Freedom56
Thinks s/he gets paid by the post
This security can be called starting in 2025 and therefore is a hedge if rates run away to 10%. Nothing wrong with JP Morgan.
We are entering a "Golden Period" for fixed income investing
- Thread starter Freedom56
- Start date
- Status
This security can be called starting in 2025 and therefore is a hedge if rates run away to 10%. Nothing wrong with JP Morgan.
jazz4cash
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Trying to restrain myself from getting a bit of the JPM step-up bond now that I finally have >12 mos of expenses in a High Yield Savings Account. I really need to stop looking until my next CD matures in August.
Freedom56
Thinks s/he gets paid by the post
From Barron's Today:
Bonds Are Entering a New Era. How to Play It.
"For stock investors, higher bond yields become a significant headwind when the 10-year Treasury crosses above 5%, Yamada’s work shows. That hasn’t been the case since before the 2008-09 financial crisis. But history shows it could happen again."
If the 10 year does cross 5%, some of those intermediate and long term funds are going to see another 20-25% haircut.
https://www.barrons.com/articles/bonds-new-era-how-to-play-it-660a444d?mod=RTA
Bonds Are Entering a New Era. How to Play It.
"For stock investors, higher bond yields become a significant headwind when the 10-year Treasury crosses above 5%, Yamada’s work shows. That hasn’t been the case since before the 2008-09 financial crisis. But history shows it could happen again."
If the 10 year does cross 5%, some of those intermediate and long term funds are going to see another 20-25% haircut.
https://www.barrons.com/articles/bonds-new-era-how-to-play-it-660a444d?mod=RTA
I'd love to hear thoughts about this Canadian Imperial Bank Bond: CUSIP 13605WK59.
The return is 5.8%, though the coupon is only 1.1%. I'm thinking of buying this for my IRA, which I don't plan to tap for years. I don't care about income, so the 1.1 coupon doesn't bother me. I care about total return. It matures in May 2027.
Thoughts?
The return is 5.8%, though the coupon is only 1.1%. I'm thinking of buying this for my IRA, which I don't plan to tap for years. I don't care about income, so the 1.1 coupon doesn't bother me. I care about total return. It matures in May 2027.
Thoughts?
I got the impression from some folks that a 5% 10 year would not be tolerated due to the amount of debt the US has now. But I might have misunderstood what I read. What is your opinion Freedom?
Freedom56
Thinks s/he gets paid by the post
Since it's for your IRA and you don't have to worry about tax liability, I would buy higher coupon notes from CIBC. Look for at least a 4.5% coupon and 5.8% yield or better for a 4 year note.
This bond’s not going to be called, so a 5.8% yield on a four-year A rated bond is pretty good.
I'm not buying the new issues (or secondary market) with coupons at the higher end because these bonds all are callable and I'm looking for something that is not callable. I know there are people are concerned about income and less concerned about calls, and I can appreciate that. I'm not concerned about that for this IRA. I just want to make sure that I'm not missing something else that makes this bond a poor choice.
That was my thinking. Even though it's technically callable, there seems to be very, very little risk of it being called given the low coupon. But, I do want to know if I'm missing something.
Freedom56
Thinks s/he gets paid by the post
IMO, near term the 10 year is likely to climb to 4.25-4.5% which will retrace back to the 2007 timeframe. Beyond, that a 5% 10 year can do a lot of damage to the markets.
copyright1997reloaded
Thinks s/he gets paid by the post
As an alternative data point, the JPMorgan Chase & Co., 4.20% Dep Shares Non-Cumulative Preferred Stock Series MM (Ticker Symbol: JPM-M CUSIP: 48128B523) last traded at $19.37 (callable at $25), which is a 5.43% yield. If rates go up, the price will likely fall, but you will still receive the 5.34% on investment in perpetuity. If rates fall a lot, it would rise in price and be eventually called at $25, which would represent a 29.26% capital gain.
