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Post by yogibearbull on Apr 24, 2022 20:09:07 GMT
If you are thinking about selling bonds, most of the damage already done. I'm not sure about that. Yogi said that about IT-IG about six months ago when I sold the last of my DODIX. He erred. Two days ago Barrons published an article saying munis were now a buy. I sold all my VWALX anyway. Yesterday it dropped another 0.65%. As I’ve said (too many times, I know), I look at the 10Y yield from 1985-2021. Straight line down, more or less, from 12% to 0%. Now yields are reverting to the mean. What the “mean” is, I don’t know, but with downward pressure on prices likely to continue for years, who wants bonds? Can you provide a link? I don't remember what you asked and what I said. Context is important. I did a site search since its inception and I couldn't find the related post/thread. In general, I like core-plus and multisector bond funds. But I am accumulating CEFs in this rout, not OEFs. This bond selloff already is reflecting 4-5 25-bps rate hikes but the Fed has only done 1 and CME FedWatch in indicating 11 for 2022. If the answer for how many is between 1 and 11, then it is or will soon be time to add, not sell. Those already holding bond funds with unrealized losses should do tax-swaps into similar funds in taxable accounts. |
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Deleted
Deleted Member
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Post by Deleted on Apr 24, 2022 23:25:35 GMT
YBB,
1. "In general, I like core-plus and multisector bond funds. But I am accumulating CEFs in this rout, not OEFs.
2. This bond selloff already is reflecting 4-5 25-bps rate hikes but the Fed has only done 1 and CME FedWatch in indicating 11 for 2022. If the answer for how many is between 1 and 11, then it is or will soon be time to add, not sell.
3. Those already holding bond funds with unrealized losses should do tax-swaps into similar funds in taxable accounts"
Regarding your #2 above, isn't the latest talk about two 50 bps rate hikes to begin with and then whatever they deem necessary?
Regarding #1 and #3, I continue to hold mine and hybrid funds but taking dividends in cash. Sold majority of munis in January and rest in March.
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Post by retiredat48 on Apr 25, 2022 7:01:17 GMT
retiredat48 , I don't disagree with that. I think you will do fine. But I ask myself, "how much will I really get in either income or price appreciation on VGSH over the next 6 months as opposed to sitting in cash". My answer is not enough at this point for the risk (although admittedly small). And to get anything worthwhile, I would have to take a large commitment, which of course, increases the potential risk. I'm waiting for intermediates to be a compelling, lower-risk buy with my cash. VGSH still trending bearish. yes...treasuries are absorbing the fed (Powell) recently stating he would like to go ABOVE the neutral rate. This is new. The neutral rate is considered about 2.5%. So is "above" 3%? If so, expect 2 year treasury bonds to be 3-3.2%. Getting there is not much of an NAV price decline. But do note that when bond rates peak, they tend to have rates go back down for several months. They simply do not go up and down in straight lines, forever. More like sin wave moves, as the economy adjusts. Personally, I doubt the economy will permit the fed to get above neutral this first go-around. Then we have balance sheet reduction. Further we have the mid-term elections in November where the fed never likes to raise rates the month before any election. Then we have XMAS and the fed does not like to raise rates at that time. I suspect fed will now quickly get to 2.5% by summer...and halt. If so, 2 year treasury should rise in price, as yield falls some, to reflect the "neutral rate". For example, mortgages at or above 6% are simply going to be a shock and a damper on things. If Gundlach liked the two year treasury a month ago at 1.9%, 2.9% seems very attractive to me! R48 |
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Post by chang on Apr 25, 2022 11:31:17 GMT
I'm not sure about that. Yogi said that about IT-IG about six months ago when I sold the last of my DODIX. He erred. Two days ago Barrons published an article saying munis were now a buy. I sold all my VWALX anyway. Yesterday it dropped another 0.65%. As I’ve said (too many times, I know), I look at the 10Y yield from 1985-2021. Straight line down, more or less, from 12% to 0%. Now yields are reverting to the mean. What the “mean” is, I don’t know, but with downward pressure on prices likely to continue for years, who wants bonds? Can you provide a link? I don't remember what you asked and what I said. Context is important. I did a site search since its inception and I couldn't find the related post/thread. In general, I like core-plus and multisector bond funds. But I am accumulating CEFs in this rout, not OEFs. This bond selloff already is reflecting 4-5 25-bps rate hikes but the Fed has only done 1 and CME FedWatch in indicating 11 for 2022. If the answer for how many is between 1 and 11, then it is or will soon be time to add, not sell. Those already holding bond funds with unrealized losses should do tax-swaps into similar funds in taxable accounts. I think it was in the DODIX thread but I’m not sure. No offense whatsoever, no dig intended; on the contrary please take it as a compliment. I was slow to follow R48 and sold off all my bonds slowly from about middle-2021 until 1Q2022. First to go was VBILX and PIGIX, then VWEAX, and throughout the whole time I was letting DODIX go in dribs and drabs. That one was hard to let go because I thought that if ever there was a “sleepy easy” fund to be married to, it was DODIX. Anyway, at some point, I believe (and apologies if I am misremembering) you commented that the bulk of the damage had already happened, and that the time to sell had already passed. Or something very similar to that. In fact, many people have been saying that from late 2021 onward, and my slow liquidation of DODIX was probably influenced by this. But I am now 100% out of bonds, except for RPHIX and a small holding of FPURX that was was bought in the 1990s. |
