CEF Holdings --- March 2026

[dickoncapecod]

As the lyrics from Lady In Black states so eloquently:

"But she would not think of battle, that, reduces men to animals
So easy to begin and yet impossible to end"

It is a test for those who indicate that "only the income matters". I believe there are a few here, who truly feel that way. Some may only feel that way when on a winning

Although I admire all the confidence I'm reading, I have to agree with COcheese. All the popular Pimco CEFs are definitely still trending down. Iran shows no sign of tiring -- indeed the US attack might be seen as a boon for the the mullas as a way to unite their people to be even more pro-government.. Fuel prices WILL be a drag on economy. At current borrow rates, Federal debt will exceed $40 trillion well before Labor Day and bonds weakening, while preferreds funds anemic too. Inflation will be back over 3%, making further rate cuts unlikely.

Dividends, schmividends. I'll buy when indicators revert bullish. Now we'll see if Pimcos bust down through support or bounce again.

Maybe I'm just getting too old ----- I saved a lot of portfolio value and increased my annual income substantially by getting most of "Swoon #1" right, but I'm not inclined to try it again. A lot of historically well performing CEFs now yield 12+% and more, which fits my objectives nicely. Sure, it would be nice to earn a percent more, but if I decide to play for further downside, I'm much more inclines to do it with equity index puts. IMO if CEFs are in the 3rd inning, stocks are too.
Regards, Dick

 

[richardsok]

I agree, Dick. Getting 12-15% is plenty good enough out of this briar patch, and it's likely you've timed your trades splendidly, especially if these CEFs do rise from here. I'm not holding out to seek bigger payouts, but waiting for some chart evidence that we're (in fact) NEAR the bottom -- and will settle for a lesser 11-13% instead for a bit of positive evidence. At current nose-bleed levels, nothing about this market seems encouraging -- especially with missiles flying and the Straits still contested.
.
And I'll agree on a second point, too. We ARE getting old.

 

[dickoncapecod]

I agree, Dick. Getting 12-15% is plenty good enough out of this briar patch, and it's likely you've timed your trades splendidly, especially if these CEFs do rise from here. I'm not holding out to seek bigger payouts, but waiting for some chart evidence that we're (in fact) NEAR the bottom -- and will settle for a lesser 11-13% instead for a bit of positive evidence. At current nose-bleed levels, nothing about this market seems encouraging -- especially with missiles flying and the Straits still contested.
.
And I'll agree on a second point, too. We ARE getting old.

Yes....real evidence of a bottom IS worth a modest give-up in yield. But I'm stuck with a (probably dangerous) "feeling": it's much harder to START a major price waterfall from prices/yields close to the 5.25% Fed policy bottom of late 2023 ---- of course it CAN happen, but it's definitely harder.
Regards, Dick

 

[GaltintheGulch]

I agree, Dick. Getting 12-15% is plenty good enough out of this briar patch, and it's likely you've timed your trades splendidly, especially if these CEFs do rise from here. I'm not holding out to seek bigger payouts, but waiting for some chart evidence that we're (in fact) NEAR the bottom -- and will settle for a lesser 11-13% instead for a bit of positive evidence. At current nose-bleed levels, nothing about this market seems encouraging -- especially with missiles flying and the Straits still contested.
.
And I'll agree on a second point, too. We ARE getting old.

hear hear

 

[DrVenture]

I haven't sold any bond CEFs, yet. I have recently sold all of my bond OEFs and more than 7 figures of equities in tax-advantaged accounts. Since 1Q 2025 I have dropped my equities by about half. Less about fear, than impending retirement and wanting dry powder to cherry-pick opportunities.

My view is that the macro has been steadily deteriorating, GDP, jobs, inflation, all looking poor well before the Iran war began. Two straight quarters of lackluster GDP, PCE core hovering just above 3%, jobs flat. Now a war impacting oil. Where we are in this cycle is impossible to ascertain.

 

[FlyingCircus]

For what it's worth as an indicator of credit market in general, the MOVE Index yesterday (3/12) spiked up 21%, and is up 69% in 6 weeks. It's still comfortably below 130 (what I've read is a level indicating significantly increasing spreads). Coincidentally more chatterati about private credit problems / limited withdrawals.

