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You are right. About tomorrow's auction, I inadvertently missed the stuff above the memorial day row. The 2 year looks tempting, given a lot of inflation data releases around the world next week.
ET (MLP) is still in the add-zone. Limit order is in for just several more shares. I also don't want to shoot myself in the foot and jack-up my cost basis needlessly.
...Still waiting for the glorious, special, spectacular TS dividend, due 22 May. Feces.
Bought a callable10 year Federal Agency bond in my Schwab IRA, yield 5.97%. Yield-to-call is 6.175%. First call is 2/24/25, which I assume will happen.
I've been playing the same callable game as @BaluBalu on these bonds, and they do readily get called. So, you have to check out the first call date to decide if it's worth it. This one was like buying an 8 month CD, in my mind.
Bought a callable10 year Federal Agency bond in my Schwab IRA, yield 5.97%. Yield-to-call is 6.175%. First call is 2/24/25, which I assume will happen.
I've been playing the same callable game as @BaluBalu on these bonds, and they do readily get called. So, you have to check out the first call date to decide if it's worth it. This one was like buying an 8 month CD, in my mind.
Why is the yield to call higher than yield (or coupon rate)?
I never bought Agencies at Schwab. May be I will do today. If it is not inconvenient, pl share the CUSIP.
Yield to call on bonds trading under par will always be higher, because it adds the percentage difference between purchase price and call price to the “yield” of the bond itself.
Bonds trading above par can have a yield to call less than coupon yield (unless first call is SEVERAL years out).
Thanks. This late in the rate cycle, if I need education on these basics, I need to be committed! I have not seen a single new Agency issued in the past year for anything other than par. I was asking for specifics related to the specific bond that makes Mike come up with those differences. See the request for CUSIP!
@BaluBalu, I typically go to Research - Bonds, CDs and Fixed Income and it defaults to the 'overview' page. That's where I look. I don't look for new issues. Not sure why that would matter if the yield you get is stated. But also, I may not know what I'm doing.
Farm Credit System 5.95% 05/24/2034 Callable CUSIP 3133ERFA4 Price -- 99.850 Current Yield -- 5.959% Yield To Maturity -- 5.970% Yield To Call -- 6.176% Yield To Worst -- 5.970% Call Details: Callable in whole or part Daily beginning 02/24/2025 with 5 days notice.
Issuer Name Federal Farm Credit Bks Cons Systemwide Bds Maturity Date 05/24/2034 Coupon Rate 5.950% Coupon Type Fixed Coupon Frequency Semi-annually Accrual Day Count 30/360 Dated Date 05/24/2024 First Settlement Date 05/24/2024 First Coupon Date 11/24/2024 Next Coupon Date 11/24/2024 DTC Eligible Yes Evaluated Price 99.6387
@BaluBalu- There's actually one more step to Mike's directions- as he said, go to Research - Bonds, CDs and Fixed Income, and then clicking on "Find Bonds & Fixed Income" takes you to a new "Find Bonds" page where you click "Bond Type" to select, in this case, "Agencies". Note that the "Bond Type" box is defaulted to "Corporates", so the "Agencies" option is not really obvious.
Thanks, Guys. I did try that way and New Issues is not a choice available for Agencies. But under Bond Type there is a choice for Recently Issued, which implies secondaries. There is a transaction fees for secondaries. I tried to speak with a fixed income specialist today and it felt like I was training her. I will call again on Wed and update you if I gather any insights.
@BaluBalu, to my knowledge, I've never paid a fee for a transaction for secondary agency bonds, treasuries or corporate bonds on that page. Last time this was brought up here, I went through all my buy history and there were no fees listed. If you hear otherwise please let me know. If hidden and not shown in transaction history, that would be a surprise to me. So that gets back to what yield am I actually getting after yield is reduced for the fee?
Edit Hi again @BaluBalu. I did a little research on the topic of transaction fees for fed agency secondary bonds. I think we both may be right. There is a transaction fee as you said. But per the info given below, the fee is shown inclusive in the yield shown. That would likely be why I never see a separate fee for the buy transaction.
The rates shown below are the best available to Schwab for each maturity range and product based on a $25,000 face value amount. Click on the individual rates for the bond details. Rates and yields are delayed 15 minutes, and yields displayed are inclusive of transaction fees.
Individual bonds - secondary trades $1 per bond online $10 minimum, $250 maximum online**
So that gets back to what yield am I actually getting after yield is reduced for the fee? The list of yields is confusing: Price -- 99.850 Current Yield -- 5.959% Yield To Maturity -- 5.970% Yield To Call -- 6.176% Yield To Worst -- 5.970% Coupon Rate 5.950%
All these yields are pretty good in relative measure, but it would be nice to know which is accurate. If you clarify this info, please email. I'm going to inquire also, hopefully through my local office.
@MikeM, None of the big brokerages I have access to, no fees is charged for Treasuries, New or Secondary. I did not look into why, as that is not important to me.
Based on your reply yesterday, you bought the secondaries below par. As you find out the differences in different yields, you may want to find out the difference between Price and Evaluated Price - I can guess but better to hear from the horse. .
