
--- VTIP = +.23% / +.45% (Vanguard Short-Term Infl-Prot Secs ETF)
--- STPZ = +.16% / +.48% (UST, short duration TIPs bonds, PIMCO)
--- LTPZ = +.07% / +4.8% (UST, long duration TIPs bonds, PIMCO)
--- TLT = +1.5% / +7.2% (I shares 20+ Yr UST Bond
--- EDV = +2.15% / +9.8% (UST Vanguard extended duration bonds)
--- ZROZ = +2.12 / +10.6% (UST., AAA, long duration zero coupon bonds, PIMCO
--- TBT = -3.12% / -13.1% (ProShares UltraShort 20+ Year Treasury (about 23 holdings)
--- TMF = +4.26% / +22.2% (Direxion Daily 20+ Yr Trsy Bull 3X ETF (about a 3x version of EDV etf)
--- BAGIX = +1.02% / +2.81% (active managed, plain vanilla, high quality bond fund)
*** Other, for reference:
--- HYG = +1.5% / +4.1% (high yield bonds, proxy ETF)
--- LQD = +1.72% / +4.8% (corp. bonds, various quality)
--- FZDXX = 4.27% yield (7 day), Fidelity Premium MMKT fund
*** FZDXX yield was .11%, April,2022. The rate of rise in the yield remained flat again this week.
Comments and corrections, please.
Remain curious,
Catch
I went from investing under 1% to 99+%. I also posted that HY Munis is my favorite category and gave ORNAX as an example. Schwab lets you buy Muni funds in IRA while Fidelity doesn't.
Basically, since 11/2022, all my money is in HY Muni in 2 funds.
”The talking heads and market gurus I monitor mostly speak optimistically of a splendid 2023 for longer dated bonds. In particular, Rick Rieder of Blackrock appears to have trouble ‘containing’ himself during interviews on this point.”
So I and Rieder might have gotten out in front of your freaking genius prediction. Can’t tell here what date you made your call. Your reference to date currently reads: “I posted in early 11/2022”. The number “11” would indicate late in 2022 (not early). No longer share my own market views, so can’t give my take on the present investment environment. But Rick Rieder, referenced above, is a pretty sharp bond dude.
Should add:
- The issue of whether someone investing for retirement wants to allocate 100% of their long-term money into government bonds (or any other type of bond) remains an open question - and something I’m not going to comment on.
- A mere mere 2.5 weeks into a new year is a very short time to assess that year’s total performance of any asset class.
Here’s what FD1000 wrote 1/2/2023 - “I will invest hugely in bond OEFs in 2023, as I have done in the last several years.But, I must see an uptrend to be invested. I think 2023 will be a good year. You can make several % more in managed bond fund, this is where they shine. Think DODIX for higher rated bonds, HY Munis and good Multi (where I find my best ideas). I made 9.7% in 2022, mostly in 3 HY munis trades. See ORNAX (chart). The 3 trades were several days in May + July and several weeks in Nov. All are based on T/A.”
Looking at his January 2 post it appears FD is claiming that he invested in ORNAX 2 months earlier (about when it turned up). Is anyone looking for that early November ‘22 post by FD? I can’t seem to dig it up.
Keep reading until you get to a post saying "As promised, my posts about what I do would be late by weeks instead of days (you know why). Let's start from the end. My first "nibble" wasn't 1-2-5%, it was 20+% and within days I was in at 99+% first time after I sold early in 2022."
There are no longer posts within days of what I do, as I have done before. See this example
https://www.mutualfundobserver.com/discuss/discussion/55299/bond-mutual-funds-analysis-act-2/p2
So if you want to claim credit here for predictions you made months earlier it seems only reasonable that you also post those predictions here at the time you make them.
And the MFO post you just put up is nearly 3 years old (February 2020).
'Clowns to the left of me
Jokers to the right
Here I am stuck in the middle with you'
While it would be highly likely that a debt ceiling impasse would affect bonds of all flavors, no secret with this thought, I suspect; one may wonder what the path will be until the dust settles. Bond holdings at this house will remain, as we can't guess what will be.
The vast majority of Congress enjoy the debt, eh? Spending OPM (other peoples money) is ultimate power of high political office; 'a look what I've done for you', even if it's a 'bridge to nowhere'.
--- Wednesday, BOJ.....has been fiddling with yield curve since Dec. of 2022. They wanted to maintain a base yield on the BOJ 10 year bond. This attempt has kinda gone 'poof' as global traders have other concerns for inflation in Japan. The thinking has been that a higher10 year yield would repatriate Japanese monies, as well as other potential monies into the Japanese bond market; which would draw these monies away for other foreign bond investments, which would include the U.S. bond market. Well, today finds a large downward move in U.S. yields, as folks apparently want UST and related again, and/or still.
--- Wednesday, weaker retail sales and PPI data. As well as thoughts 'again' about a mild U.S. recession.
--- Wednesday. For a small dot of time in the investing time frame, IG bonds performed as they 'should' when equity takes a 'whack'.
Read the current Real Yield thread for other details, that may or may not provide any clarity.
The other days of the week found me away from the 'desk'.
Relative to the below performance info for this week: Most bond returns in the list were positive this week; with a few longer term duration with profit taking(?) . Several bond sectors remain with YTD returns as good as, or better than some U.S. equity sectors.
