We are entering a "Golden Period" for fixed income investing

[MercyMe]

It's back along with the 5/5 from City National.

Just bought jumbo's of the 3 and 5. Thank you!

 

[dobig]

Pacific WesterN Bank is offering 5.5% 1 year non callable on Etrade.

69506YYG8/ US69506YYG87 Pacific Westn Bk Beverly Hills Primary 5.5 03/29/2024

 

[Freedom56]

Just bought jumbo's of the 3 and 5. Thank you!

They are gone again.

 

[ER604me]

City Bank of LA has 3yr at 5.1% noncallable and 5yr at 5.0% noncallable at Vanguard

 

[MercyMe]

Even better, if you are buying jumbo CDs, you can call the Fidelity bond desk and get a discount on those CDs for an even better yield.

I tried getting a bond desk rep at Fido to do this with the $400k I bought this afternoon, and he said they have no way to change/tweak/discount/etc any new issue CD's. Were you mentioning this in terms of secondary market CD's?

 

[Car-Guy]

Let me know how you make out on that.

Here's an extract of what I got from my FA at Schwab regarding Jumbo CD's. I guess a 100k just ain't what it was. (And he did go on to talk about the issue of FDIC coverage over 250k)

Jumbo CDs generally refer to trades of $1 million or more. While Schwab can execute trades of this size, we don't currently offer the higher yields conventionally offered with Jumbo CDs.

 

[pb4uski]

Wall Street is full of morons. One of the safest asset classes, CDs, are yielding more than treasuries, and high grade corporate bonds. How long can that last?

Even worse, the steep inversion in the yield curve is creating and even more dangerous situation for bond index funds as they sell short duration at losses and buy longer duration at low coupons.

Yes, the premium yield of brokered CDs over similar duration UST over the last week so is definitely astounding. I've backed up the truck and loaded up on 5%+ CDs, in some cases even selling UST or GSE bonds and used the proceeds to buy a higher yielding CD.

I was thinking that the lower yield on UST is due to them being more popular, well known and viewed as super-safe and supply is limited so prices have increased and yields are lower.

 

[copyright1997reloaded]

Yes, the premium yield of brokered CDs over similar duration UST over the last week so is definitely astounding. I've backed up the truck and loaded up on 5%+ CDs, in some cases even selling UST or GSE bonds and used the proceeds to buy a higher yielding CD.

I was thinking that the lower yield on UST is due to them being more popular, well known and viewed as super-safe and supply is limited so prices have increased and yields are lower.

In addition to what I posted earlier, another possible reason for a widening spread that the explicit FDIC insurance is 250K, so if you are a company or whale (not you personally) with say 100 million, then buying CD's presents more risk (than us peons buying under the 250K FDIC cap). For these folks, in times of trouble or worry about bank solvency, treasuries are the only place they can guarantee safe.

I too have been selling UST and buying CD's...(with some "is this too good to be true" worry).

 

[Freedom56]

Another batch of City National 5/5 and 5.1/3 CDs landed at Fidelity.

 

[Freedom56]

I tried getting a bond desk rep at Fido to do this with the $400k I bought this afternoon, and he said they have no way to change/tweak/discount/etc any new issue CD's. Were you mentioning this in terms of secondary market CD's?

This was from the HNBD at Fidelity. The advisor who was assigned to my account said that I was eligible for a discount due to the volume of CDs I bought over the past two weeks. She then contacted the fixed income manager for our region and he offered a $500 discount on the next 100K order. So instead of paying the face value of $100,000, they charged me $99500. He then advised me to contact him directly for future jumbo CD purchases for a better price.

 

[Echard]

Can you purchase the CD’s in off hours?

 

[MercyMe]

This was from the HNBD at Fidelity. The advisor who was assigned to my account said that I was eligible for a discount due to the volume of CDs I bought over the past two weeks. She then contacted the fixed income manager for our region and he offered a $500 discount on the next 100K order. So instead of paying the face value of $100,000, they charged me $99500. He then advised me to contact him directly for future jumbo CD purchases for a better price.

What is the HN part of HNBD? I just bought 2 batches of $200k CD's so feels like I got jipped.

 

[lawman]

I've backed up the truck and loaded up on 5%+ CDs, in some cases even selling UST or GSE bonds and used the proceeds to buy a higher yielding CD.