 

[keppelbay]

Fwiw the floor seems to be holding for PDI.
Too early to call it a base. One day at a time...

 

[dennis5502]

Some time ago Dick drew our attention to setting up a watchlist on Fido to follow and chart NAV. With the large drop in Pimco cefs I own in my ira, I compared the percentage changes in market vs close end fund today. Here are the results: PAXS mv -1.44% nav -.07%
PCM mv -1.57%. nav 0.0%
PDI mv -.69%. nav +.06%
PDO. mv -1.21%. nav -.08%
PFL. mv -1.73%. nav 0.0%
PHK mv -3.62%. nav +.22%

Dennis

 

[dennis5502]

Some time ago Dick drew our attention to setting up a watchlist on Fido to follow and chart NAV. With the large drop in Pimco cefs I own in my ira, I compared the percentage changes in market vs close end fund today. Here are the results: PAXS mv -1.44% nav -.07%
PCM mv -1.57%. nav 0.0%
PDI mv -.69%. nav +.06%
PDO. mv -1.21%. nav -.08%
PFL. mv -1.73%. nav 0.0%
PHK mv -3.62%. nav +.22%

Dennis

Correction percentage changes in market vs. nav today

 

[joejetski]

You guys scare me. We are in reality hardly down at all. What are you going to do when the inevitable bear claws at you? Hope you have a plan.

I have held all my PIMCOs, added to them, and started new positions in SPYI and QQQI, so there’s that. Oh yeah, and a starter position in ARCC.

 

[dickoncapecod]

Some time ago Dick drew our attention to setting up a watchlist on Fido to follow and chart NAV. With the large drop in Pimco cefs I own in my ira, I compared the percentage changes in market vs close end fund today. Here are the results: PAXS mv -1.44% nav -.07%
PCM mv -1.57%. nav 0.0%
PDI mv -.69%. nav +.06%
PDO. mv -1.21%. nav -.08%
PFL. mv -1.73%. nav 0.0%
PHK mv -3.62%. nav +.22%

Dennis

Since mid-Feb the 2s-30s spread shrank pretty dramatically. Today it bounced out 6bps. For duration-weighted spread trades at bond fund size, curve trades drive very large dollar amount valuation changes. PIMCO said in a lot of their website analytics/talks that they believed the curve would steepen this year --- and they walk their talk. Large curve steepeners + negative marks during the curve contraction might account for the substantial NAV drops. Only The Shadow knows for sure.
Regards, Dick

 

[Bill E]

Since mid-Feb the 2s-30s spread shrank pretty dramatically. Today it bounced out 6bps. For duration-weighted spread trades at bond fund size, curve trades drive very large dollar amount valuation changes. PIMCO said in a lot of their website analytics/talks that they believed the curve would steepen this year --- and they walk their talk. Large curve steepeners + negative marks during the curve contraction might account for the substantial NAV drops. Only The Shadow knows for sure.
Regards, Dick

Makes sense Dick. As you've noted the NAV decreases have not been explained by proxy components like HYG, MBB etc.

Thanks,
Bill

 

[FlyingCircus]

. ...Large curve steepeners + negative marks during the curve contraction might account for the substantial NAV drops. Only The Shadow knows for sure.
Regards, Dick

Balanced by your succinct reminder in a post yesterday that the inflows to these bond+ CEFs - the source of most of the dividends - are relatively solid over the short term; (unless a black swan default wave happens)

 

[dickoncapecod]

The week ended 3/13 was a very rough and disappointing one for essentially all financial assets, including of course bondish CEFs. ALL CEFs I watch are on weekly MACD sell signals as are portfolio component ETFs HYG LQD MBB and IEF. That is generally consistent with the shift in sentiment seen in underlying implied future rates. Fed funds futures now predict only one rate cut at year end. The year bill one year.forward rose to 3.81% --- as the curve steepened and 2yr yields rose a bit above 1yr rates for the first time in a long while. And while near term inflation estimates rose in sympathy with crude oil and other war-related cost increases, the concurrent reduction in longer term inflation expectations kept Fed's favorite 5yr inflation breakeven 5yrs forward at 2.07%.