Last week I sold DIVO from the IRA. I was concerned about the level of its DE ratio and the overweight in consumer cyclicals.
After looking at bond funds today, I stuck the proceeds in VRIG. I was unwilling to commit more to existing position in THOPX or FCFAX. Not even thinking about adding to anything much further out in duration. I may look a little harder at active preferred etf's.
I am now at 60/40 in the IRA. Never thought I'ld be there, but we're in different territory with ZIRP in the rearview mirror.
Last week I sold SCHD from the taxable. Today the proceeds went into FDVV. Bought SPHQ. Added to XMHQ and AMAGX since there was some cash left lying around after I exited a number of Vanguard CRSP-based indexes last fall.
Pretty much fully invested in the IRA, unless I sell some VRIG. Still lots of room in the taxable if opportunities present.
I'm away now until 12 June. Enjoy, everyone. 5 years since I've been "off the Rock." Of course, everything is in the crapper today. And somehow, the TS div. date has a new published day: 29th now, not 22nd, as previously published. And how does THAT s*** happen, eh? Adios.
They do not list new issue Agencies separately. If something is offered at par, you can guess it is probably a new issue. Then on the trade ticket if there is no fees being charged, then you know for sure it is a new issue. Schwab does not charge a fees on any new issues - https://client.schwab.com/secured/bonds/pricing .
As to the Yield to Call difference in your CUSIP, it is a mystery to them as well. In any case, I would focus on the YTW and ignore Yield to Call, especially if the latter is larger than the former. Good luck.
P.S.: apologies to everyone for hogging this page with no B/S/W posts.
@BaluBalu- I'm a little confused by "if there is no fees being charged, then you know for sure it is a new issue", because I frequently buy secondary Treasury issues at Schwab which show "No Fee" on the trade ticket. That would seem to suggest different rules for Treasuries vs Agencies?
@BaluBalu- I'm a little confused by "if there is no fees being charged, then you know for sure it is a new issue", because I frequently buy secondary Treasury issues at Schwab which show "No Fee" on the trade ticket. That would seem to suggest different rules for Treasuries vs Agencies?
You have to read the sentence you quoted in the context it was written. You might also find my previous post from earlier today useful.
To specifically answer your question, “Yes.” See the Schwab pricing link in my post
I have always found Fidelity site easier to buy bonds. Also, more dealers seem to list their inventory on the Fidelity platform. Just to have at least two good brokerages for these products, I have shared many of Fidelity features with Schwab but Schwab are slow to them. Having said that I did buy some secondary Treasuries at Schwab.
In advocating for term limits for political offices, I have always claimed that it should not take more than two years to be good at one’s job if one has aptitude for it but I am starting to question my judgement as I discover brokerage Reps with more than five years fixed income experience guessing answers to my questions.
@BaluBalu- thanks for the info. Re job experience vs learning, speaking for myself I was always learning something new, right to the very end. And I was regarded as "the guy who wrote the book" at our shop.
@BaluBalu- thanks for the info. Re job experience vs learning, speaking for myself I was always learning something new, right to the very end. And I was regarded as "the guy who wrote the book" at our shop.
Being good at one’s job includes ability to learn new things of the job. Universe and everything in it (including jobs) changes continuously. In any case, I was not talking specifically about learning new things but about generally being good at one’s job.
Brokerages keep assigning overconfident, disinterested Reps to their so called premium services. It seems part of the cost of doing business with these brokerages is we have to spend time and energy training their Reps and sometimes their supervisors, and unfortunately, many times about their own systems.
QLTY is a relatively new fund with an inception date of 11/13/2023. GQETX is very similar to QLTY (holds some foreign stocks unlike QLTY) but its history is much longer. Since the $5mm min. initial investment for GQETX was "slightly" out of reach, I went with QLTY instead!
Initiated a new stake in GPQFX today. Adding to LCR (thanks @David Snowball).
Bought 2yr Treasury at auction on Tuesday. Next Monday I will buy more 1 yr Treasury to extend the duration on the treasury ladder.
Correction: June 6th is when one year treasury will be announced. So it the the following Monday, June 11th when the purchase takes place.
@Derf, For now 2 years T notes is the longest I like the ladder to be. But I won’t say never as I see other managers run a barbell ladder of treasuries. This year my investment grade bonds (mostly short to intermediate duration) have not done well. Ironically short term junk bonds carry the bulk of advancement. Cash cannot yield over 5% for long. So longer treasuries make perfect sense for now as it did well when the Fed hikes rate aggressively.
Increased cash from around 12% to 12.65% today. Sold a few shares of NSRGY and FOF. (Anticipating some significant cash withdrawals before year’s end.)
Comments
You are right. About tomorrow's auction, I inadvertently missed the stuff above the memorial day row. The 2 year looks tempting, given a lot of inflation data releases around the world next week.
...Still waiting for the glorious, special, spectacular TS dividend, due 22 May. Feces.
I've been playing the same callable game as @BaluBalu on these bonds, and they do readily get called. So, you have to check out the first call date to decide if it's worth it. This one was like buying an 8 month CD, in my mind.
I never bought Agencies at Schwab. May be I will do today. If it is not inconvenient, pl share the CUSIP.
