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

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It's always been my thought that any fixed income, other than perhaps high yield which can be almost or as risky as equities, does not really out pace inflation. The rates are typically close to but less than whatever the inflation is.

I wish the arguing would stop, I don't want to see this thread closed.
 
We are on the verge of returning to the pre-2008 yield curve. Stay focused. Some of us want JP Morgan 10 year notes at 8%. When that happens it will be caviar, lobster tails, scallops, and USDA prime steaks.
 
I don’t buy fixed income to keep pace with inflation. I buy it for current income with capital preservation. I buy other things for my inflation hedge.
Some of us actually are over funded so inflation is a secondary threat.
 
COcheesehead said:
I don’t buy fixed income to keep pace with inflation. I buy it for current income with capital preservation. I buy other things for my inflation hedge.
Some of us actually are over funded so inflation is a secondary threat.
Click to expand...

Or no threat at all, but an opportunity to make more income.
 
COcheesehead said:
I don’t buy fixed income to keep pace with inflation. I buy it for current income with capital preservation. I buy other things for my inflation hedge.
Some of us actually are over funded so inflation is a secondary threat.
Click to expand...
Inflation isn't just a threat, it's a reality. But as long as you are aware and OK that your capital preservation might actually be losing to inflation/taxes, and isn't truly a lot of extra "windfall" money from wealth gains in purchasing power, that's fair and your decision.
 
<mod note> This thread is to discuss specific non-gov’t fixed income opportunities, track them, and discuss the logistics of buying and selling. Please take the off-topic petty squabbling offline. It is distracting, bothers members and has led to many complaints.

Off topic posts were removed, and new off topic posts will also be removed without notification.
 
I look at the overall performance in our portfolio. VG performance shows the IRR. The significant change we've made is to create a bond/CD ladder in the tIRA which holds more than 1/2 of our portfolio. The change in our tIRA started in April 2022 and we're gradually moving into the 4-5% IRR because of the bond ladder and will be there completely by the end of 2023.

Total portfolio IRR for 1 year: 9.1%
Equity portion (40% of portfolio) for 1 year: 15.1%
tIRA (bond ladder) portion for 1 year: 4.9%
Edit: tax-deferred portion of portfolio 55% of portfolio, 5% cash

The change is significant when compared to bond fund IRR over 10 years. Our tIRA all bond funds IRR never reached more than +2.5% with bond funds and went into very negative territory in 2021 - 2022 until the ladder returns kicked in. Tracking over time, I see it is necessary for us to go long-term in 2023 with CDs hoping to get 4%+ for 10 years which will provide us with more income than the pension offered. And we're keeping the principal.

I'm not one to get into the weeds of these calculations. I only look at our needs and have followed the very valuable advice from this thread. We are completely retired this year and have no WDs from our portfolio. Just changed the strategy.
 
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I will continue to follow any fixed-income thread that helps us ER with confidence and predictability.
 
In other news the jobs report came in light at 209K jobs compared to 240k expected. Prior months were revised downward by 110k jobs.

It is the fewest jobs added since Dec 2020.

Bonds yields modestly lower.

The 18 month noncallable agency bonds FHLB and FNMA I bought yesterday at 5.4%+ are yielding a bit lower this am.
 
Freedom56 said:
We are on the verge of returning to the pre-2008 yield curve. Stay focused. Some of us want JP Morgan 10 year notes at 8%. When that happens it will be caviar, lobster tails, scallops, and USDA prime steaks.
Click to expand...

The highest the 10 year Treasury has achieved since 2000 is 5.42%. Assuming a spread of 1-1.5% for A rated bonds, that would only be around 6.42-6.92%. Nothing to sneeze at. Are you thinking they will have a 1 or 2 year call, thus bumping it to 8%?

Overall, I have difficulty seeing the 10 year get to or over 5% because of it completely wrecks the deficit, which is already a wreck.

I'm trying to decide whether to go ahead and fill in years 6-10 in the ladder, or wait, and it's a tough call.
 
Echard said:
The highest the 10 year Treasury has achieved since 2000 is 5.42%. Assuming a spread of 1-1.5% for A rated bonds, that would only be around 6.42-6.92%. Nothing to sneeze at. Are you thinking they will have a 1 or 2 year call, thus bumping it to 8%?



Overall, I have difficulty seeing the 10 year get to or over 5% because of it completely wrecks the deficit, which is already a wreck.



I'm trying to decide whether to go ahead and fill in years 6-10 in the ladder, or wait, and it's a tough call.
Click to expand...
Wrecks the deficit, wrecks the economy, wrecks the equity market.

But the good news is there is no evidence that high investment grade credits will top out anywhere near 8%.

Consumers expect longer term inflation between 2-3%. The long term bond will settle probably about where it is now, unless something changes to US demographics or government blows out spending again.
 