Many popular bond CEFs are now trading at 12+% 13+% and as much as 15+%.
Viewed simply as income assets, they are extraordinarily cheap against realistic rate expectations --- at yields not seen since Fed funds were over 5% near the end of the Fed's last tightening cycle. But the fact that they appear cheap does not mean that market prices won't fall further. Investor fear and uncertainty are now driving price declines --- selling continues BECAUSE prices are falling as more investor pain thresholds are crossed with every downdraft. For a while, rational analytics are out the window.

Friday's NAV behavior across the PIMCO suite MAY HAVE provided an explanation (not a excuse) for their recent concerning NAV declines. PIMCO portfolios were likely structured to exploit a steepening of yield curves ---- a principal feature of the firm's expectations for 2026. But from early-mid February until Thursday, the Treasury 2y-30yr spread COLLAPSED from 138 to 112 basis points, seriously damaging all curve steepening positions ---- a time period consistent with PIMCO CEFs' pretty dramatic NAV declines. AND Friday that NAV decline stopped as the curve STEEPENED by about 6 basis. It MIGHT just be happenstance, but I feel confident that "misbehaving" curve steepeners were at least significant contributors to recent sharp NAV declines.

Opinion: next week we get a few bits of economic data that will be overwhelmed by difficult to anticipate Iran war developments --- particularly those bearing on the status of the critical waterway Straint of Hormuz and crude prices. There will likely be a mix of positive and negative market driving headlines / developments. But in the bondish CEF corner, the easiest path is toward lower prices ---- a path that weak technicals suggest may not stop until fear-driven selling ends.
Regards, Dick

 

[DrVenture]

...

Many popular bond CEFs are now trading at 12+% 13+% and as much as 15+%.
Viewed simply as income assets, they are extraordinarily cheap against realistic rate expectations --- at yields not seen since Fed funds were over 5% near the end of the Fed's last tightening cycle. But the fact that they appear cheap does not mean that market prices won't fall further. Investor fear and uncertainty are now driving price declines --- selling continues BECAUSE prices are falling as more investor pain thresholds are crossed with every downdraft. For a while, rational analytics are out the window.



...But in the bondish CEF corner, the easiest path is toward lower prices ---- a path that weak technicals suggest may not stop until fear-driven selling ends.
Regards, Dick

This is MHO too (above). I have a lot of dry powder now, and have yet to sell bond CEFs (could still happen). But I would be prepared to buy back or add, if I perceive the right moment.

Every move up could be perceived as a selling opportunity, as you say. That early "sloppy selling" may not have been executed well, but I think that someone wanted out very badly.

 

[Quattro73]

Corporate bond spreads seem to have bottomed out in January (at historic lows). Have risen 20bps on BBB credit since February and over 30bps on high yield since Feb. I assume they got that low due to government by debt concerns. But those levels seem unsustainable and unrealistic.

I don’t know what that all means except it seems like a headwind for corporate credit along with rising rates from oil shocks. I dunno.

 

[marget]

But in the bondish CEF corner, the easiest path is toward lower prices ---- a path that weak technicals suggest may not stop until fear-driven selling ends.
Regards, Dick

Yes, selling to continue seems inevitable....right on thru the summer. Sell in May...
I have 58% cash.
I intend to raise that number b/c this month's exdate was on the 12th.
In the present situation, elaborated by Dick, the 4 weeks until the next ex-date could see significant selling. I wonder how many ex-date CEF holders will be doing what I'm going to do---& that is sell (some)
My lowest purchase of PDO shares was on 10/16/23 @ $11.00
My lowest purchase of PDI shares was on 4/7/25 @ $17.04 I slept thru that tank
PAXS----i am down .78%---------i will most likely sell a 500 lot that has lost a bit & immediately replace it depending on how the c-sticks and chart looks. I'll take the small loss, but not let it sit still.
PFN----that is down 2.47%. I'm ok w/ this. I will wait to see a bottom & then add at that time. Why? the cost basis is at 7.06. Will it reach 7.06 again, seems likely. The distribution is almost 1k a month b/c I added 1k to the original buy.

