Fixed Income Investing II

....things I never like to hear before investing...."if the company stays viable"....hahaha
 
imbatman said:
....things I never like to hear before investing...."if the company stays viable"....hahaha
Click to expand...



I basically put that in as a catch all reminder nothing is certain! The company is certainly not stressed, but P&C insurers arent exactly suitable replacements for CDs, lol.
CO, I am kind of like you, in I designate only a certain amount of high yield risk. And generally for me my preference is to snag lower stack junk off a company with IG rated higher credit stack. Except my one weakness of NSS which purrs right along with a 12% floating rate now.
 
The thread that preceded this saved me over $40K. Thanks freedom56...
 
Midpack said:
The thread that preceded this saved me over $40K. Thanks freedom56...
Click to expand...

he saved me a ton of money too, because after reading through the thread I finally understood the truth about bond funds in rising rate markets.

Having said that, shouldnt bond funds/ETFs become more appealing the longer rates are either stable here (or go lower)?
 
SWVXX is at 4.98 now... I expect it will hit ~5.2x in the next few weeks and may stay there a few months. Also expect to see shorter term brokered CD's (a year or less) to hit 5.5 in August.
 
Car-Guy said:
SWVXX is at 4.98 now... I expect it will hit ~5.2x in the next few weeks and may stay there a few months. Also expect to see shorter term brokered CD's (a year or less) to hit 5.5 in August.
Click to expand...

Yes, I'm having a lot of trouble convincing myself not to just stay in SWVXX considering the spread to CDs is so small right now. You do get FDIC protection with the CD. I

I really wish long rates would move, both because I would love to lock in some solid interest rates and because I think the Fed needs to get them to move in order to really get inflation in the bottle.
 
Yep, for me playing the short term fixed income game, it's the instant liquidity of something like SWVXX vs the insurance a CD brings to the table. The rates are so close and timeframes are so short it really doesn't make much difference "to me". And at this time, I'm really not concerned with non insured funds. However, that could change and I'm ready to switch.

Like everyone, I'm trying to adjust to what Powell does at the FOMC meetings and then read the tea leaves at what he says may be coming. It's a bit of a crap shoot and I keep bouncing between SWVXX and 12 to 18mo CD's. :confused: Not nearly as stressful as swing trading equities.
 
Last edited:
madatrub said:
he saved me a ton of money too, because after reading through the thread I finally understood the truth about bond funds in rising rate markets.



Having said that, shouldnt bond funds/ETFs become more appealing the longer rates are either stable here (or go lower)?
Click to expand...
In a word, yes. But best in a stable environment. In a declining rate environment, people tend to exit for stocks. The need to hold cash for redemptions can drag earnings.

Not so for closed-end funds which do not face redemptions. But watch fees and leverage.

What does best in a declining rate environment? Duration. Exactly what you needed to sell in 2021.

Duration in a fund or ETF wrapper or in individual bonds. In fact funds and ETFs can make selling relatively easy.
 
Last edited:
^^^^
That just changed this afternoon... This morning it was 4.98. Heading in the right direction.
 
Last edited:
Closet_Gamer said:
Yes, I'm having a lot of trouble convincing myself not to just stay in SWVXX considering the spread to CDs is so small right now. You do get FDIC protection with the CD. I

I really wish long rates would move, both because I would love to lock in some solid interest rates and because I think the Fed needs to get them to move in order to really get inflation in the bottle.
Click to expand...

+1 My weighted average maturity right now is 2.5 and I'd like to extend it to 3.5 or more... ultimately perhaps even 5.0 if we get a positive yield curve... as I reinvest the proceeds of maturities. If I had an evenly balanced 7 year ladder, I'm way overweight in 2023 to 2025 maturities and underweight in 2026 to 2030 maturities, meaning that I should be reinvesting proceeds in 2026-2030 maturities. Right now, I can find decent GSE offerings that mature in 2026-2030 in the 5-6% YTM, but a lot of them are callable and I'm trying to manage my call risk as well.

Right now I'm about 50% callable and want to stay at 50% or less, but if a callable will pay me a 150 bps premium then I'm inclined to take the risk.
 
pb4uski said:
+1 My weighted average maturity right now is 2.5 and I'd like to extend it to 3.5 or more... ultimately perhaps even 5.0 if we get a positive yield curve... as I reinvest the proceeds of maturities. If I had an evenly balanced 7 year ladder, I'm way overweight in 2023 to 2025 maturities and underweight in 2026 to 2030 maturities, meaning that I should be reinvesting proceeds in 2026-2030 maturities. Right now, I can find decent GSE offerings that mature in 2026-2030 in the 5-6% YTM, but a lot of them are callable and I'm trying to manage my call risk as well.

Right now I'm about 50% callable and want to stay at 50% or less, but if a callable will pay me a 150 bps premium then I'm inclined to take the risk.
Click to expand...

Agree.

