Muni Bond (and Muni Bond Fund) Discussion

[njhowie]

10-year treasury is pushing 1.66% this morning, which is beginning to break out of the 1.4%-1.6% range it had previously been stuck in before the last dip down to 1.2% area. It will become interesting if it hits 1.7%. Again, I'm hoping we begin to see a little relief on the munis and that prices come down some (giving higher yields). Maybe as we get closer to year end and tax maneuvers begin to take place?

 

[njhowie]

Guys - here's my gift of a free $100 for each of you ($200 if you do it for DW as well).

Go to this link:

https://www.fidelity.com/go/special-offer

The offer is open to existing Fidelity customers. Go to the link, choose a new account to open (I just chose another Investment account). You can have multiple investment accounts, so it's not an issue. Go through the screens (you'll see the FIDELITY100 promo code automatically filled on the screen with the account registration info).

I did it for myself, then logged in to DW's account and did it for her. Took about 1 minute each.

Set up a $50 transfer into the new account (must be new money from outside bank, not from existing Fidelity account), should see the $100 bonus credited within 25 days.

After the $100 bonus is credited it has to stay in the account for 90 days. But after that you can just empty it all in to your primary Fidelity account or send it back to your bank.

A few minutes after the account is created, you should receive email confirming registration for the $100 cash reward.

Easiest/fastest 200% I've ever made.


Note: Log out of your Fidelity account before you go to the offer page. Let it prompt you for your log in on the screen where it asks if you're an existing Fidelity customer. If you're logged in and you go through the offer page, it may not register the new account with the offer - I had to redo mine...didn't get the email confirmation of the offer the first time.

 

[jazz4cash]

Thanks Howie.
It took longer to read your post than to open the account. I was procrastinating on opening CMA so this was perfect. I looked at a couple of the disclosures but I didn’t read them. One of them is 57 pages. I haven’t funded the account yet either since it won’t pull from an account that is previously linked. Hopefully that can be done in a day or two.

 

[njhowie]

I haven’t funded the account yet either since it won’t pull from an account that is previously linked.

At first it similarly stopped me, but there was a link to click right there to link the new account with the bank account already in the login. After clicking that, it gave a popup, clicked submit, and it then proceeded. Transfers completed from bank this morning. Try going to the funds transfer page again, choose your new CMA account and look closely to see if the link is there to attach with your existing bank link.

Also, if you have the Fidelity rewards Visa card, there is a current promotion if you pay any insurance bill with the card, they'll give you 1000 points ($10). I received an email for this the other day, and just paid my December insurance bill in advance.

 

[jazz4cash]

Ok. I think I stumbled onto the procedure you suggested. I was expecting my two previously linked accounts to be available but had to re-select them to be linked to the new account. Didn’t need to re enter acct/Rtg numbers so was easy.

 

[njhowie]

Due to an issue that arose with BofA/Merrill this past weekend, I too just opened a Fidelity CMA. I came to the realization that we needed to have a backup bank. Happy it was so easy and only took about 2 minutes, if that.

 

[njhowie]

Just had a handful of 5% New Orleans GO bonds called/defeased for 9/1/2022.

I have another batch that are also 5% New Orleans GO, callable 12/1/2022, so I suppose those are coming next.

 

[jazz4cash]

Ok. I think I stumbled onto the procedure you suggested. I was expecting my two previously linked accounts to be available but had to re-select them to be linked to the new account. Didn’t need to re enter acct/Rtg numbers so was easy.

PSA.........I had not realized that I would need to designate beneficiaries for this new account. I thought it would default to the same designations I have for my other accounts, but that would be inappropriate. They do have pretty good notifications but I've been ignoring this account since I set it up in a hurry.

 

[njhowie]

Anything exciting, guys? I pick up a muni here and there - pricing seems to be loosening up a little. I have a call tomorrow. Maybe a muni to swap into will present itself.

jazz - suspecting we should be seeing the $100 bonus soon on our new $50 Fidelity accounts. I topped off our I Bond purchases for the year before November 1. Will get another $20k in there between January and May.

Graybeard, I took a few of each of the JPM 240% participation CDs this month. The Goldman 7-year 130% is no bargain - I purchased the same as 5-year at 200% two years ago. Always scratching my head as to how they determine what the participation rate will be...might be a random number generator.