CUSIP 06367WX81
Security type Corporate
Issuer Bank Of Montreal
Maturity 07/30/2025
Coupon 1.000
Industry Finance (bank)
Debt ranking Unknown
Min. increment 1,000
Min. denomination 1,000
Pay frequency Quarterly
Day count 30/360
Coupon type Stepped: Known Future Coupon Rates
Next coupon 07/30/2023
Foreign bond (US$) Yes
Bond form Book entry
Collateral Medium term note
State restrictions —
Survivor option No
Conditional put No
Conditional put
reason
Redemption price 100.000
Common stock BMO
Security notes —
Issuance
Dated date 07/30/2020
First settlement 07/30/2020
First coupon 10/30/2020
Last coupon 04/30/2025
Price at issue 100.000
Yield at issue 0.000
Amount issued 21,000,000
Outstanding issue size 21,000,000
Ratings
Moody's S&P
Rating A2 —
Credit watch — —
Outlook Note —
Calls & sinking fund features
Callable Yes
Call timing 07/30/2023 at 100 on 5 days notice
Call type Discrete
Full or partial call —
Redemption details —
Call notice 5 Days
Conditional call —
Special mandatory redemption No
Make whole call No
Sinking fund No
Call schedule
Date Price
07/30/2021 100.00
10/30/2021 100.00
01/30/2022 100.00
04/30/2022 100.00
07/30/2022 100.00
(5 of 16) See full schedule
TRACE trade activity (delayed 4 hours)
Date Time Trade Size Price YTW Trade Type
06/02/2023 09:41:57 25 91.0850 5.783 Customer Sold
06/02/2023 09:41:57 25 91.2100 5.718 Inter-dealer Trade
12/29/2022 12:07:59 25 90.6500 5.187 Customer Bought
12/29/2022 12:07:59 25 90.5500 5.231 Inter-dealer Trade
12/27/2022 11:29:51 25 89.6640 5.604 Customer Sold

See more TRACE trade activity
Click to access live TRACE data
Coupon schedule
Date Coupon
07/30/2020 1.00
07/30/2023 1.25
07/30/2024 1.50
Bid/Ask details
Price 90.082 / 91.485
Quantity 225 / 25
Yield to worst 6.564 / 5.791
Yield to maturity 6.564 / 5.791
Yield to call 209.262 / 177.065
Yield to sink —
Current yield 1.110 / 1.093
Modified duration 1.99 / 1.995
Convexity 0.045 / 0.045




This one?
 
Agency securities safer, some tax benefits. I look for noncallable.

ETA:

Post immediately above crossed mine.

That one looks fairly interesting since bought at a discount. More costly to call.

I like it.
 
Last edited:
MarieIG said:
CUSIP 06367WX81
Security type Corporate
Issuer Bank Of Montreal
Maturity 07/30/2025
Coupon 1.000
Industry Finance (bank)
Debt ranking Unknown
Min. increment 1,000
Min. denomination 1,000
Pay frequency Quarterly
Day count 30/360
Coupon type Stepped: Known Future Coupon Rates
Next coupon 07/30/2023
Foreign bond (US$) Yes
Bond form Book entry
Collateral Medium term note
State restrictions —
Survivor option No
Conditional put No
Conditional put
reason
Redemption price 100.000
Common stock BMO
Security notes —
Issuance
Dated date 07/30/2020
First settlement 07/30/2020
First coupon 10/30/2020
Last coupon 04/30/2025
Price at issue 100.000
Yield at issue 0.000
Amount issued 21,000,000
Outstanding issue size 21,000,000
Ratings
Moody's S&P
Rating A2 —
Credit watch — —
Outlook Note —
Calls & sinking fund features
Callable Yes
Call timing 07/30/2023 at 100 on 5 days notice
Call type Discrete
Full or partial call —
Redemption details —
Call notice 5 Days
Conditional call —
Special mandatory redemption No
Make whole call No
Sinking fund No
Call schedule
Date Price
07/30/2021 100.00
10/30/2021 100.00
01/30/2022 100.00
04/30/2022 100.00
07/30/2022 100.00
(5 of 16) See full schedule
TRACE trade activity (delayed 4 hours)
Date Time Trade Size Price YTW Trade Type
06/02/2023 09:41:57 25 91.0850 5.783 Customer Sold
06/02/2023 09:41:57 25 91.2100 5.718 Inter-dealer Trade
12/29/2022 12:07:59 25 90.6500 5.187 Customer Bought
12/29/2022 12:07:59 25 90.5500 5.231 Inter-dealer Trade
12/27/2022 11:29:51 25 89.6640 5.604 Customer Sold

See more TRACE trade activity
Click to access live TRACE data
Coupon schedule
Date Coupon
07/30/2020 1.00
07/30/2023 1.25
07/30/2024 1.50
Bid/Ask details
Price 90.082 / 91.485
Quantity 225 / 25
Yield to worst 6.564 / 5.791
Yield to maturity 6.564 / 5.791
Yield to call 209.262 / 177.065
Yield to sink —
Current yield 1.110 / 1.093
Modified duration 1.99 / 1.995
Convexity 0.045 / 0.045




This one?
Click to expand...

Possibly but I'm not sure. I was mostly asking about credit risk
 
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