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

[Born2Fish]

Another batch of 5%/5 year landed at Fidelity and they are going fast. The 1,2,3, and 4 are also still available.

Thanks for the alert.

I bought some 5%, 5-yr CDs, Synchrony Bank this morning.

I am out of cash to buy more but I have a T-bill maturing tomorrow. Hope to buy more then.

 

[Mulligan]

Another batch of 5%/5 year landed at Fidelity and they are going fast. The 1,2,3, and 4 are also still available.

The question is…Am I going to have to be forced to keep buying CDs….Or will the market finally crack and force a nice credit spread widening event and allow me to snag some high yielding IG debt!

 

[Vincenzo Corleone]

Is there anyone who's bought these CDs in a taxable account? I'm wondering if I made a mistake in buying a bunch of these CDs in my taxable account instead of using that money to continue laddering Treasuries.

Thanks.

 

[latexman]

First time CD buyer here. I took a small step. I ordered 10 new issue SOFI BANK NA 5.250000 03/20/2024 03/21/2023.

Seemed very easy, but I have a question on Auto Roll. I elected no, and will shop again when it matures. I think that decision was me taking less risk on a new venture. Does anyone elect Auto Roll normally? Does Fido do a decent job matching what one just bought? Can one decline the Auto Roll CD at maturity (1 year for me)?

 

[COcheesehead]

Is there anyone who's bought these CDs in a taxable account? I'm wondering if I made a mistake in buying a bunch of these CDs in my taxable account instead of using that money to continue laddering Treasuries.

Thanks.

You’ll pay full tax on a CD.
You’ll get a state and local exemption on treasuries
You’ll get a Fed exemption on a muni
You’ll get Fed and state exemption on your state specific muni

You’ll need to decide how this fits your tax situation.

I personally buy only my state specific munis and treasuries in my taxable account. It produces the most income and I am trying to be tax efficient.

 

[Spock]

First time CD buyer here. I took a small step. I ordered 10 new issue SOFI BANK NA 5.250000 03/20/2024 03/21/2023.

Seemed very easy, but I have a question on Auto Roll. I elected no, and will shop again when it matures. I think that decision was me taking less risk on a new venture. Does anyone elect Auto Roll normally? Does Fido do a decent job matching what one just bought? Can one decline the Auto Roll CD in 1 year?

I disable auto-roll on CDs.
I fiddle with having Fidelity's bond ladder tool populate rungs and am not thrilled with the choices it initially makes so I don't think I would like it's auto-roll choices.
I think it would be OK with auto-roll on 1 month treasuries.

 

[Spock]

Is there anyone who's bought these CDs in a taxable account? I'm wondering if I made a mistake in buying a bunch of these CDs in my taxable account instead of using that money to continue laddering Treasuries.

Thanks.

Depends on why you chose Treasuries. If you have a low/no state income tax then there is no tax advantage to the Treasuries. If you are trying to push income into next year by have treasuries not payoff this year the same can be done with at-maturity CDs.

 

[Golden sunsets]

Treasury big drop vs CD's

Yikes; We have a 1 year treasury ladder in 12 monthly increments. Our 3-23 rung is supposed to be replaced with a 3/24 bill with this months 52 week auction, announced today I believe, but the secondary market 3/24 treasuries are showing a yield of 4.3%, a big drop. I guess I can substitute a 1 year brokered CD at 5.3% with call protection. I dislike mixing my apples and my oranges, but for a 1% difference in yield and no risk, I guess I'll need to do that. Any thoughts??

 

[COcheesehead]

Nothing to see here

 

[Gumby]

This graph can give some perspective

https://www.longtermtrends.net/bond-yield-credit-spreads/

In March 2009, I bought BND and made some decent money when the yield spread between corporates and treasuries narrowed.

 

[Born2Fish]

Nothing to see here

Not sure of your point.

Credit Suisse skewing the highest yield, maybe?

https://fixedincome.fidelity.com/ftgw/fi/FIYieldTable?popupMode=Y&yldTabSelected=M

 

[COcheesehead]

I guess we know why there were all those bank bond offerings late last year/ early this year.

 

[COcheesehead]

Not sure of your point.

Credit Suisse skewing the highest yield, maybe?

My point is it’s a wild time in the bond market. You don’t see yield charts like that. Yes it’s bank bonds and not just CS.
My regional, conservative, quiet little bank, had bonds yielding over 8% yesterday.

 

[Born2Fish]

My point is it’s a wild time in the bond market. You don’t see yield charts like that. Yes it’s bank bonds and not just CS.
My regional, conservative, quiet little bank, had bonds yielding over 8% yesterday.

I agree completely.

It takes some time to separate the wheat from the chaff...

 

[Rianne]

This SVB situation brings up so many questions.
If I have a $100K CD in a bank at 5% for 5 years, is the $100K protected and the interest earned over 5 years?

 

[Sasquatch1]

This SVB situation brings up so many questions.
If I have a $100K CD in a bank at 5% for 5 years, is the $100K protected and the interest earned over 5 years?

Interest paid up until bank fails per this article:

https://www.cnbc.com/2023/03/13/wha... coverage, you will,a $250,000 limit for cash.

 

[COcheesehead]

I agree completely.

It takes some time to separate the wheat from the chaff...

All of them hold low yielding bonds. It’s just who it hurts more.

 

[Echard]

Any thought on CIBC bank CD’s? They have attractive yields

 

[pb4uski]

Yikes; We have a 1 year treasury ladder in 12 monthly increments. Our 3-23 rung is supposed to be replaced with a 3/24 bill with this months 52 week auction, announced today I believe, but the secondary market 3/24 treasuries are showing a yield of 4.3%, a big drop. I guess I can substitute a 1 year brokered CD at 5.3% with call protection. I dislike mixing my apples and my oranges, but for a 1% difference in yield and no risk, I guess I'll need to do that. Any thoughts??

Crazy not to.

 

[pb4uski]

This SVB situation brings up so many questions.
If I have a $100K CD in a bank at 5% for 5 years, is the $100K protected and the interest earned over 5 years?

What about up to $250k is insured is so hard to understand.

 

[Echard]

So I bought new issue American Express CDs at over 5% for 2 year. I notice all of the secondary market spreads of CD’s are really high, 5.2 vs 4.8 bid ask. Any chance of new issue interest rates not being over 5% for a new issue? The rate is locked right?

 

[pb4uski]

Interest paid up until bank fails per this article:

https://www.cnbc.com/2023/03/13/wha... coverage, you will,a $250,000 limit for cash.

Perhaps that is the case technically, but as a practical matter I think it just continues since the FDIC is so quick in either selling the failed bank to another bank or transferring all insured deposits and assets to support them to a new bank.

 

[lordjust]

Crazy not to.

im with pb. if it was my money i would do it as well especially if you have the call protection.

 

[lordjust]

holy guacamole you people werent kidding about how fast those 5% 5 year cds disappear.

I just bought some this morning and was watching the amount available dip but cant believe that the discovers are gone (2546732U9) and the synchrony's are almost gone at schwab.

 

[Chuckanut]

A friend just had a 5 year CD yielding 0.5% mature yesterday. I tipped her off to the 5% CDs at Fidelity. Alas those are now all callable. But, she did pickup a 5% CD for 3 years non callable. Needless to say as a person of limited income she is all smiles at the moment. 10x more interest dollars.