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BONDS The week that was....w/e December 20, 2024..... Bond NAV's Another HEAD SLAP + distributions
Observations: * Since 03/2022 I posted many times that treasuries and high-rated funds are not the place to be. You get higher volatility + lower performance. * The analysts said last year that we will have 6-7 rate cuts in 2024. Not even close. * Listen to the Fed: we are going to keep rates higher than expected, be causious, and lower rates slowly; we must be sure inflation is low and stays low, and it's data dependent. * Since 2023 I posted: low duration, high yield, lower-rated bonds, and smoother charts is where you want to be.
Several funds that follow the above Easy choice for LT hold = CBLDX+RSIIX RCRIX SCFZX CLOZ SEMMX DBLIX
With the inflation being sticky, it is likely the rate will stay higher and longer with fewer cuts in 2025. One pundit mentioned there may be no cut next year and one or two cut in 2026.
Right, no one can say what will definitely happen, not even the FED--- until they see what's going on. Like Gretsky: chase the puck to where it's GOING to be, next; not where it is at the moment.
I have the suspicion that inflation will be difficult to bring down much further, unless a recession occurs. In that case, fewer cuts, and stretched over a longer period of time, is what's to be expected. NOT acting upon that, but upon the simple desire to reduce risk and leave a disappointing fund, my recent switch into PRCFX (effective today, when Chucky gets around to it) has brought my equity position down to 42% of total. (Bonds = 48%. The "cash" and "other" stuff is in the hands of the Portfolio Managers of my funds.)
All the above being said: rates might stay the same but chances of rates going higher? Big leap of faith? I can see higher for longer but I don't see higher than today. UNLESS tariffs and immigration policy causes higher inflation.
MMF - checking at local bank,BMO, dropped for the second time in three months. Rate went from 2.?? -1.745 1.547. Time to move RMD , which went there by my error!
What sounds appealing on the campaign trail will bring about unintended consequences. Even Giroux said on the recent WealthTrack interview that tariffs and immigration will bring inflationary pressure. Who will pay the tariffs in the end? Likely the buyers will bear higher import cost and pass that onto the consumers like you and me. Same goes to agricultural products with fewer farm workers legal or not.
ADD: A reported gauge monitored by the FED, the PCE (Personal Consumption Expenditures) slowed somewhat, may have helped support positive pricing on Friday for bond NAVs, via lower yields.
ADD #2: MANY BOND funds had distributions this week, which should be reflected in this weeks numbers, as provided by their sources.
ADD #3: This is directed towards possibilities into the new government period arriving January 20, and monetary/fiscal actions.
--- Bond vigilantes are investors who sell government bonds or threaten to do so to force policy changes and discipline excessive government spending: --- Explanation Bond vigilantes use their market power to drive up borrowing costs for the government. This can happen when they protest against expansionary monetary or fiscal policy. --- Origin The term was coined by economist Ed Yardeni in the 1980s to describe traders who sold Treasury bonds to protest Federal Reserve policies that were considered too inflationary. --- Example In the "Great Bond Massacre" from 1993 to 1994, US 10-year yields increased from 5.2% to over 8% due to concerns about federal spending. The Clinton administration and Congress responded by reducing the deficit, and 10-year yields dropped to around 4% by 1998.
NOTE:
My intention, at this time; is to present the data for the selected bond sectors, as listed; through the end of the year (2024). This 'end date' will take us through the U.S. elections period, pending actions/legislation dependent upon the election results, pending Federal Reserve actions and market movers trying to 'guess' future directions of the U.S. economy. As important during this period, are any number of global circumstances that may take a path that is not expected; and/or 'new' circumstances. In the 'cooking pot' we currently have the big ingredients of the middle east and also, how much damage Ukraine may inflict upon Russia and the response.
