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

[ShokWaveRider]

I would switch to Fidelity from Schwab if I was a regular trader. But I only buy CDs or bonds and keep them till they mature. I also "love" did I say love Schwab's 2 FA Device. The Symantec Key Fobb that produces security codes on demand. I do not like the apps that one has to use on one's phone. I am sure that Fidelity must use the same.

 

[Freedom56]

I’ve seem monthly CDs but not bonds. Monthly is better if you need the income and/or when rates are rising. Brokered CD’s don’t compound interest so that reduces the earnings a bit.

Some of the one year notes pay monthly. Many of the 2-5 year notes pay quarterly. Most pay semi-annually.

 

[Montecfo]

Maybe on the strong jobs report today we get some upward movement on rates.

 

[ShokWaveRider]

Are Schwab Agency Bonds FDIC insured? Or, does it vary? Sorry, I am new to this stuff.

 

[pb4uski]

I’ve seem monthly CDs but not bonds. Monthly is better if you need the income and/or when rates are rising. Brokered CD’s don’t compound interest so that reduces the earnings a bit.

If you ultimately reinvest the interest received from the brokered CD isn't it the same result?

 

[pb4uski]

Are Schwab Agency Bonds FDIC insured? Or, does it vary? Sorry, I am new to this stuff.

It doesn't vary by broker but no agency bonds are FDIC insured. They are not full faith and credit either but are US government sponsored entities.

 

[Freedom56]

With the jobs report out, the market futures dropped and yields ticked up again across the board. As many in the Fed have communicated, yields will stay elevated for quite some time which is good for those who want to generate income from their investments and not rely just on the "greater fool theory" for asset appreciation. There is still a $1.8 trillion tailwind from the infrastructure bill that will keep employment elevated for quite some time.

Here is an entertaining summary from CNBC.

https://www.cnbc.com/video/2022/12/...ore-than-expected-despite-fed-rate-hikes.html

 

[njhowie]

With the jobs report out, the market futures dropped and yields ticked up again across the board. As many in the Fed have communicated, yields will stay elevated for quite some time which is good for those who want to generate income from their investments and not rely just on the "greater fool theory" for asset appreciation. There is still a $1.8 trillion tailwind from the infrastructure bill that will keep employment elevated for quite some time.

Here is an entertaining summary from CNBC.

https://www.cnbc.com/video/2022/12/...ore-than-expected-despite-fed-rate-hikes.html

Longer term munis are not reacting to this at all.

 

[Montecfo]

If you ultimately reinvest the interest received from the brokered CD isn't it the same result?

Absolutely. It is like reinvesting dividends. You want to re-invest but no need to do so in same security for compounding to work.

 

[lawman]

Not sure if anyone checks the link i posted previously .. but i noticed quite a few new bank bonds that are coming available.. thought you all might be interested.... The red are still not showing up in Schwab

https://www.us-mtns.com/fixedRateDeals

These are much better rates than Schwab has up now..None of these are available now. Will they show up later with these same rates or will the rates be lower and when will they be available for purchase?

 

[Freedom56]

Absolutely. It is like reinvesting dividends. You want to re-invest but no need to do so in same security for compounding to work.

What makes the "golden period" great is that interest payments from CD and bonds compound monthly in money market cash sweep funds now yielding 3.8% even if you delay reinvesting in more CDs and bonds.

 

[Fermion]

My 10 year TIPS and 2 year treasury purchases are way up today...seems weird with the job numbers and such?

 

[daylatedollarshort]

My 10 year TIPS and 2 year treasury purchases are way up today...seems weird with the job numbers and such?

I am not sure about the 2 year Treasury, but I have a likely explanation for the TIPS price change. When people are worried about inflation, the demand for TIPS tends to go up, the current prices go up and the yields decline. The latest jobs report showing continued low unemployment may have rekindled inflation fears among TIPS buyers.

The last high real yield time to buy TIPS was after the Great Recession when we had some deflation, because then most people don't worry about inflation, even over the next 5 - 30 years, and TIPS aren't a good deflation hedge.

 

[jazz4cash]

If you ultimately reinvest the interest received from the brokered CD isn't it the same result?

Depends if rates are higher, lower, or the same. In my case it’s all the same because my ladder steps are tiny and my interest payments don’t meet minimums to buy. I was just responding to a question.

 

[Chuckanut]

I would switch to Fidelity from Schwab if I was a regular trader. But I only buy CDs or bonds and keep them till they mature. I also "love" did I say love Schwab's 2 FA Device. The Symantec Key Fobb that produces security codes on demand. I do not like the apps that one has to use on one's phone. I am sure that Fidelity must use the same.

Fidelity and Schwab both use the same authenticator app.

 

[Car-Guy]

What makes the "golden period" great is that interest payments from CD and bonds compound monthly in money market cash sweep funds now yielding 3.8% even if you delay reinvesting in more CDs and bonds.