 

[Mr._Graybeard]

I got a partial bond call this week, student loan paper that I picked up at about face value several years ago. Since then the issuer has been nibbling away about once a year -- the bond started out at $50k, and it'll be down to $15K after the partial call takes effect next month. I haven't seen any student loan bonds on the market for quite some time.

I bought $10K in IBonds this month, and we'll do $10K more in my wife's acct before the end of the month. They look tasty at the moment, and it can't hurt to diversify.

 

[jazz4cash]

Fido chipped in the$100 bonus already. Now I need to actually utilize the cash management account I opened to get the bonus.

I <sheepishly> closed the TD Bank and M&T Bank checking accounts I had opened just for a bonus. I was gonna roll into more bonus programs but I don’t feel good about that.

One of my NYT muni’s matured and I rolled the principal into my 1st ibond. That’s the only bit of excitement for me. That Treasury direct website is so clunky yet extremely easy to purchase the bond.

I have a NASA FCU CD that matures next month. I plan to buy an ibond for DW and put the rest into equity funds but I’m watching MYGA rates too.

 

[njhowie]

Fido chipped in the$100 bonus already. Now I need to actually utilize the cash management account I opened to get the bonus.

Looks like we got it in one of our accounts but not the other. Oh well, not going to spend time pursuing it. It didn't get posted for the account I had a problem setting up, so something ultimately did go wrong there. Time to empty/close that one.

As far as CDs, I picked up another HSBC yesterday in the IRA that popped up on Fidelity's secondary market list - there are about 5 of them with maturities in 2027 and 2028 that are being unloaded and are there every day. When the price/yield get good, I grab them. Yesterday I picked up 11/13/2028 maturity with YTM of 2.54%, YTC of 1.2% for 24 months. It's 3.125% coupon, so the likelihood is it gets called.

 

[jazz4cash]

I keep forgetting I have a ~3% NFCU add on that matures in 15 mos. I might even go over the insured limit there, but really need some longer terms to keep the ladder going.

 

[finnski1]

Guys - here's my gift of a free $100 for each of you ($200 if you do it for DW as well).

Go to this link:

https://www.fidelity.com/go/special-offer

The offer is open to existing Fidelity customers. Go to the link, choose a new account to open (I just chose another Investment account). You can have multiple investment accounts, so it's not an issue. Go through the screens (you'll see the FIDELITY100 promo code automatically filled on the screen with the account registration info).

I did it for myself, then logged in to DW's account and did it for her. Took about 1 minute each.

Set up a $50 transfer into the new account (must be new money from outside bank, not from existing Fidelity account), should see the $100 bonus credited within 25 days.

After the $100 bonus is credited it has to stay in the account for 90 days. But after that you can just empty it all in to your primary Fidelity account or send it back to your bank.

A few minutes after the account is created, you should receive email confirming registration for the $100 cash reward.

Easiest/fastest 200% I've ever made.


Note: Log out of your Fidelity account before you go to the offer page. Let it prompt you for your log in on the screen where it asks if you're an existing Fidelity customer. If you're logged in and you go through the offer page, it may not register the new account with the offer - I had to redo mine...didn't get the email confirmation of the offer the first time.

Thanks. Just did one each for the wife and I.
Put in the $50 each got $100 each. Nice!
Now on to Treasury direct to get my 2 $10k I bonds.

 

[njhowie]

Graybeard - I picked up a Texas Municipal Water/Sewer system issue today.

CUSIP 099743GE0

YTM = 5.15% 12 years
YTC = 1.58% 21 months

 

[phil1ben]

NJ Howie: Saw that Texas issue this morning. They raised the price. Only 5.5MM outstanding so maybe they won't call it.

 

[Mr._Graybeard]

Graybeard - I picked up a Texas Municipal Water/Sewer system issue today.

CUSIP 099743GE0

YTM = 5.15% 12 years
YTC = 1.58% 21 months

A 6% coupon on one of those bonds is pretty unusual. Hopefully they'll neglect to call it on schedule.

 

[Mr._Graybeard]

Well, I'll get an extra month of interest out of Crook County, but it appears they're finally calling their 5.25% note as of 12/15: CUSIP 213185FM8. One of my O'Hare bonds is getting called too as of Jan. 1, on schedule.

I'm thinking about moving more into preferreds, mostly via the ETF PFFD. Most of the holdings are in major banks, and 30-day SEC yield is 4.76%. It seems to be holding up better than the average bond index fund, and yield is a lot higher.