I do think we gotta start taking some duration now. It (longer end) might rise but time to grab selectively for sure.
 
pb4uski said:
+1 My weighted average maturity right now is 2.5 and I'd like to extend it to 3.5 or more... ultimately perhaps even 5.0 if we get a positive yield curve... as I reinvest the proceeds of maturities. If I had an evenly balanced 7 year ladder, I'm way overweight in 2023 to 2025 maturities and underweight in 2026 to 2030 maturities, meaning that I should be reinvesting proceeds in 2026-2030 maturities. Right now, I can find decent GSE offerings that mature in 2026-2030 in the 5-6% YTM, but a lot of them are callable and I'm trying to manage my call risk as well.

Right now I'm about 50% callable and want to stay at 50% or less, but if a callable will pay me a 150 bps premium then I'm inclined to take the risk.
Click to expand...

Quattro73 said:
Agree.

I do think we gotta start taking some duration now. It (longer end) might rise but time to grab selectively for sure.
Click to expand...
I can understand taking some callables and/or locking in longer terms (both have their own risks of course) but for me it's no callables and terms not longer than 5yrs... I'd like to be around to collect.
 
Car-Guy said:
... I'd like to be around to collect.
Click to expand...

I collect interest payments 2x a year on my callables.

While I used the contractual term in my maturity distribution I have considered buying callables for shorter rungs... you get higher yields and if they get called then no problem... and if they don't get called that's even better.

I also try to buy callables with lower coupon rates that have lower call risk.
 
Last edited:
pb4uski said:
I collect interest payments 2x a year on my callables.

While I used the contractual term in my maturity distribution I have considered buying callables for shorter rungs... you get higher yields and if they get called then no problem... and if they don't get called that's even better.

I also try to buy callables with lower coupon rates that have lower call risk.
Click to expand...
Makes sense to me...
 
madatrub said:
he saved me a ton of money too, because after reading through the thread I finally understood the truth about bond funds in rising rate markets.

Having said that, shouldnt bond funds/ETFs become more appealing the longer rates are either stable here (or go lower)?
Click to expand...

Simple answer yes, more complicated answer is when. Many funds still hold lower coupon bonds so you are likely to be paid sub market interest to wait out the NAV return.

Fidelity is reporting distribution interest on broad funds like BND or AGG as sub 3%. That is less than a money market.
 
FFCB just announced a new 6.09%, state income tax free - bond offering. Cusip# 3133EPRZ0. Rated the same as regular T-bills by Moody's and S&P. 1 year call protected.



Instead of buying more CDs or TBills, I've been hiding out in these 6%+ offerings to gather the higher yield and also take advantage of the state income tax benefit.


You might even still be able to find some of the 6.25% cusip 3133EPQX6 out there at your brokerage, but slim pickings there.
 
Affinity4Investing said:
FFCB just announced a new 6.09%, state income tax free - bond offering. Cusip# 3133EPRZ0. Rated the same as regular T-bills by Moody's and S&P. 1 year call protected.



Instead of buying more CDs or TBills, I've been hiding out in these 6%+ offerings to gather the higher yield and also take advantage of the state income tax benefit.


You might even still be able to find some of the 6.25% cusip 3133EPQX6 out there at your brokerage, but slim pickings there.
Click to expand...
I’ve bought similar around 6-6%+ So far any within the call window have not been called. I’ll take the interest as long as they will pay it.
 
COcheesehead said:
I’ve bought similar around 6-6%+ So far any within the call window have not been called. I’ll take the interest as long as they will pay it.
Click to expand...


3133EN2D1 was a fat 6.375%'er. Would love to see more of those and with first call coming up 11/2023, I'm interested in seeing if they call it or not.
 
Affinity4Investing said:
3133EN2D1 was a fat 6.375%'er. Would love to see more of those and with first call coming up 11/2023, I'm interested in seeing if they call it or not.
Click to expand...

Highest agency I have is 6.33% with a Sept call. We’ll see what happens, but it beats anything else in short duration.
 
Affinity4Investing said:
FFCB just announced a new 6.09%, state income tax free - bond offering. Cusip# 3133EPRZ0. Rated the same as regular T-bills by Moody's and S&P. 1 year call protected.
Click to expand...

Fido currently has FFCB 5.96% with 2-year call protection......depending on what you think an extra year is worth, that may be a better option...details in the Agency/ Corporate Bonds thread
 
You must log in or register to reply here.

Similar threads

C
2024 Investment Performance Thread
3 4 5
Replies
124
Views
5K
Born2Fish
B
G
BALANCED FUND vs INTEREST INCOME FUND? Where to park $100k for the next 2 years?
2
Replies
40
Views
2K
rayvt
R
C
Bond Investing
Replies
8
Views
1K
Texas Proud
T
L
Nationwide Peak® 10 fixed indexed annuity
Replies
9
Views
790
tim0476
T
F
Fixed income strategies
2
Replies
28
Views
2K
pb4uski
pb4uski

Latest posts

Back
Top Bottom