Yep, that's where I'm putting my dry powder these days. SWVXX paying 3.77%... It takes the pressure off me wanting to rush to buy even more shorter term CD's. And, if I need/want the cash for equity investments or anything else, it's available the next day.

 

[Freedom56]

Yep, that's where I'm putting my dry powder these days. SWVXX paying 3.77%... It takes the pressure off me wanting to rush to buy even more shorter term CD's. And, if I need/want the cash for equity investments or anything else, it's available the next day.

I'm have it in FZDXX now at 3.82%. With the 1 and 3 month T-bills moving up to 4.25-4.5% in anticipation of the next rate hike, these money market funds should be up over 4% very soon. Last year it was painful to watch maturities and coupon payments earn just .01% in the same fund. I could do little with my IRA but I pulled money out of my taxable brokerage accounts and transferred the cash to AMEX and Capital One savings accounts that were paying .4%. But today it's in cruise control.

 

[lordjust]

These are much better rates than Schwab has up now..None of these are available now. Will they show up later with these same rates or will the rates be lower and when will they be available for purchase?

These are new so they will be the same price as listed. Many of the banks Schwab will NOT participate in selling. I did a quick search on Fidelity and it "appears" you can buy some (all?) of them on Fidelity. You can try to call the bond desk to see if they will put an order in for you but my experience is they will not and they will tell you to buy them when they hit the secondary market.
Schwab tends to list/sell GS, JPM and C for some reason so you may get lucky with those 3.

 

[ShokWaveRider]

Fidelity and Schwab both use the same authenticator app.

Schwab also has a key Fobb that I prefer to an app. I did say that in my post.

 

[sengsational]

I did a quick search on Fidelity and it "appears" you can buy some (all?) of them on Fidelity.

I typed in the cusip for the first one, and it looked like it might work, but ended up saying

• (010412) Your order cannot be placed.
• The security you are searching is not currently in our inventory. Please select Back from your browser's toolbar to use a different CUSIP or select Search Inventory to find another security.

 

[foxfirev5]

You are a bond trader. You readily admit that. Much of what you do is timing, and if you are able to always time the bond market, wonderful. The bond market continues telling a different story than what you are indicating here.

Personally, I have no difficulty taking medium and longer term issues that will let me lock in solid yields of 5%, 6%, 7%, or more. I have no need to sell prior to maturity, as my retirement horizon is much longer than most folks here. It's certainly not "torture".

My belief is that what we have at this time is an aberration. Have things all of a sudden reversed course from the last 50 years? I don't believe so. Long term yields are already reflecting that the Fed is going to lower rates, and folks are racing to get what's left before it's too late. That does not lead to the conclusion that when the Fed does lower rates that the long end of the yield curve is going to move higher to "normalize". It may simply stay the same or go even lower, as short term rates move lower...and as was the case over the past 10 years; as folks were willing to accept lower yields for long term bonds.

We'll see.

I agree. Since I lack the ability to predict the future I'll stick to my LMP and rolling ladders. I must admit that in the 3rd qtr I did go longer on Treasuries and beefed up my TIPS holdings when the real rates approached 2%. That's about as fancy as I'll get.

 

[lordjust]

I typed in the cusip for the first one, and it looked like it might work, but ended up saying

bummer. I also checked vanguard for 78014RJS0 and the buy/sell are grayed out so... not available or to new ? Not sure if a call would help. I do know that you can call on the new ones with Schwab and they will add them if Schwab will carry them. I had that happen once with a GS bond. It would be nice if there was a way to quickly determine who is selling these new ones.

 

[njhowie]

With the jobs report out, the market futures dropped and yields ticked up again across the board. As many in the Fed have communicated, yields will stay elevated for quite some time which is good for those who want to generate income from their investments and not rely just on the "greater fool theory" for asset appreciation. There is still a $1.8 trillion tailwind from the infrastructure bill that will keep employment elevated for quite some time.

Here is an entertaining summary from CNBC.

https://www.cnbc.com/video/2022/12/...ore-than-expected-despite-fed-rate-hikes.html

Yields fell throughout the day. 10-year ended down, fighting to stay above 3.5%.

Similar on the entire range of munis I follow - dealers were not budging on price...many raising through the day.

 

[lordjust]

These are new so they will be the same price as listed. Many of the banks Schwab will NOT participate in selling. I did a quick search on Fidelity and it "appears" you can buy some (all?) of them on Fidelity. You can try to call the bond desk to see if they will put an order in for you but my experience is they will not and they will tell you to buy them when they hit the secondary market.
Schwab tends to list/sell GS, JPM and C for some reason so you may get lucky with those 3.

C,GS and JPM just got listed on Schwab.

 

[lawman]

New Issue CUSIP(38150AQK4) Goldman Sachs coupon 6%..Matures 12/14/27.
Any reason not to buy?