----------------------------------------------------------------------------------------------------------------------------------------
---Several selected bond funds returns since October 25, 2022. I'll retain this date, as it is a recent inflection point when bonds began to have positive price moves. We'll need to watch if this was just a 'blip'.
NOTE: I've kept the prior dated reports in the beginning of this thread; and have added YTD to this data.
For the WEEK/YTD, NAV price changes, January 16 - January 20, 2023
***** AGAIN, this week, FZDXX, MMKT yield has remained at 4.27% for one month. The core Fidelity MMKT's have continued a slow creep upward to about 3.95%. The holdings of these different funds account for the variances at this time.
--- AGG = +.17% / +3.2% (I-Shares Core bond etf) widely used bond benchmark, (AAA-BBB holdings)
--- MINT = +.23% / +.44% (PIMCO Enhanced short maturity, AAA-BBB rated)
--- SHY = +.15% / +.67% (UST 1-3 yr bills)
--- IEI = +.2% / +2.16% (UST 3-7 yr notes/bonds)
--- IEF = +.18% / +3.5% (UST 7-10 yr bonds)
--- TIP = +.44% / +2.08% (UST Tips, 3-10 yrs duration, some 20+ yr duration)
--- VTIP = +.26% / +.71% (Vanguard Short-Term Infl-Prot Secs ETF)
--- STPZ = +.3% / +.78% (UST, short duration TIPs bonds, PIMCO)
--- LTPZ = +.61% / +5.43% (UST, long duration TIPs bonds, PIMCO)
--- TLT = -.52% / +6.7% (I shares 20+ Yr UST Bond
--- EDV = -1% / +8.7% (UST Vanguard extended duration bonds)
--- ZROZ = -1.67 / +8.8% (UST., AAA, long duration zero coupon bonds, PIMCO
--- TBT = +.92% / -12.3% (ProShares UltraShort 20+ Year Treasury (about 23 holdings)
--- TMF = -2.15% / +19.6% (Direxion Daily 20+ Yr Trsy Bull 3X ETF (about a 3x version of EDV etf)
--- BAGIX = +.2% / +3.02% (active managed, plain vanilla, high quality bond fund)
*** Other, for reference:
--- HYG = -.6% / +3.5% (high yield bonds, proxy ETF)
--- LQD = +.07% / +4.9% (corp. bonds, various quality)
--- FZDXX = 4.27% yield (7 day), Fidelity Premium MMKT fund
*** FZDXX yield was .11%, April,2022. The rate of rise in the yield remained flat again this week.
Comments and corrections, please.
Remain curious,
Catch
In December the 10-year peaked around 4.33% but then receded to under 3.4% early this month. Interestingly, that drop in rates to below 3.4% appeared to spark some interest in buying on the board / likely elsewhere. But then late in the week it spiked back up sharply to 3.48%. That degree of fluctuation in rates may not sound like much, but can lead to significant gains or losses for anyone “playing” the bond market.
I submit the question merely as a curiosity. Not seeking or offering investment advice.
https://stockcharts.com/h-perf/ui?s=VGIT&compare=VCIT&id=p52114443552
This is a one year chart of the 10 year UST. You may hover the cursor on the graph line to see the yield displayed for a date(s) area. You may also change the 250 day range at the bottom right of the chart with a 'right click' onto the 250 day. This will provide several range choices, or double click the 250 days and enter the number of days you want to display.
BUT, I can't pick a particular 'yield sweet spot'; other than what appeared to be and is still in place for a short term top in the yield around October 25 that has held for 3 months. Going forward and for how long will the yield decrease??? Magic 8 Ball cracked.
The IEF etf is the closest fit for 10 year UST, at least relative to an easily traded etf.
IEF has a return of 5.94% since October 25, 2022.
Is an ETF trade what you are thinking about?
Oh no! Just tossed out a guessing game if anyone has an opinion. If one was trying to trade the 10-year or other bond (or related fund) of high quality / intermediate duration, where on the rate curve would they be inclined to buy and at what rate would they be inclined to sell? My question assumes bonds will stay in some sort of trading range for a considerable length of time. Of course, that assumption might not be correct. Could be a “one-way street” (up or down) for rates, I suppose.
The instrument used? Yes, it would likely be an ETF of some sort. Mutual funds wouldn’t work as well because of trading restrictions / fees - though if held directly at some fund houses you probably could trade on a 30-day basis without running amuck of the rules. Would depend in part on the amount. They’re most concerned with the big players.
Thanks @catch22 for all your excellent reporting on bonds.
There's a goodly chunk of 1-3 years in there, followed closely by a slightly smaller chunk at 3-5 years. So, no one there is betting the farm on the long stuff, though there is a tranche, much smaller, at 10-20 years. And in between a not small portion with 5-7 year maturities. Guess they wanted to cover the waterfront. OK by me. Spread it out, some. Flexibility, yes? AAA-rated, of course.
But I can't find a portfolio turnover statistic. This is very new money for us--- just got in a week or two ago.
SCHP portfolio tab at M*
Scroll down to the 'holdings' area for turnover, which is reported at 19%. This is within the normal range for similar funds with less than 50 holdings, with varying maturies.