FIRST: NOTHING TO ADD/ALTER regarding 'Never-Never Land'. The pre-DC world shift of January, 2025 remains 'interesting' at this time! We're in a 'Never-Never Land' (events you never imagined) of potential large impacts upon various economic functions emanating from a central government in the coming months and years. What comes next for the investing world of bonds is not yet known or fully understood, except for those have a better guessing system than I. I can only watch and listen a little bit and let the numbers try to bring forth meaningful directions.
W/E December 20 , 2024. Bond NAV's Another HEAD SLAP for most + distributions
--- 'Course, all the bond sectors in the list find their reasons for price movements, and we find most bond sectors HAD ANOTHER HEAD SLAP for this week's pricing. The majority of bond sectors were down all day, with FRIDAY being the exception day. All durations pricing were down every day of the week. So, depending on where you're 'hanging' your bond market monies, the pricing this week, was mostly DOWN. The MINT etf, to the best of my recall, has maintained a positive price for the year, each and every week; and this remains for this week.
A few numbers for your viewing pleasure.
NEXT:
*** UST yields chart, 6 month - 30 year. This chart is active and will display a 6 month time frame going forward to a future date. Place/hover the mouse pointer anywhere on a line to display the date and yield for that date. The percent to the right side is the percentage change in the yield from the chart beginning date for a particular item. You may also 'right click' on the 126 days at the chart bottom to change a 'time frame' from a drop down menu. Hopefully, the line graph also lets you view the 'yield curve' in a different fashion, for the longer duration issues, at this time. Save the page to your own device for future reference. NOTE: take a peek at the right side of this graph to find the yield swings of the past week, and for the current yields for the last business day.
For the WEEK/YTD, NAV price changes, December 16 - December 20, 2024
***** This week (Friday), FZDXX, MM yield continues to move with Fed funds/repo/SOFR rates; and ended the week at 4.37% yield (Unchanged for the week). Fidelity's MM's continue to maintain decent yields, as is presumed with other vendors similar MM's. Theoretically, a new yield bottom is in place, until the next FED action. SO, one is still obtaining a decent MM yield. MOST MM's found a negative .05 - .07% basis change in yield for the week.
--- AGG = -.66% / +1.37% (I-Shares Core bond), a benchmark, (AAA-BBB holdings) --- MINT = +.08% / +5.77% (PIMCO Enhanced short maturity, AAA-BBB rated) --- SHY = -.04% / +3.66 % (UST 1-3 yr bills) --- IEI = -.45% / +1.63% (UST 3-7 yr notes/bonds) --- IEF = -.82% / -.46% (UST 7-10 yr bonds) --- TIP = -1.00% / +1.64% (UST Tips, 3-10 yrs duration, some 20+ yr duration) --- VTIP = -.37% / +4.50% (Vanguard Short-Term Infl-Prot Secs ETF) --- STPZ = -.45% / +4.07% (UST, short duration TIPs bonds, PIMCO) --- LTPZ = -2.24% / -4.31% (UST, long duration TIPs bonds, PIMCO) --- TLT = -1.66% / -7.03% (I Shares 20+ Yr UST Bond --- EDV = -2.31% / -11.54% (UST Vanguard extended duration bonds) --- ZROZ = -2.69% / -14.46% (UST., AAA, long duration zero coupon bonds, PIMCO --- TBT = +3.69% / +24.74% (ProShares UltraShort 20+ Year Treasury (about 23 holdings) --- TMF = -5.66% / -33.51% (Direxion Daily 20+ Yr Trsy Bull 3X ETF (about a 2x version of EDV etf) *** Additional important bond sectors, for reference: --- BAGIX = -.72% / +1.95% Baird Aggregate Bond Fund (active managed, plain vanilla, high quality bond fund) --- USFR = +.12% / +5.31% (WisdomTree Floating Rate Treasury) --- LQD = -1.25% / +.99% (I Shares IG, corp. bonds) --- MBB = -.59% / +1.29% (I-Shares Mortgage Backed Bonds) --- BKLN = -.24% / +7.84% (Invesco Senior Loan, Corp. rated BB & lower) --- HYG = -.53% / +7.87 % (I Shares High Yield bonds, proxy ETF) --- HYD = -1.40%/+3.49% (VanEck HY Muni) --- MUB = -.73% /+.93% (I Shares, National Muni Bond) --- EMB = -1.21%/+5.85% (I Shares, USD, Emerging Markets Bond) --- CWB = -2.16% / +11.59% (SPDR Bloomberg Convertible Securities) --- PFF = -.88% / +7.96% (I Shares, Preferred & Income Securities) --- FZDXX = 4.37% yield (7 day), Fidelity Premium MM fund
*** FZDXX yield was .11%, April,2022. (For reference to current date)
Comments and corrections, please. Remain curious, Catch
Comments
* Since 03/2022 I posted many times that treasuries and high-rated funds are not the place to be. You get higher volatility + lower performance.
