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Old 03-24-2020, 05:33 AM   #61
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Vanguard muni bond yield curve for 5 pm ET Monday:

VG Muni Money Market: 3.37%
VG Short-Term Tax-Exempt: 1.24%
VG Limited-Term Tax-Exempt: 1.28%
VG Intermediate-Term Tax-Exempt: 1.44%
VG Long-Term Tax-Exempt: 1.82%
VG High-Yield Tax-Exempt: 2.29%

Even crazier. An article from last week providing some background on this phenomenon can be found here.
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Old 03-24-2020, 07:04 AM   #62
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I just think we are a ways away from interest rates going up again.

The treasury only MM funds I see - the 7-day yields have already dropped considerably.
Yes they will probably be near zero soon. These are abnormal times so I will give up a bit of yield for safety and security.
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Old 03-25-2020, 04:48 AM   #63
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Vanguard muni bond yield curve for 5 pm ET Tuesday:

VG Muni Money Market: 3.77%
VG Short-Term Tax-Exempt: 1.49%
VG Limited-Term Tax-Exempt: 1.51%
VG Intermediate-Term Tax-Exempt: 1.67%
VG Long-Term Tax-Exempt: 2.07%
VG High-Yield Tax-Exempt: 2.56%

The last time that VG Municipal Money Market Fund (VMSXX) spiked like this was the 2008/2009 financial crisis. VMSXX didn't break the buck back then - are the risks really higher this time around? It seems that some folks are so terrified that they view even VMSXX as too risky. OK - whatever.
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Old 03-25-2020, 08:45 AM   #64
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I just think we are a ways away from interest rates going up again.

The treasury only MM funds I see - the 7-day yields have already dropped considerably.

And a few years ago, when bond yields were historically low, many were certain that they had nowhere to go but up and acted accordingly. More evidence in favor of the argument that the market is smarter than we are.
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Old 03-26-2020, 04:04 AM   #65
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Vanguard muni bond yield curve for 5 pm ET Wednesday:

VG Muni Money Market: 4.05%
VG Short-Term Tax-Exempt: 1.55%
VG Limited-Term Tax-Exempt: 1.56%
VG Intermediate-Term Tax-Exempt: 1.73%
VG Long-Term Tax-Exempt: 2.12%
VG High-Yield Tax-Exempt: 2.62%

How high will VMSXX yield go?
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Old 03-26-2020, 06:14 AM   #66
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How high will VMSXX go?

I don't know but I'm more interested to know how long the rates will be elevated. It's not like you can lock into theses rates for any meaningful period of time, right?
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Old 03-26-2020, 10:22 AM   #67
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I just think we are a ways away from interest rates going up again.

The treasury only MM funds I see - the 7-day yields have already dropped considerably.
I'm coming around to thinking maybe I should hold a combination of short term Treasury and intermediate term Treasury. Or maybe all short term Treasury.

VUSXX Treasury MM 1.01% (rapidly declining yield)
VFIRX Short Term Treasury 0.92%
VFIUX Intermediate Treasury 0.95%

Confusing times.
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Old 03-26-2020, 10:27 AM   #68
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The bond fund payouts will drop too if equivalent treasuries are already lower - just more slowly. They always do.

Not much point in chasing yield right now. Maintaining the desired allocation is good.
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Old 03-26-2020, 10:37 AM   #69
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The bond fund payouts will drop too if equivalent treasuries are already lower - just more slowly. They always do.

Not much point in chasing yield right now. Maintaining the desired allocation is good.
Yes but one gets some cap gains kicker in the process. Here is the table for the Treasuries that those 3 funds key on:



So I am thinking of going with short term Treasury because if for some reasons rates go up fast, I won't suffer as much. My planning all along was to go with a combination of ST and Intermediate Treasuries in stock market sell offs. This just happened so fast and the worse thing is rates are very very low here.
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Old 03-26-2020, 01:35 PM   #70
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I have been buying up investment grade corporate bonds/notes over the past week and a half. The yields have been nothing short of incredible. The panic liquidation by funds allowed me to pick up quality investment grade short term notes well below par at YTM as much as 9.8% for 5 year notes and 6% for 1 year notes. Four weeks ago those same corporate notes were yielding 2.6% and 1.9%. Bid and ask spread on bonds were as much as 15-20%. I also traded investment grade preferred stocks (bought and sold) that were under massive liquidation that I haven't seen since 2008/9. Some fools were even selling their brokered FDIC insured CDs below par. These trades plus the bond purchases put me in the plus column for 2020 and added to my income stream going forward. What I have lost in this sell-off was most of my bond premiums which are coming back as bond funds are all programmed to look for yield.

I'm holding 20% cash now and ready any more mass liquidations. I believe that muni bonds will be targets going forward again. States and cities are losing a lot of their revenue stream from all the business closures. I avoided muni bonds as their yields were far too low relative to other bond investments and not worth risk of holding them. That may change in the future.

One of reasons why bond fund yields will be down going forward is that they liquidated many of their holdings at a loss and are now buying them back at much higher prices. I see the same pattern repeat over and over again.
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Old 03-26-2020, 01:45 PM   #71
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Where does one buy these invstment grade corporate bond deals direct?
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Old 03-26-2020, 02:39 PM   #72
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Where does one buy these invstment grade corporate bond deals direct?
Im sure your brokerage bond desk can help you out.
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Old 03-26-2020, 02:39 PM   #73
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I have been buying up investment grade corporate bonds/notes over the past week and a half. The yields have been nothing short of incredible. The panic liquidation by funds allowed me to pick up quality investment grade short term notes well below par at YTM as much as 9.8% for 5 year notes and 6% for 1 year notes. Four weeks ago those same corporate notes were yielding 2.6% and 1.9%. Bid and ask spread on bonds were as much as 15-20%. I also traded investment grade preferred stocks (bought and sold) that were under massive liquidation that I haven't seen since 2008/9. Some fools were even selling their brokered FDIC insured CDs below par. These trades plus the bond purchases put me in the plus column for 2020 and added to my income stream going forward. What I have lost in this sell-off was most of my bond premiums which are coming back as bond funds are all programmed to look for yield.

