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Those "pesky" investment grade bond yields, low that is.....
.....Well, anyway; for those of you who have some of these mixed into your funds directly(your choice) or at the discretion of a manger(s), continued price support remains, eh? Enjoy the price performance.
U.S. notes, bills and bonds (July 27, 2016 closing yields)
3 Month 0.28% -0.03 (-9.68%) 6 Month 0.37% -0.03 (-7.50%) 2 Year 0.72% -0.03 (-4.00%) 5 Year 1.08% -0.05 (-4.42%) 10 Year 1.50% -0.05 (-3.23%) 30 Year 2.21% -0.05 (-2.21%)
Major global gov't 10 year yields (July 27, 2016) link below
From 3 weeks ago,but still worth contemplating. Negative Swiss Yields Get Even Crazier Posted on July 6, 2016 by David Ott Acropolis Investment Management
I mean, if I bought a 50 year bond, I’d be in my 90s before I got my money back. Forget inflation, I’m just talking about getting my cash back in nominal 2016 dollars. But it’s even worse than that since I would have been lending money to the Swiss for (gulp) 50 years and paying them for the privilege. ...Amidst the short-term concerns, is the larger problem, which is that bond investors seem to be saying that they are worried about growth for the next five decades. They’re not especially worried about inflation because they just don’t think there will be much growth to support higher prices.
..I too am worried about long-term global growth, but I have to admit that 50 years is further than I can even contemplate To me, such a dim outlook is too pessimistic. I’ve been accused of excess optimism, a charge that I accept, but realistically believe that that the answer lies in the middle: slower growth than the last 50 years, but something more than nothing.
So, where would be the "breaking point" for people here? Does anyone have a plan? I think, if the 10-yr goes on another rip up, I'm gonna be trimming some gains @1.25% and worry where I'm gonna put it after the fact. I am not gonna stick around and presume the SHTF at 1% or even below but not before.
So, if yield is positive they pay you, but if yield is negative you pay them. So, how does that work? Is there some drop slot in every major city where you drop your "dues" every month, or a special Swiss foreign address where you send their dvd? And, if you miss payments for 3 months, do you receive a default notice? And, if you don't pay for another 3 months, can they put a lien on that boat you have in dry dock at the lakeside summer cottage?
Wouldn't a 50-yr Swiss bond, with a negative yield at purchase, be the perfect gift to bequeath to any millennial grandchild who you pampered from birth, who you showered with money and affection until they left for college, and who thereafter never called or sent a notice of graduation or even a holiday greeting, except for a written request to assist in paying off their student debt "in a small way" when the creditors came calling, say, 10K? Yeah, the POD from the trust to special, entitled you, something to remember me by.
So, where would be the "breaking point" for people here? Does anyone have a plan?
@Hez: I'm beginning to break right now. And, No - I don't have a plan. -
From Catch's post above: "For those of you who have some of these mixed into your funds directly (your choice) or at the discretion of a manager(s) ... "
I get it Catch. If memory serves correctly, I think Ed S. wrote convincingly on that second part a year or two ago. In a nutshell: Those of us taking comfort from large holdings of balanced, hybrid, mixed allocation funds, etc. may be lulled into a false sense of security. If/when rates rise, those funds may not offer the protection we expect. Some may invest to a limited extent in derivatives and alternatives and might avoid some carnage. But most of those managers are investing in the same kinds of fixed income securities available to you and me.
You'll hear all kinds of solutions put forth by the so-called experts. Some managers are rotting in cash. I was reading recently of one at 38%. Others are even higher. There's Marc Faber's gold and John Hussman's voodoo. There's high yield bonds and floaters. But I don't really know the answer, if there is one.
It almost seems as if cash has already been devalued to the point that is just pieces of paper sitting in a pile on the dresser, which you might as well spend right now on stuff you really don't need because it probably won't be worth all that much in the future. It's hard to figure: If you want to rent your cash to someone, no one seems to want it. But if you buy a piece of income property, transmuting the cash to real estate, you can rent that out for almost whatever you want, at least here in SF.
I'm beginning to believe that there's some sort of warning here, but not sure how to read it.
>>>>>FWIW, Peter Schiff and thoughts about the Fed <<<<<< If there were a market for opinions, Peter Schiff's opinions should have a high negative value. Of course, you could have done well by doing the <i>exact opposite of what Peter recommended over the last five years.
Hi @hank@MOZART325 One would think that a kind of perma bear or whatever he (Mr. Schiff) chooses to name his style would have seen value in some form of investment grade bond based on his assessment of what central banks have been doing for some time now. I don't/won't dismiss that the price of some bond types continues to be on the "twitchy" side of life. I also don't discount the fact that enough folks want to have monies in this area at this time. Is there a bond bubble forming? Hell, there will be bubbles in many areas if and when enough folks want to rotate to something else; bonds or equity. Our house will remain invested at about 50% of our portfolio in the IG area and hopefully will leave in a proper and timely fashion when the music stops.