* The analysts said last year that we will have 6-7 rate cuts in 2024. Not even close.
* Listen to the Fed: we are going to keep rates higher than expected, be causious, and lower rates slowly; we must be sure inflation is low and stays low, and it's data dependent.
* Since 2023 I posted: low duration, high yield, lower-rated bonds, and smoother charts is where you want to be.
Several funds that follow the above
Easy choice for LT hold = CBLDX+RSIIX
RCRIX
SCFZX
CLOZ
SEMMX
DBLIX
Chart (https://schrts.co/eQFWwSdf)
I have the suspicion that inflation will be difficult to bring down much further, unless a recession occurs. In that case, fewer cuts, and stretched over a longer period of time, is what's to be expected. NOT acting upon that, but upon the simple desire to reduce risk and leave a disappointing fund, my recent switch into PRCFX (effective today, when Chucky gets around to it) has brought my equity position down to 42% of total. (Bonds = 48%. The "cash" and "other" stuff is in the hands of the Portfolio Managers of my funds.)
Time to move RMD , which went there by my error!
ADD #2: MANY BOND funds had distributions this week, which should be reflected in this weeks numbers, as provided by their sources.
ADD #3: This is directed towards possibilities into the new government period arriving January 20, and monetary/fiscal actions.
--- Bond vigilantes are investors who sell government bonds or threaten to do so to force policy changes and discipline excessive government spending:
--- Explanation
Bond vigilantes use their market power to drive up borrowing costs for the government. This can happen when they protest against expansionary monetary or fiscal policy.
--- Origin
The term was coined by economist Ed Yardeni in the 1980s to describe traders who sold Treasury bonds to protest Federal Reserve policies that were considered too inflationary.
--- Example
In the "Great Bond Massacre" from 1993 to 1994, US 10-year yields increased from 5.2% to over 8% due to concerns about federal spending. The Clinton administration and Congress responded by reducing the deficit, and 10-year yields dropped to around 4% by 1998.
NOTE: FIRST: NOTHING TO ADD/ALTER regarding 'Never-Never Land'. The pre-DC world shift of January, 2025 remains 'interesting' at this time! We're in a 'Never-Never Land' (events you never imagined) of potential large impacts upon various economic functions emanating from a central government in the coming months and years. What comes next for the investing world of bonds is not yet known or fully understood, except for those have a better guessing system than I. I can only watch and listen a little bit and let the numbers try to bring forth meaningful directions.
W/E December 20 , 2024. Bond NAV's Another HEAD SLAP for most + distributions
--- 'Course, all the bond sectors in the list find their reasons for price movements, and we find most bond sectors HAD ANOTHER HEAD SLAP for this week's pricing. The majority of bond sectors were down all day, with FRIDAY being the exception day. All durations pricing were down every day of the week. So, depending on where you're 'hanging' your bond market monies, the pricing this week, was mostly DOWN. The MINT etf, to the best of my recall, has maintained a positive price for the year, each and every week; and this remains for this week.