I did not think this type of trading would help you..Why would someone buy your UST or GSE bond instead of buying a C.D.?

 

[Freedom56]

What is the HN part of HNBD? I just bought 2 batches of $200k CD's so feels like I got jipped.

High Net worth Bond Desk. This is Fidelity's term for anyone who holds $3M or more in individual bonds, CDs, treasuries, in their portfolio.

 

[pb4uski]

I did not think this type of trading would help you..Why would someone buy your UST or GSE bond instead of buying a C.D.?

Dunno and don't care. All I know is that I sold them. In the case of the UST they seem to be currently in high demand.

One example: On Jan 10, I bought 3137EAFA2 FHLMC 0.25%23 DUE 12/04/23 for $96.156 (4.674% YTM)... sold it on Mar 15 for $96.8724 (4.74% YTM) and bought 857894J59 STEARNS BANK NTN 5.35%23CD FDIC INS DUE 12/26/23 for $100.00 (5.35% YTM).

In my mind I was swapping the 4.74% YTM for the GSE bond that I owned if I held it from Mar 15 to maturity for a 5.35% YTM on the CD since both mature in Dec 2023.

 

[Echard]

I did not think this type of trading would help you..Why would someone buy your UST or GSE bond instead of buying a C.D.?

There are many reasons. Portfolio allocation strategy, hedging, etc.

 

[lawman]

Dunno and don't care. All I know is that I sold them. In the case of the UST they seem to be currently in high demand.

I've never sold any notes in my Schwab account. If I wanted to sell something am I able to do it on line or would I have to call the bond desk?

 

[pb4uski]

You can sell online OR call the bond desk.

 

[MercyMe]

Can you purchase the CD’s in off hours?

I'd like to know as well.

 

[pb4uski]

Never done it but I think you can since for new issue CDs you are not so much buying them as putting in an order to buy them when they are issued.

 

[MercyMe]

High Net worth Bond Desk. This is Fidelity's term for anyone who holds $3M or more in individual bonds, CDs, treasuries, in their portfolio.

No offense at all to you Freedom, but I find this frustrating... it's a teeny, tiny example of how the rich get richer. I have $3M with Fido but half is in equity funds, but no love from them in terms of getting special discounts on CD's.


(Sorry for going off topic)

 

[pb4uski]

This was from the HNBD at Fidelity. The advisor who was assigned to my account said that I was eligible for a discount due to the volume of CDs I bought over the past two weeks. She then contacted the fixed income manager for our region and he offered a $500 discount on the next 100K order. So instead of paying the face value of $100,000, they charged me $99500. He then advised me to contact him directly for future jumbo CD purchases for a better price.

No offense at all to you Freedom, but I find this frustrating... it's a teeny, tiny example of how the rich get richer. I have $3M with Fido but half is in equity funds, but no love from them in terms of getting special discounts on CD's.


(Sorry for going off topic)

WADR, that's going off the deep end a little bit. I don't know the term of that $100k jumbo that Freedom got a $500 discount on but let's say it was 3 years for discussion purposes... so that $500 equates to an additional 0.167%.

The bond desk isn't going to give you a volume discount because you have equity funds with Fido.

Reminds me of that old Lee Iacocca commercial... if you can find a better car, buy it!

 

[Freedom56]

No offense at all to you Freedom, but I find this frustrating... it's a teeny, tiny example of how the rich get richer. I have $3M with Fido but half is in equity funds, but no love from them in terms of getting special discounts on CD's.


(Sorry for going off topic)

Well during the prior week, I bought $2.2M in CDs without any discounts in our accounts as well as my parent's account that I manage. The new advisor assigned to my account reached out to me yesterday morning and mentioned that with the volume CDs that I was buying, I should be dealing with the HNBD for discounts. So she put me in touch with the person assigned to our area for high net worth fixed income investors. He offered me the $500 discount per $100K buy on a single jumbo CD and I accepted. Fidelity receives about .75% to 1% commission for selling CDs from the bank so giving me $500 is a drop in the bucket given how much I purchased during the prior week.

 

[jazz4cash]

No offense at all to you Freedom, but I find this frustrating... it's a teeny, tiny example of how the rich get richer. I have $3M with Fido but half is in equity funds, but no love from them in terms of getting special discounts on CD's.


(Sorry for going off topic)

I maybe in the wrong forum.

 

[bmcgonig]

I maybe in the wrong forum.

Lol