Muni Bond (and Muni Bond Fund) Discussion

[pdxgal]

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Originally Posted by njhowie Happy to be done with the oils because of all the volatility over the past few years. Very happy to have gotten her out at/near the all-time highs on XOM and COP. Had heart palpitations a few times with them just three years ago.

Your comment made me flash back to my mom's situation about 15 years ago when our investment advisor convinced my mom to sell most of her remaining Chevron stock. It was a large part of her portfolio. Had been in the family since the 1920's! Thankfully we also dumped her PG&E preferred stock (also bought in the 20's) around the same time, not long before a gas explosion in their lines killed 8 people, they were found liable for several apocalyptic forest fires, etc. Felt like we dodged a bullet on both counts, getting out while the getting was good.

[pb4uski]

Quote:

Originally Posted by sengsational Thanks, all, for the thoughts. At the time of the original build, munis were paying the best, I think. I suppose I could check CD's and treasury rates as the munis mature, but I don't want to have to open a discussion about credit risk, no matter how small, so probably won't delve into corporate bonds for her.

How about GSE bonds? Not full, faith and credit but usually Aaa, better than most minis and a tad more yield than CDs and USTs... but usually callable.

[sengsational]

I might be able to say a GSE issue is a fit for the project. Next round, I'll check the rate advantage.

[njhowie]

Gundlach Says Listen to Bond Market Rather Than Fed on Rates

https://finance.yahoo.com/news/gundl...220343912.html

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My 40 plus years of experience in finance strongly recommends that investors should look at what the market says over what the Fed says

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He also drew attention to the inversion of the Treasury yield curve, which have successfully predicted economic slumps in the past. Inverted yield curves have always led to recession in relatively short order, he said, adding that “there is tremendous upside in many bond strategies.”

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Gundlach’s comments on the Fed echo remarks he made late last week on Twitter in which he said “There is no way the Fed is going to 5%. The Fed is not in control. The Bond Market is in control.”

[njhowie]

10-year treasury yield cratering again today.

[MercyMe]

I've been out of Vanguard's intermediate-term muni fund (VWIUX/VWITX) for a good while now. Does anyone think it would be a mistake to DCA back in to it?

[aja8888]

Quote:

Originally Posted by MercyMe I've been out of Vanguard's intermediate-term muni fund (VWIUX/VWITX) for a good while now. Does anyone think it would be a mistake to DCA back in to it?

If interest rates are going to start dropping, the NAV of muni bond funds should increase. That's a good thing if you buy in while the NAV is down.

[COcheesehead]

If they go up…
NAV will drop more though.

[aja8888]

Quote:

Originally Posted by COcheesehead If they go up… NAV will drop more though.

Exactly, it's a casino out there.

[jazz4cash]

I have come to understand how weak the pricing mechanism is for these thinly traded bonds when there is frequently no bid. As a holder of individual bonds, it’s easy to ignore. If I’m holding a bond fund I have one eye on the NAV and the other on my fellow fund holder and wondering if I need to race to beat him out the door.

[COcheesehead]

Quote:

Originally Posted by jazz4cash I have come to understand how weak the pricing mechanism is for these thinly traded bonds when there is frequently no bid. As a holder of individual bonds, it’s easy to ignore. If I’m holding a bond fund I have one eye on the NAV and the other on my fellow fund holder and wondering if I need to race to beat him out the door.

Bond funds are not bonds and I think many people learned that lesson recently.

[njhowie]

10-year at 3.375% at the moment.

[COcheesehead]

Interesting tidbit. I run a muni screen of my state specific bonds a couple times a week. I usually get about 1200 - 1500 results. Today - 700. Hmmmmm.

[njhowie]

Quote:

Originally Posted by COcheesehead Interesting tidbit. I run a muni screen of my state specific bonds a couple times a week. I usually get about 1200 - 1500 results. Today - 700. Hmmmmm.

My saved queries have also declined in resulting bonds over the past few weeks. Yields are way down.

[COcheesehead]

Quote:

Originally Posted by njhowie My saved queries have also declined in resulting bonds over the past few weeks. Yields are way down.

The yield change has been evident. I wasn’t aware of the low inventory though. I suppose they go hand in hand. People buying.

[53anddone]

Quote:

Originally Posted by COcheesehead Interesting tidbit. I run a muni screen of my state specific bonds a couple times a week. I usually get about 1200 - 1500 results. Today - 700. Hmmmmm.

Maybe its a result of fewer new bonds due to higher rates? Haven't run my state screen in awhile I will check it out and see what I get.

[njhowie]

So, as periodically happens, my muni, which was pre-refunded/escrowed was supposed to be redeemed on March 1, wasn't. That morning, in the activity it did show the redemption, cash put in the account and the bond removed from my holdings. Next morning (yesterday) the activity entry was removed, the bonds back in my account and the cash taken away.

I call the fixed income folks, I get the same run around as usual. Nothing we can do, have to wait. Survey comes, I give them a piece of my mind. I go to US Bank Corporate Trust Services website as they are the trustee for this bond issue/escrow, drop them a message from their Contact Us screen. They send me a reply this morning that it's an issue with my broker. I call Fidelity fixed income again. Rep starts repeating the same basic info as the day before. I'm livid at this point. They say it's DTCC and nothing they can do. I say get someone in your department to pick up the phone and call DTCC and find out what the problem is. Rep says we usually give them 3 to 5 days to get us the money before inquiring. I tell him that's completely unacceptable. He tells me that's a risk with these bonds. I let loose on him that there is no risk, this is pre-refunded, all the money is escrowed, someone has my money, I am no longer collecting interest, and Fidelity is sitting by idly doing nothing. The rep asks what they can do? I once again say to pick up the phone and call DTCC. He offers to let me speak to a manager. I say fine, let's do that. The manager gets on the phone, and the attitude is immediately that I'm wasting his time. Begins giving me the same story that there's nothing they can do. Then he decides to add in "and technically, we don't have to give you the money for up to 10 business days". I ask him incredulously "After the redemption date"? He says yes. I tell him I need a reference for that, where is that documented? He says he doesn't have it. Obviously he's BS'ing. He says I can request it. I say fine - tell me who to contact, and he reads the main customer service address in Ohio off his screen.

I'm really beginning to get annoyed with the fixed income folks at Fidelity. The service level has been deteriorating over the past couple years. Whenever I contact them I get a run around. It's really been a few years since someone in the department gave me good/correct information or resolved an issue.

[Mr._Graybeard]

Yes, I think it's all on Fidelity. I never had a similar problem at Schwab.

[sengsational]

I'd be interested in hearing of this foot dragging on maturity at other brokerages. What government agency polices the laws? Would that be a next step? Maybe if you had details about your specific plans of opening a case with an agency, that saber rattling would get their attention.

[dmpi]

If you don't pay up in time the brokerage charges a 11% margin, If they don't up in time.... well...we'll just wait a few more days...