A few numbers for your viewing pleasure.
NEXT:
*** UST yields chart, 6 month - 30 year. This chart is active and will display a 6 month time frame going forward to a future date. Place/hover the mouse pointer anywhere on a line to display the date and yield for that date. The percent to the right side is the percentage change in the yield from the chart beginning date for a particular item. You may also 'right click' on the 126 days at the chart bottom to change a 'time frame' from a drop down menu. Hopefully, the line graph also lets you view the 'yield curve' in a different fashion, for the longer duration issues, at this time. Save the page to your own device for future reference. NOTE: take a peek at the right side of this graph to find the yield swings of the past week, and for the current yields for the last business day.
For the WEEK/YTD, NAV price changes, December 16 - December 20, 2024
***** This week (Friday), FZDXX, MM yield continues to move with Fed funds/repo/SOFR rates; and ended the week at 4.37% yield (Unchanged for the week). Fidelity's MM's continue to maintain decent yields, as is presumed with other vendors similar MM's. Theoretically, a new yield bottom is in place, until the next FED action. SO, one is still obtaining a decent MM yield. MOST MM's found a negative .05 - .07% basis change in yield for the week.
--- AGG = -.66% / +1.37% (I-Shares Core bond), a benchmark, (AAA-BBB holdings)
--- MINT = +.08% / +5.77% (PIMCO Enhanced short maturity, AAA-BBB rated)
--- SHY = -.04% / +3.66 % (UST 1-3 yr bills)
--- IEI = -.45% / +1.63% (UST 3-7 yr notes/bonds)
--- IEF = -.82% / -.46% (UST 7-10 yr bonds)
--- TIP = -1.00% / +1.64% (UST Tips, 3-10 yrs duration, some 20+ yr duration)
--- VTIP = -.37% / +4.50% (Vanguard Short-Term Infl-Prot Secs ETF)
--- STPZ = -.45% / +4.07% (UST, short duration TIPs bonds, PIMCO)
--- LTPZ = -2.24% / -4.31% (UST, long duration TIPs bonds, PIMCO)
--- TLT = -1.66% / -7.03% (I Shares 20+ Yr UST Bond
--- EDV = -2.31% / -11.54% (UST Vanguard extended duration bonds)
--- ZROZ = -2.69% / -14.46% (UST., AAA, long duration zero coupon bonds, PIMCO
--- TBT = +3.69% / +24.74% (ProShares UltraShort 20+ Year Treasury (about 23 holdings)
--- TMF = -5.66% / -33.51% (Direxion Daily 20+ Yr Trsy Bull 3X ETF (about a 2x version of EDV etf)
*** Additional important bond sectors, for reference:
--- BAGIX = -.72% / +1.95% Baird Aggregate Bond Fund (active managed, plain vanilla, high quality bond fund)
--- USFR = +.12% / +5.31% (WisdomTree Floating Rate Treasury)
--- LQD = -1.25% / +.99% (I Shares IG, corp. bonds)
--- MBB = -.59% / +1.29% (I-Shares Mortgage Backed Bonds)
--- BKLN = -.24% / +7.84% (Invesco Senior Loan, Corp. rated BB & lower)
--- HYG = -.53% / +7.87 % (I Shares High Yield bonds, proxy ETF)
--- HYD = -1.40%/+3.49% (VanEck HY Muni)
--- MUB = -.73% /+.93% (I Shares, National Muni Bond)
--- EMB = -1.21%/+5.85% (I Shares, USD, Emerging Markets Bond)
--- CWB = -2.16% / +11.59% (SPDR Bloomberg Convertible Securities)
--- PFF = -.88% / +7.96% (I Shares, Preferred & Income Securities)
--- FZDXX = 4.37% yield (7 day), Fidelity Premium MM fund
*** FZDXX yield was .11%, April,2022. (For reference to current date)
Comments and corrections, please.
Remain curious,
Catch