New Issues
Treasury Auctions
New Issue Municipals
Retail Notes
Mortgage-backed Securities
I do not see Agencies in this list. Are you able to help? I will call Schwab
Farm Credit System 5.95% 05/24/2034 Callable
CUSIP 3133ERFA4
Price -- 99.850
Current Yield -- 5.959%
Yield To Maturity -- 5.970%
Yield To Call -- 6.176%
Yield To Worst -- 5.970%
Call Details: Callable in whole or part Daily beginning 02/24/2025 with 5 days notice.
Issuer Name Federal Farm Credit Bks Cons Systemwide Bds
Maturity Date 05/24/2034
Coupon Rate 5.950%
Coupon Type Fixed
Coupon Frequency Semi-annually
Accrual Day Count 30/360
Dated Date 05/24/2024
First Settlement Date 05/24/2024
First Coupon Date 11/24/2024
Next Coupon Date 11/24/2024
DTC Eligible Yes
Evaluated Price 99.6387
Edit
Hi again @BaluBalu. I did a little research on the topic of transaction fees for fed agency secondary bonds. I think we both may be right. There is a transaction fee as you said. But per the info given below, the fee is shown inclusive in the yield shown. That would likely be why I never see a separate fee for the buy transaction. So that gets back to what yield am I actually getting after yield is reduced for the fee? The list of yields is confusing:
Price -- 99.850
Current Yield -- 5.959%
Yield To Maturity -- 5.970%
Yield To Call -- 6.176%
Yield To Worst -- 5.970%
Coupon Rate 5.950%
All these yields are pretty good in relative measure, but it would be nice to know which is accurate. If you clarify this info, please email. I'm going to inquire also, hopefully through my local office.
Based on your reply yesterday, you bought the secondaries below par. As you find out the differences in different yields, you may want to find out the difference between Price and Evaluated Price - I can guess but better to hear from the horse.
.
After looking at bond funds today, I stuck the proceeds in VRIG. I was unwilling to commit more to existing position in THOPX or FCFAX. Not even thinking about adding to anything much further out in duration. I may look a little harder at active preferred etf's.
I am now at 60/40 in the IRA. Never thought I'ld be there, but we're in different territory with ZIRP in the rearview mirror.
Last week I sold SCHD from the taxable. Today the proceeds went into FDVV. Bought SPHQ. Added to XMHQ and AMAGX since there was some cash left lying around after I exited a number of Vanguard CRSP-based indexes last fall.
Pretty much fully invested in the IRA, unless I sell some VRIG. Still lots of room in the taxable if opportunities present.
I spoke with a fixed income veteran at Schwab.
They do not list new issue Agencies separately. If something is offered at par, you can guess it is probably a new issue. Then on the trade ticket if there is no fees being charged, then you know for sure it is a new issue. Schwab does not charge a fees on any new issues - https://client.schwab.com/secured/bonds/pricing .
As to the Yield to Call difference in your CUSIP, it is a mystery to them as well. In any case, I would focus on the YTW and ignore Yield to Call, especially if the latter is larger than the former. Good luck.
P.S.: apologies to everyone for hogging this page with no B/S/W posts.
To specifically answer your question, “Yes.” See the Schwab pricing link in my post
I have always found Fidelity site easier to buy bonds. Also, more dealers seem to list their inventory on the Fidelity platform. Just to have at least two good brokerages for these products, I have shared many of Fidelity features with Schwab but Schwab are slow to them. Having said that I did buy some secondary Treasuries at Schwab.
In advocating for term limits for political offices, I have always claimed that it should not take more than two years to be good at one’s job if one has aptitude for it but I am starting to question my judgement as I discover brokerage Reps with more than five years fixed income experience guessing answers to my questions.
Added a few more shares to the collection.
Brokerages keep assigning overconfident, disinterested Reps to their so called premium services. It seems part of the cost of doing business with these brokerages is we have to spend time and energy training their Reps and sometimes their supervisors, and unfortunately, many times about their own systems.
QLTY is a relatively new fund with an inception date of 11/13/2023.
GQETX is very similar to QLTY (holds some foreign stocks unlike QLTY) but its history is much longer.
Since the $5mm min. initial investment for GQETX was "slightly" out of reach, I went with QLTY instead!
“Me fool you not …”
Added small amounts to both CGDV & QLTY. I still think a bigger flush is in our future.
Bought 2yr Treasury at auction on Tuesday. Next Monday I will buy more 1 yr Treasury to extend the duration on the treasury ladder.
Correction: June 6th is when one year treasury will be announced. So it the the following Monday, June 11th when the purchase takes place.
@Derf, For now 2 years T notes is the longest I like the ladder to be. But I won’t say never as I see other managers run a barbell ladder of treasuries. This year my investment grade bonds (mostly short to intermediate duration) have not done well. Ironically short term junk bonds carry the bulk of advancement. Cash cannot yield over 5% for long. So longer treasuries make perfect sense for now as it did well when the Fed hikes rate aggressively.
ready have it covered ? I also bought the 2 year.
I have many T's maturing this year & thinking , how far do I want to reach out ?
Have a great day, Derf