From Peter Schiff in my linked article: "I don't own any bonds," he explained when pressed by "Futures Now" trader Scott Nations on why his bond fund is underperforming the market. "It's a bond fund that has no bonds, because I don't want to participate in a bond bubble. When the bond bubble bursts, my bond fund is going to be number one. All I have is very short-term debt in foreign currencies." Regards, Catch
Hi @heezsafe I search this and that...the graphs and charts and such...........why the heck have I not been able to easily find performance charts of Japanese bonds. Charts are everywhere for yields over the past "x" years. Ya got a chart there someplace for Japan bond performance? Thank you. Catch
Comments
From 3 weeks ago,but still worth contemplating.
Negative Swiss Yields Get Even Crazier
Posted on July 6, 2016 by David Ott Acropolis Investment Management
I mean, if I bought a 50 year bond, I’d be in my 90s before I got my money back.
Forget inflation, I’m just talking about getting my cash back in nominal 2016 dollars. But it’s even worse than that since I would have been lending money to the Swiss for (gulp) 50 years and paying them for the privilege.
...Amidst the short-term concerns, is the larger problem, which is that bond investors seem to be saying that they are worried about growth for the next five decades. They’re not especially worried about inflation because they just don’t think there will be much growth to support higher prices.
..I too am worried about long-term global growth, but I have to admit that 50 years is further than I can even contemplate
To me, such a dim outlook is too pessimistic. I’ve been accused of excess optimism, a charge that I accept, but realistically believe that that the answer lies in the middle: slower growth than the last 50 years, but something more than nothing.
We may be stuck with negative rates for some period much longer than we all want, but I just think that 50 years is overdoing it.
http://acrinv.com/negative-swiss-yields-get-even-crazier/
I think, if the 10-yr goes on another rip up, I'm gonna be trimming some gains @1.25% and worry where I'm gonna put it after the fact. I am not gonna stick around and presume the SHTF at 1% or even below but not before.
So, if yield is positive they pay you, but if yield is negative you pay them. So, how does that work? Is there some drop slot in every major city where you drop your "dues" every month, or a special Swiss foreign address where you send their dvd? And, if you miss payments for 3 months, do you receive a default notice? And, if you don't pay for another 3 months, can they put a lien on that boat you have in dry dock at the lakeside summer cottage?
Wouldn't a 50-yr Swiss bond, with a negative yield at purchase, be the perfect gift to bequeath to any millennial grandchild who you pampered from birth, who you showered with money and affection until they left for college, and who thereafter never called or sent a notice of graduation or even a holiday greeting, except for a written request to assist in paying off their student debt "in a small way" when the creditors came calling, say, 10K? Yeah, the POD from the trust to special, entitled you, something to remember me by.
http://www.bloomberg.com/graphics/2016-central-banks/#1
-
From Catch's post above: "For those of you who have some of these mixed into your funds directly (your choice) or at the discretion of a manager(s) ... "
I get it Catch. If memory serves correctly, I think Ed S. wrote convincingly on that second part a year or two ago. In a nutshell: Those of us taking comfort from large holdings of balanced, hybrid, mixed allocation funds, etc. may be lulled into a false sense of security. If/when rates rise, those funds may not offer the protection we expect. Some may invest to a limited extent in derivatives and alternatives and might avoid some carnage. But most of those managers are investing in the same kinds of fixed income securities available to you and me.
You'll hear all kinds of solutions put forth by the so-called experts. Some managers are rotting in cash. I was reading recently of one at 38%. Others are even higher. There's Marc Faber's gold and John Hussman's voodoo. There's high yield bonds and floaters. But I don't really know the answer, if there is one.
I'm beginning to believe that there's some sort of warning here, but not sure how to read it.
Regards,
Ted
I Left My Gentrification In San Francisco: Tony Bennett
If there were a market for opinions, Peter Schiff's opinions should have a high negative value. Of course, you could have done well by doing the <i>exact opposite of what Peter recommended over the last five years.
One would think that a kind of perma bear or whatever he (Mr. Schiff) chooses to name his style would have seen value in some form of investment grade bond based on his assessment of what central banks have been doing for some time now. I don't/won't dismiss that the price of some bond types continues to be on the "twitchy" side of life. I also don't discount the fact that enough folks want to have monies in this area at this time. Is there a bond bubble forming? Hell, there will be bubbles in many areas if and when enough folks want to rotate to something else; bonds or equity. Our house will remain invested at about 50% of our portfolio in the IG area and hopefully will leave in a proper and timely fashion when the music stops.
From Peter Schiff in my linked article:
"I don't own any bonds," he explained when pressed by "Futures Now" trader Scott Nations on why his bond fund is underperforming the market. "It's a bond fund that has no bonds, because I don't want to participate in a bond bubble. When the bond bubble bursts, my bond fund is going to be number one. All I have is very short-term debt in foreign currencies."
Regards,
Catch
from http://www.bloomberg.com/news/articles/2016-07-28/three-things-that-show-investors-are-making-a-huge-bet-on-low-interest-rates
To each his own brand of poison.
I search this and that...the graphs and charts and such...........why the heck have I not been able to easily find performance charts of Japanese bonds. Charts are everywhere for yields over the past "x" years. Ya got a chart there someplace for Japan bond performance?
Thank you.
Catch