Some of these lows will probably stay low as Dick indicates.
But others will most likely bounce back---but when? It does not look like anything is going to bounce back significantly any time soon for all the reasons that all of us already know.
Question for myself: Will I buy back before the next ex-date? maybe or maybe not. It may be a summer of waiting & patience

 

[dickoncapecod]

Corporate bond spreads seem to have bottomed out in January (at historic lows). Have risen 20bps on BBB credit since February and over 30bps on high yield since Feb. I assume they got that low due to government by debt concerns. But those levels seem unsustainable and unrealistic.

I don’t know what that all means except it seems like a headwind for corporate credit along with rising rates from oil shocks. I dunno.

Oil price shocks have also increased the likelihood of serious slowdown or recession.
Regards, Dick

 

[dickoncapecod]

Forgot to mention two potential hiccup events this week.
1. Tuesday Treasury auctions 20yrs ---- for decades the on-off, neither-fish-nor-fowl, limited interest/sponsorship maturity. While it is most likely to go just fine, this is the most likely maturity to have a really poor auction --- and the only one in my experience where Fed called around to Primary Dealers telling them they needed more bids (many years ago). Of course, that circumstance would never be visible to the public unless somebody leaked the info, almost certainly against their own firm's interest.
2. Wednesday afternoon Fed will release its interest rate decision, almost certainly leaving its policy rate unchanged. They might instruct the Open Market Desk to buy some more Treasuries, but that would indicate nothing except banks desired more reserves --- a reasonable approach given credit headlines and war fears. However, it is quite possible that a hawkish FOMC member dissents in favor of higher rates --- just to make a point. Moreover, the JPOW press conference MIGHT be full of headline risk land mines as/if the Committee has taken a tougher approach to inflation.,
FWIW, Dick

 

[stefansm]

Yes, selling to continue seems inevitable....right on thru the summer. Sell in May...
I have 58% cash.
I intend to raise that number b/c this month's exdate was on the 12th.
In the present situation, elaborated by Dick, the 4 weeks until the next ex-date could see significant selling. I wonder how many ex-date CEF holders will be doing what I'm going to do---& that is sell (some)
My lowest purchase of PDO shares was on 10/16/23 @ $11.00
My lowest purchase of PDI shares was on 4/7/25 @ $17.04 I slept thru that tank
PAXS----i am down .78%---------i will most likely sell a 500 lot that has lost a bit & immediately replace it depending on how the c-sticks and chart looks. I'll take the small loss, but not let it sit still.
PFN----that is down 2.47%. I'm ok w/ this. I will wait to see a bottom & then add at that time. Why? the cost basis is at 7.06. Will it reach 7.06 again, seems likely. The distribution is almost 1k a month b/c I added 1k to the original buy.

Some of these lows will probably stay low as Dick indicates.
But others will most likely bounce back---but when? It does not look like anything is going to bounce back significantly any time soon for all the reasons that all of us already know.
Question for myself: Will I buy back before the next ex-date? maybe or maybe not. It may be a summer of waiting & patience

A TA reading:
The market trend is not broken yet. Look at the upper pane below: S&P is still above support and above its 200 day MA. That is, the trend is still up, with a minor reversal to the mean.
The second pane shows the McClellan oscillator. It is not a signal but used to identify overbought/oversold conditions. What you can see is that the market is as oversold as it was during the 2025 tariffs tantrums of April 2025.
Finally, the lower pane is the HY Spread, which I use to identify when the pro HY bond traders signal a Risk-Off condition. In my opinion, it has to show a trend up (i.e. above its 250 days MA) and to be above 3.5% to signal Risk-Off. Look at the red areas, which are when it signaled Risk-Off in 2022 and recently in 2025 tariffs panic. I don't see any of that now, no rising of the risk off measure from the pros.

It all can change next week, of course, but, for now, we are still in trend up, the trend not broken but oversold big time and still in a Risk-On state. I will change my allocations if the market breaks trend next week and the Hy switches to Risk-Off. But, for now, keeping the same 75/25 CEfs (or stocks)/Managed Futures .

