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Old 08-04-2022, 11:09 AM   #1161
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Fidelity money market funds yields are rapidly approaching their last peaks back at the end of 2018. The yields already exceed those of most short duration bond funds and by September should exceed short and medium duration bond funds. Attached are the charts for FZDXX and FXFXX.
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Old 08-04-2022, 01:28 PM   #1162
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Do the brokerage MM funds have FDIC protection or something equivalent?

Or only the brokerage CDs?
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Old 08-04-2022, 02:15 PM   #1163
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Old 08-04-2022, 02:18 PM   #1164
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Do the brokerage MM funds have FDIC protection or something equivalent?

Or only the brokerage CDs?
They are covered under SIPC I believe, but nothing like FDIC. The Govt MM funds are supposed to use mostly govt issued short-term debt, so those are very safe.

The brokerage CDs are issued by banks therefore they usually have FDIC protection.

And of course Treasuries are backed by the US govt.

There are treasury only MM funds, and their rates have gone up dramatically too. FDLXX is yielding 1.38% right now, and has been climbing with the other MM funds. They generally yield less because they have the highest quality credit.
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Old 08-04-2022, 03:17 PM   #1165
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OK so these brokerage MM funds like VMFXX which are yielding around 2% are probably what, AAA corporate securities?
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Old 08-04-2022, 03:19 PM   #1166
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Fidelity money market funds yields are rapidly approaching their last peaks back at the end of 2018. The yields already exceed those of most short duration bond funds and by September should exceed short and medium duration bond funds. Attached are the charts for FZDXX and FXFXX.

I noticed a couple of those MM funds just yesterday but at least the ones I checked said not open to new investors or something to that effect.
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Old 08-04-2022, 05:52 PM   #1167
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I noticed a couple of those MM funds just yesterday but at least the ones I checked said not open to new investors or something to that effect.
FZDXX and FXFXX have been my default cash sweep funds for my roll-over IRA and taxable accounts at Fidelity. I wasn't aware that they were not accepting new investors. It makes no sense given how deep the treasury markets are. You can roll 30 day treasury bills at 2.2% currently and do effectively the same as a money market fund.
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Old 08-04-2022, 06:06 PM   #1168
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I noticed a couple of those MM funds just yesterday but at least the ones I checked said not open to new investors or something to that effect.
FZDXX is open. It has a note that it can only be used by natural persons, but there is no other restriction. So unless you are a trust or partnership or something like that, you can invest in it.
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Old 08-04-2022, 06:23 PM   #1169
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OK so these brokerage MM funds like VMFXX which are yielding around 2% are probably what, AAA corporate securities?
Nope. Government securities:

https://investor.vanguard.com/invest...vmfxx#overview
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Old 08-04-2022, 06:55 PM   #1170
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The 5 and 10 year treasury rates have dropped, not risen, so looking for longer rates to rise significantly may be futile until 5 and 10 year treasuries move back up again.

All the rising action is in the short end right now - 1 month to 2 years.
So everyone thinks rates will top out, or drop, in 3 years. What are they going to do with their money when their CD's mature in 2025, and interest rates are back down to 0.7 % ? Invest in the stock market? Apparently so. Just my guess.
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Old 08-04-2022, 07:25 PM   #1171
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So everyone thinks rates will top out, or drop, in 3 years. What are they going to do with their money when their CD's mature in 2025, and interest rates are back down to 0.7 % ? Invest in the stock market? Apparently so. Just my guess.
I havenít been afraid to go longer. I doubled the yield of my ladder this year by buying 10 years plus. The yield makes my plan work, anything over 4% works for me. My withdrawal rate is in the low 2ís.


I buy muni bonds for income. I get growth and inflation hedges elsewhere
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Old 08-04-2022, 08:04 PM   #1172
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OK so these brokerage MM funds like VMFXX which are yielding around 2% are probably what, AAA corporate securities?
No,
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VMFXX-Vanguard Federal Money Market Fund
The fund invests at least 99.5% of its total assets in cash, U.S. government securities, and/or repurchase agreements that are collateralized solely by U.S.
It’s a US Govt MM fund.

