Muni Bond (and Muni Bond Fund) Discussion

[njhowie]

What a move. I was buying 8-10 year duration munis just 6-7 weeks ago in the mid 4% range.

Amazing, isn't it? Will be interesting to see where we are come year end.

 

[COcheesehead]

I had a corporate note in my order ticket this morning, gone before I could hit buy. Feeding frenzy.

 

[sengsational]

Is it somewhat cyclical wrt when in the month it is? If bonds come due on the first and everyone trying to reinvest, maybe wait a few days?

 

[COcheesehead]

Is it somewhat cyclical wrt when in the month it is? If bonds come due on the first and everyone trying to reinvest, maybe wait a few days?

Corporates come due all over the place. Munis usually on the 1st or 15th, but not always.

 

[jazz4cash]

I was getting weekly notices from Fido on new issue munis for my home state and one neighboring state. They were all lousy deals selling at a premium on the offer. NJhowie convinced me to avoid initial offers but I would still look at them except very few are being offered. The last one was a zero coupon offer at a huge premium. No thanks.

 

[COcheesehead]

I was getting weekly notices from Fido on new issue munis for my home state and one neighboring state. They were all lousy deals selling at a premium on the offer. NJhowie convinced me to avoid initial offers but I would still look at them except very few are being offered. The last one was a zero coupon offer at a huge premium. No thanks.

How does a zero get priced at a premium? They are discounted at purchase and rise back to par. That’s how they work.

 

[pb4uski]

Perhaps he means a premium over the proposed issued price so a lower yield than the stated yield but still lower than par.

 

[jazz4cash]

How does a zero get priced at a premium? They are discounted at purchase and rise back to par. That’s how they work.

I mis remembered…. You are correct. The discounted initial offer price estimate put the yield at 5% for a 30 year bond. It was all the other munis that were priced at a premium on the initial offer and the yields were 1-2%.

 

[COcheesehead]

I mis remembered…. You are correct. The discounted initial offer price estimate put the yield at 5% for a 30 year bond. It was all the other munis that were priced at a premium on the initial offer and the yields were 1-2%.

LOL, if the zero was sold at a premium, it would have a negative yield - not that it couldn’t happen.

 

[pb4uski]

Not in the US anyway... so far anyway.

 

[njhowie]

677704A65 - one of the 100 year bonds

bought on 7/8 for 95.204 (plus 0.1 mark up)
sold today for 105.75 (minus 0.1 mark down)

Not bad for 1 month hold.

 

[jazz4cash]

677704A65 - one of the 100 year bonds

bought on 7/8 for 95.204 (plus 0.1 mark up)
sold today for 105.75 (minus 0.1 mark down)

Not bad for 1 month hold.

Were you planning to sell when it hit a target price all along?

 

[njhowie]

Were you planning to sell when it hit a target price all along?

Not a particular target price, but when I could book a nice profit. I only trade the 100 year bonds...I can't hold them long term, the potential volatility scares me.

With this one, I saw the 104.212 trade a few days ago, and with the 10-year yield down today, I figured I'd put it out there with as high as Fidelity would let me set the ask and see what happens.

On Tuesday last week, I submitted a request for bid, and the best bid that came back was 98.000.

 

[COcheesehead]

Finding some interesting stuff in taxable munis for my IRA. Low coupons, but yields over 5%. Bought one yesterday and it showed a 7% gain already this morning when the price updated.

 

[njhowie]

I was bidding all day long on a few issues, dealers were not budging. The yields are decent, but no way I was going to pay them the spread they were looking for over their purchase price.

I may need to change my mentality on that if I really want to pick some of these up.

 

[COcheesehead]

Very interesting times in the bond market. Pockets of opportunity and pockets of crap all at the same time.

 

[njhowie]

Very interesting times in the bond market. Pockets of opportunity and pockets of crap all at the same time.

This is very true.

 

[njhowie]

Fidelity is once again having their $100 bonus offer for opening an account and depositing $50 in it. This is available for new or existing customers who have not previously done the offer.

Last year I was able to do this for DW, but mine was screwed up in the process. I just signed up for it again for myself, and it looks like it will work this time.

Since I now control mom's accounts, I'll do one for her as well.

https://www.fidelity.com/go/starter-pack

Got our $100 in each of the new accounts this morning.

The offer is still ongoing - there is no end date specified on any of the pages or terms and conditions. So it could go on another day, or another few months. It's easy/free money - deposit $50, get $100 - no hoops to jump through.

 

[MarieIG]

Got our $100 in each of the new accounts this morning.

The offer is still ongoing - there is no end date specified on any of the pages or terms and conditions. So it could go on another day, or another few months. It's easy/free money - deposit $50, get $100 - no hoops to jump through.

I have been trying to consolidate, but I'm wondering if this is a good account to open just so I can use their tools to gain info about bonds . . .

 

[njhowie]

I have been trying to consolidate, but I'm wondering if this is a good account to open just so I can use their tools to gain info about bonds . . .

A free 200% for almost no effort is worth it. If you get additional benefit, all the better.

As jazz has mentioned a couple times, if you just want to browse around the bond area, you can create a guest account without having a real Fidelity account.

 

[MarieIG]

A free 200% for almost no effort is worth it. If you get additional benefit, all the better.

As jazz has mentioned a couple times, if you just want to browse around the bond area, you can create a guest account without having a real Fidelity account.

As long as I have to go to the effort of creating another account, I might as well pick up the $100.

 

[njhowie]

I have been getting some successful underbids through. Dealers are budging a bit.

 

[COcheesehead]

I am waiting to see if I can get 5-10 year muni durations at the same yields as back in June for my taxable account. Right now they are still well below that. I have been picking up lower investment grade corporates over 6% at and around the 5 year mark for my IRA.

 

[njhowie]

I am waiting to see if I can get 5-10 year muni durations at the same yields as back in June for my taxable account. Right now they are still well below that. I have been picking up lower investment grade corporates over 6% at and around the 5 year mark for my IRA.

I did pick up small amounts of a couple BBB- munis for very good yields. The rating is lower, but the issues do have some additional protections built in.

I've also gone a little further out on the maturity curve - some in 15 to 30 year range. If I can get good yields, for longer terms, I'm willing to lock it in. One benefit - because of the low coupons, the pricing is well below 100. The lower coupons, a result of having been issued in the past few years, also reduces the likelihood that they get called. However, if they do get called, because pricing is well below 100, that will simply increase yield significantly.

 

[COcheesehead]

I got the dealer to accept an under bid on a 4% muni today. First time I can ever remember that happening. Probably a bad sign. LOL