I'm holding 20% cash now and ready any more mass liquidations. I believe that muni bonds will be targets going forward again. States and cities are losing a lot of their revenue stream from all the business closures. I avoided muni bonds as their yields were far too low relative to other bond investments and not worth risk of holding them. That may change in the future.

One of reasons why bond fund yields will be down going forward is that they liquidated many of their holdings at a loss and are now buying them back at much higher prices. I see the same pattern repeat over and over again.
The muni bond train has left the station. Over the last week there was a big spike in yields. Mostly on the short end, but you could pick up AA - AAA bonds well over 4%. They are all gone now as soon as muni bonds were added into the bailout.
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Old 03-26-2020, 02:44 PM   #74
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I have been buying up investment grade corporate bonds/notes over the past week and a half. The yields have been nothing short of incredible. The panic liquidation by funds allowed me to pick up quality investment grade short term notes well below par at YTM as much as 9.8% for 5 year notes and 6% for 1 year notes. Four weeks ago those same corporate notes were yielding 2.6% and 1.9%. Bid and ask spread on bonds were as much as 15-20%.
...
Are you referring to BBB rated bonds? Any examples of the kind of corporate quality you are talking about?

I have only ever bought Treasuries in individual bonds and have no way of rating these except by going by the rating agency ratings. Many funds do their own ratings.
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Old 03-26-2020, 02:53 PM   #75
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Hers is a yield table as of today from Fidelity. All the good, high yield, high quality bonds are gone. The spike was late last week and early this week. Anything with yield now is close to junk rated.

https://fixedincome.fidelity.com/ftg...ILanding?bar=p
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Old 03-26-2020, 03:31 PM   #76
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Where does one buy these invstment grade corporate bond deals direct?
You need to look at the Finra site for trace data. Calling your broker or using a Fidelity bond selector first is a ticket to getting ripped off. Bond spreads are often very wide. You need to look at Finra trace data to see the price and trade history. Always use limit orders. Never go at ask price unless it is at or below the trace data.

Research the company and pick stable companies in stable to growth sectors like Intel, Applied Materials, JP Morgan Chase, Seagate Technology, Pfizer, Merk...etc

Don't rely on bond ratings. You need to look at free cash flow operating earnings and interest coverage ratio. For example Exxon is still rated as a AAA/AA+ but the reality is they have to issue debt to pay their dividends. Boeing is an example of another ratings disaster. It was rated A about 2 weeks ago and now is rated BBB+. The bonds trade like they are junk rated. It should be rated CCC. Ignore the ratings and look at the company and its fundamentals first.

Bonds Home
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Old 03-26-2020, 03:35 PM   #77
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Are you referring to BBB rated bonds? Any examples of the kind of corporate quality you are talking about?

I have only ever bought Treasuries in individual bonds and have no way of rating these except by going by the rating agency ratings. Many funds do their own ratings.
I am referring to BBB, BBB+, A+, A, Baa1 rated bonds from Capital One Financial, JP Morgan Chase, Applied Materials, Intel, and Seagate Technology.

Don't go by ratings only. I have high yield bonds in my portfolio that lower chance of default than an investment grade issue like Boeing, Chevron, or GE.
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Old 03-26-2020, 03:40 PM   #78
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Hers is a yield table as of today from Fidelity. All the good, high yield, high quality bonds are gone. The spike was late last week and early this week. Anything with yield now is close to junk rated.

https://fixedincome.fidelity.com/ftg...ILanding?bar=p
The ratings downgrades in the Muni bond market is about to hit. There will be a sharp downturn in revenue as the stay at home order is in effect and as many businesses in municipalities shutter completely after the order is lifted. Commercial real estate mortgage back bonds are about to become the next subprime debt bomb.
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Old 03-26-2020, 03:59 PM   #79
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The ratings downgrades in the Muni bond market is about to hit. There will be a sharp downturn in revenue as the stay at home order is in effect and as many businesses in municipalities shutter completely after the order is lifted. Commercial real estate mortgage back bonds are about to become the next subprime debt bomb.

I tend to think you are right, Munis in general are regarded as fairly default risk free at a certain quality(I know, not totally) but when in history have so many munis ever been in a scenario with sales tax revenues, toll revenues, convention taxes, airport taxes, liquor sale tax etc etc etc stopped. It has to have a negative impact. With unemployment headed where it will, very likely many won't be able to pay property taxes both residential and commercial. Now I do not think necessarily it means huge defaults as the FED will likely bail out but ratings decline and legitimate financial problems seem more real than ever.
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Old 03-26-2020, 04:08 PM   #80
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I listened to a muni bond fund manager the other day. He was a buyer. The risk reward is still there. Debt is almost always serviced no matter what, because if it’s not, they will never get financing again. Municipalities have multiple sources of revenue. He brought up the recent changes for online purchases that now must include sales tax. Things like that weren’t available in the last down turn.
Ratings down grades don’t hurt a bond I already own. I hold to maturity so I could care less what the value of it is day to day.
As far as getting ripped off by a Fidelity, they give you access to third party pricing. It’s a visible part of the process.
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