 

[jazz4cash]

Graybeard - I picked up a Texas Municipal Water/Sewer system issue today.

CUSIP 099743GE0

YTM = 5.15% 12 years
YTC = 1.58% 21 months

What’s your expectation for this issue? Do you expect issuer will not redeem at 21 months? That YTC makes look favorably at a muni fund. I generally avoid bond funds and prefer individual bonds but I’ve held SMDMX Fidelity Md Muni fund for a few years and it has maintained 2% minimum distribution yield throughout that time. It was underwater for me a good bit of the time. Now I wish I had loaded up when the price was down. I still have only a very modest gain.

 

[njhowie]

What’s your expectation for this issue? Do you expect issuer will not redeem at 21 months? That YTC makes look favorably at a muni fund. I generally avoid bond funds and prefer individual bonds but I’ve held SMDMX Fidelity Md Muni fund for a few years and it has maintained 2% minimum distribution yield throughout that time. It was underwater for me a good bit of the time. Now I wish I had loaded up when the price was down. I still have only a very modest gain.

I bought willing to be happy whichever way they go. Yield is good for call or maturity dates in my view.

 

[jazz4cash]

I bought willing to be happy whichever way they go. Yield is good for call or maturity dates in my view.

I figured you’d say that. Betting on the the chance they won’t call it but still getting paid to see how it plays out. I was planning to increase equity allocation but the market feels toppy to me. Shouldn’t matter I guess.

 

[njhowie]

New set of market-linked CDs posted at Fidelity this morning.

GS 1/3/2029 maturity 300% participation rate - I've purchased this same one (7-year, same index) in August, September, and October, but 200% participation rate. If I liked it at 200%, it's got to be even better at 300% - so I'm picking up some of these.

JPM 12/28/2027 maturity 160% participation rate - I purchased this same one, same index, but for 7 years in August and September with 200% participation rate, and last month for 240% participation rate. So, I'm passing on this issue.

JPM 1/2/2026 maturity 135% participation rate - I purchased this one last month, same index, but for 7 years and 240% participation rate. Likewise, passing on this one.

I'm just continuing to slowly buy them monthly, effectively laddering them so down the road at some point I'll be having maturities monthly with a guaranteed minimum payout.

 

[Mr._Graybeard]

New set of market-linked CDs posted at Fidelity this morning.

GS 1/3/2029 maturity 300% participation rate - I've purchased this same one (7-year, same index) in August, September, and October, but 200% participation rate. If I liked it at 200%, it's got to be even better at 300% - so I'm picking up some of these.

JPM 12/28/2027 maturity 160% participation rate - I purchased this same one, same index, but for 7 years in August and September with 200% participation rate, and last month for 240% participation rate. So, I'm passing on this issue.

JPM 1/2/2026 maturity 135% participation rate - I purchased this one last month, same index, but for 7 years and 240% participation rate. Likewise, passing on this one.

I'm just continuing to slowly buy them monthly, effectively laddering them so down the road at some point I'll be having maturities monthly with a guaranteed minimum payout.

I like the potential return on that GS cd, but ... 7 years is kinda long for my taste. I may try to contact JP Morgan to see exactly what their "Large Cap Dynamic Blend 3 Index" consists of.

 

[njhowie]

I like the potential return on that GS cd, but ... 7 years is kinda long for my taste. I may try to contact JP Morgan to see exactly what their "Large Cap Dynamic Blend 3 Index" consists of.

From the prospectus, on the last page is a link to Underlying supplement no. CD-35-II dated January 21, 2021:

https://www.jpmorgan.com/content/da..._CD_35_II_Large_Cap_Dynamic_Blend_3_Index.pdf

 

[Mr._Graybeard]

I was scanning the seecondary muni selection on the Fidelity website last night and found a couple of nice offerings, but since the market was closed, the software wouldn't let me make an offer. I checked on them this morning -- gone.

Having bought quite a few bonds now from both the Fidelity and the Schwab platforms, I have to say I prefer Schwab's. It doesn't let you offer any price other than the ask, but it does accept after-hours offers at least some of the time.

Schwab also lists interest due on the bond, making it easy to compute your total cost at a glance. Unless I'm missing something, on the Fidelity platform you have to begin a buy order to see what interest is due. I noticed a couple 4%-5% coupons offered recently that had call dates coming up quickly. The yields Fidelity listed looked tasty, but only because the table failed to note the interest due -- almost six months' worth. That made their real yields negative.