Note that it is non-cumulative (as almost all bank preferred are due to tier 1 capital rules), but for Chase to get to the point where dividends are omitted on both their common and preferred issue...well things might be not so good all around their debt issuance.
I'm just throwing this out there as an alternative (I own it).
Last edited:
That’s a pretty big jump. 4.5% 10 year could translate into 5.25-5.75% 5 year CDs wouldn’t it
Morningstar expects inflation to receed to 3.5% in 2023 & be below 2% in 2024-2027. If that happens I don’t know how that jives with longer term interest rates but it should usher in a kinder gentler Fed. Hope there’s an opportunity to buy some 5%+ non callable 3-5 year CDs in the coming months
COcheesehead
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
You can get returns like that (or better) right now in bonds, but not in a CD.
So I can get a 5 year corporate bond paying day 5.25% non callable right now? How low on the rating scale do I have to go? Seems like I looked at AAA corporate bonds & they weren’t paying that great. But I haven’t even bought a corporate bond before. I’ll look tomorrow & see what vanguard has.
COcheesehead
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
It’s a hunter’s market. I regularly pursue taxable muni’s, agency and corporate bonds. I have picked off all kinds of stuff, still investment grade, but yielding 6%-7%+. Some I hold, some I flip for a short term profit. The market is day by day, hour by hour, minute by minute. Stuff comes and goes.
Last edited:
You’re more of a seasoned trader. I’m more a novice investor. You’re comfortable taking risks.it sounds like. I’d love to turn this over to Vanguard but after reading Freedoms posts I realize they’d put me in index bond funds that bought low coupon debt. I gotta tell you I’m getting tired & I feel overmatched.
COcheesehead
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
The risks I am taking are only slightly more than what you seek. You seem to have a vision and won’t pull the trigger until you get to that point. That’s fine, but you may never reach that level of safety, with that duration at that yield. I buy what is and don’t worry about the future because the way my ladder is constructed I will always have cash from interest or maturing bonds to take advantage of whatever the future holds. There is no perfect time for anything.
Some of the bank bonds discussed on here in the not too distant past as being superior investments at the time and I bought some like some others on here, don’t look as good as what can be bought today. I still own them, I don’t fret, I bought what looked good then.
I encourage you to begin to take action. You’ll end up like most of us here and learn by doing.
Car-Guy
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
If I believed Morningstar, I'd be buying/locking in 3 to 5 yr CD's now at the 4.7 and 4.5% rates that are currently available. But I don't and I'm not. If the Fed raises rates another 1/4 point this week (possible) I think you will see 3 yr CD's hit 5% this summer. If they pause, probably not. So in my case, I've been accumulating cash from maturing CD's in SWVXX and I will decide my go forward plans with that cash after Powell speaks Wednesday afternoon. YMMV
Last edited:
dobig
Recycles dryer sheets
You can get a JPM 20 year non callable right now with a 5.625% coupon. Hovers a little above and below par ($100) the past few weeks. Cusip 46625HJM3.
COcheesehead
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I looked at the depth of book and it is very active.
Thanks for the encouragement Cheese. Keep posting your thoughts & actions. I did pull the trigger on some CDs & treasuries this year on the front end of the curve. Everything matures in the next 26 months or less. Going out further is more difficult.
Okay sounds good Car. Finger is off the trigger for now. Got one in the chamber with the hammer back
Any thoughts on the TD Bank 6% corp note? 5 year maturity, callable beginning 6/30/23, Rated A1/A.
I have around $10k cash remaining to invest until my CDs begin maturing in a few months. The 6% int rate is attractive.
I have around $10k cash remaining to invest until my CDs begin maturing in a few months. The 6% int rate is attractive.
imbatman
Recycles dryer sheets
- Joined
- Feb 22, 2023
- Messages
- 345
That they can call in 2 weeks? I have had stuff called at 6.2% recently so I don't think I would bother for this one.
89114XAJ2, might be an option for you ?
- Status
Similar threads