 

[joejetski]

Forgot to mention two potential hiccup events this week.
1. Tuesday Treasury auctions 20yrs ---- for decades the on-off, neither-fish-nor-fowl, limited interest/sponsorship maturity. While it is most likely to go just fine, this is the most likely maturity to have a really poor auction --- and the only one in my experience where Fed called around to Primary Dealers telling them they needed more bids (many years ago). Of course, that circumstance would never be visible to the public unless somebody leaked the info, almost certainly against their own firm's interest.
2. Wednesday afternoon Fed will release its interest rate decision, almost certainly leaving its policy rate unchanged. They might instruct the Open Market Desk to buy some more Treasuries, but that would indicate nothing except banks desired more reserves --- a reasonable approach given credit headlines and war fears. However, it is quite possible that a hawkish FOMC member dissents in favor of higher rates --- just to make a point. Moreover, the JPOW press conference MIGHT be full of headline risk land mines as/if the Committee has taken a tougher approach to inflation.,
FWIW, Dick

From my previous reads, my understanding was Fed 2-3 cuts beginning late spring. So staying pat here, particularly with gas prices up would be expected, as a rate cut now would do little for the economy. Of course playing that out, there does need to be resolution in the area by mid April in order for rate cuts to go forward in May and have some impact.

 

[dickoncapecod]

A TA reading:
The market trend is not broken yet. Look at the upper pane below: S&P is still above support and above its 200 day MA. That is, the trend is still up, with a minor reversal to the mean.
The second pane shows the McClellan oscillator. It is not a signal but used to identify overbought/oversold conditions. What you can see is that the market is as oversold as it was during the 2025 tariffs tantrums of April 2025.
Finally, the lower pane is the HY Spread, which I use to identify when the pro HY bond traders signal a Risk-Off condition. In my opinion, it has to show a trend up (i.e. above its 250 days MA) and to be above 3.5% to signal Risk-Off. Look at the red areas, which are when it signaled Risk-Off in 2022 and recently in 2025 tariffs panic. I don't see any of that now, no rising of the risk off measure from the pros.

It all can change next week, of course, but, for now, we are still in trend up, the trend not broken but oversold big time and still in a Risk-On state. I will change my allocations if the market breaks trend next week and the Hy switches to Risk-Off. But, for now, keeping the same 75/25 CEfs (or stocks)/Managed Futures .

View attachment 62368

That's nice work, but my more negative views about both stocks and bond-ish stuff flow from more recent technical phenomena with a dash of fundamentals. Bond-ish CEFs are clearly bustola, and now there are weekly MACD sell signals on HYG IEF LQD and MBB --- and these are necessary (but not ALWAYS sufficient) precursors of wider spreads and lower bond prices. Stocks indices have been weakening slowly for months, and (IMO only) the same drivers of a likely bondish dive will also trigger further equity declines.

Finally, again just me, but I can't imagine what news, data, or headline can turn the recent bond and stock downtrends around on a dime --- what appears to be required to stop stocks from breaking long term averages. Crazed inflation headlines are baked in the cake even if the war ends tomorrow. The "Fed's next move is to cut rates" narrative that has persisted for over two years is hanging on by a thread, despite the increasing likelihood of a further economic slowdown. Finally, from other historical data, in a neutral rate environment, 10yrs would typically trade around Fed funds +125-150 basis points. Since the terminal policy rate view is now AT BEST 3.38%, 10yrs may easily migrate upward to a range between 4.5% and 4.75% with overshoot possible to 5+%.
FWIW, Dick

 

[RobLJ]

I share skepticism that the Fed will cut anytime soon, given the oil shock and inflationary threats.
Hope I'm wrong, though.

 

[dickoncapecod]

From my previous reads, my understanding was Fed 2-3 cuts beginning late spring. So staying pat here, particularly with gas prices up would be expected, as a rate cut now would do little for the economy. Of course playing that out, there does need to be resolution in the area by mid April in order for rate cuts to go forward in May and have some impact.

Perhaps, but the Fed funds futures market that reflects the equilibrium view of all global dollar investors now predicts MAYBE one rate cut in the last December Fed meeting of the year.
Regards, Dick

 

[dickoncapecod]

I share skepticism that the Fed will cut anytime soon, given the oil shock and inflationary threats.
Hope I'm wrong, though.

Worth considering: what do we think the MARKET reaction would be if Fed cuts rates as CPI blows up through 4%? ---- a near certainty given the impact of energy prices on EVERYTHING.....
Regards, Dick