US 1 month treasuries are yielding 2.1%+, and VMFXX has a very low expense ratio, so it’s not surprising to see 2% yield now.
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Old 08-04-2022, 08:12 PM   #1173
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I havenít been afraid to go longer. I doubled the yield of my ladder this year by buying 10 years plus. The yield makes my plan work, anything over 4% works for me. My withdrawal rate is in the low 2ís.





I buy muni bonds for income. I get growth and inflation hedges elsewhere

Iíve purchased a few Munis going out as long as 20 years, several weeks ago when some deals were available. The rest of my fixed income is mostly in short-term CDs or treasuries. I believe rates will increase giving us better long term opportunities.
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Old 08-04-2022, 08:21 PM   #1174
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I noticed a couple of those MM funds just yesterday but at least the ones I checked said not open to new investors or something to that effect.
FZDXX is open, it just has a high initial minimum of $100K.
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Old 08-04-2022, 09:41 PM   #1175
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So everyone thinks rates will top out, or drop, in 3 years. What are they going to do with their money when their CD's mature in 2025, and interest rates are back down to 0.7 % ? Invest in the stock market? Apparently so. Just my guess.


I donít know what rates will do. I plan to continue laddering with CDs, Treasuries, individual corporate notes, bonds and/or MYGAs with 3-5yr maturities and take the best rates I can get. I also have a few munis that are locked in @ 3-4% for 10-15 yrs. I never had to settle for anything less than 2.25%.
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Navy 3.3% 33mo special. 1k to open, OK to add to 100k.
Old 08-05-2022, 08:54 AM   #1176
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Navy 3.3% 33mo special. 1k to open, OK to add to 100k.

Not a huge deal, but the Navy 33 month 3.3% special allows additional funds be added to 100k. And can be opened with $1k. And converted to a Roth IRA at any time. So, I opened (2) today with 1k ea. Wife and I will add 6k to both next year, and convert to a Roth for my 2022 new contribution. Then if there are no better rates when other Roth IRA CD's expire, have a place to get 3.3%. For a while anyway. Up to 100k. Just a little hedge. With little cost / effort involved.

Can still do better with brokered CD's. But plan to keep some $$ going with Navy and Pen Fed for as long as possible.
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Old 08-05-2022, 09:52 AM   #1177
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Effective today 8/5, Live Oak Bank High Yield Savings rate moves to 1.75% from 1.4%

A 1-year CD is 2.5%, with a 2,500 minimum with $250,000 maximum. This rate has been in effect for a while.
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Old 08-05-2022, 06:33 PM   #1178
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Not a huge deal, but the Navy 33 month 3.3% special allows additional funds be added to 100k. And can be opened with $1k.


Actually, it is a HUGE deal as I mentioned above. I was unable to open with IRA funds but I used the secure messaging and they moved the funds to open the account from IRA shares.
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Old 08-05-2022, 07:03 PM   #1179
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No,
Itís a US Govt MM fund.

US 1 month treasuries are yielding 2.1%+, and VMFXX has a very low expense ratio, so itís not surprising to see 2% yield now.
On BH there is a thread about the Federal Money Market Fund. One explanation why this fund's yield is so high is it buys repros which are 2.3%. Not sure if that was mentioned in this thread, I read so many things in so many places over days and weeks I forget sometimes what is in a given thread.

https://www.investopedia.com/terms/r...eagreement.asp
Quote:
What Is a Repurchase Agreement?
A repurchase agreement (repo) is a form of short-term borrowing for dealers in government securities. In the case of a repo, a dealer sells government securities to investors, usually on an overnight basis, and buys them back the following day at a slightly higher price. That small difference in price is the implicit overnight interest rate. Repos are typically used to raise short-term capital. They are also a common tool of central bank open market operations.

For the party selling the security and agreeing to repurchase it in the future, it is a repo; for the party on the other end of the transaction, buying the security and agreeing to sell in the future, it is a reverse repurchase agreement.
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Old 08-05-2022, 07:19 PM   #1180
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Actually, it is a HUGE deal as I mentioned above. I was unable to open with IRA funds but I used the secure messaging and they moved the funds to open the account from IRA shares.
Another bonus, The 33 month deal will allow me to combined a few smaller / maturing Roth CD's into (2) $100k Roth CD's. Have had these add on Navy CD's for a few years now. They can really come in handy.
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