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Post by mozart522 on Apr 25, 2022 13:18:07 GMT
retiredat48, "Personally, I doubt the economy will permit the fed to get above neutral this first go-around. Then we have balance sheet reduction. Further we have the mid-term elections in November where the fed never likes to raise rates the month before any election. Then we have XMAS and the fed does not like to raise rates at that time. I suspect fed will now quickly get to 2.5% by summer...and halt." Those are examples of normal times. And they raised a total of 1.5% in Aug and Nov of 1994 before a mid-term. More importantly, we haven't had 9% inflation since the 80's. In a fight between inflation or the economy, the FED will choose inflation, because high inflation will kill the economy anyway. They need to dampen demand and they need to do so aggressively. Just another opinion. At least we won't need to wait years to see who is correct 
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mikes425
Commander
generally happy in semi-retirement and dividend income-land
Posts: 126
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Post by mikes425 on Apr 25, 2022 14:24:55 GMT
even bond FUNDS appear to be my friend, today.
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Post by retiredat48 on Apr 25, 2022 14:46:42 GMT
Those are examples of normal times. And they raised a total of 1.5% in Aug and Nov of 1994 before a mid-term. Just another opinion. At least we won't need to wait years to see who is correct  ,.....??If the fed raised rates in 1994 in August (then stopped), and did not raise rates until November, this is my point. For mid terms are early Nov...the fed raise likely coming AFTER the election. I did not look up precise dates. Is that a bond rally I see today?? R48 |
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Post by mozart522 on Apr 25, 2022 15:11:59 GMT
Those are examples of normal times. And they raised a total of 1.5% in Aug and Nov of 1994 before a mid-term. Just another opinion. At least we won't need to wait years to see who is correct ,.....??If the fed raised rates in 1994 in August (then stopped), and did not raise rates until November, this is my point. For mid terms are early Nov...the fed raise likely coming AFTER the election. I did not look up precise dates. Is that a bond rally I see today?? R48 But will they halt for three months if inflation is still 7-8%? Wouldn't that have possible implications for the election? I wouldn't depend on what was done by a different fed 30 years ago. Bonds up today so far. As I said, we will know in 4-5 months. I also said your VGSH buy was fine. But it might be better in August or later. Bonds up today so far. Hope it lasts more than a day or two. |
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Post by Chahta on Apr 25, 2022 17:05:38 GMT
The Fed started behind the eight ball. They need to react to inflation, or we/they will be in trouble. Whether they stop raising in the Summer may depend on inflation reports but they need to kill inflation. I would not count on the Fed playing games or attempting to screw up this time around.
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Post by Chahta on May 1, 2022 2:08:02 GMT
I am posting this this after seeing it on another site. I have believed this to be a possibility for a while now. What goes down (bond funds) must go up at some point. retiredat48 , this article specifically mentions the 2 years treasury. |
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Post by mozart522 on May 1, 2022 12:26:22 GMT
Chahta, I read something close to this over on Seeking Alpha. His current chart is stale as it ends on March 22. VG Total bond market has drawn down 14% since early August 2021. I think most would agree with his point; bonds will turn around at some point. I think that will happen only when the FED signals a potential end to hikes, or data shows inflation falling hard, and that it is sustainable. Tanking commodities will also possibly be an indicator. It seems to me that the FED generally takes its time raising rates in most cases, overshoots, then tends to lower them quickly. I think the real money will be made in intermediate and long term bonds at some point. But I need to see some upturn and a reason for it before I'm a buyer. OTOH, I may well buy some VGSH after the 4th. It is difficult for me to see how that can be a loser.
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Post by Chahta on May 1, 2022 12:49:43 GMT
Chahta , I read something close to this over on Seeking Alpha. His current chart is stale as it ends on March 22. VG Total bond market has drawn down 14% since early August 2021. I think most would agree with his point; bonds will turn around at some point. I think that will happen only when the FED signals a potential end to hikes, or data shows inflation falling hard, and that it is sustainable. Tanking commodities will also possibly be an indicator. It seems to me that the FED generally takes its time raising rates in most cases, overshoots, then tends to lower them quickly. I think the real money will be made in intermediate and long term bonds at some point. But I need to see some upturn and a reason for it before I'm a buyer. OTOH, I may well buy some VGSH after the 4th. It is difficult for me to see how that can be a loser. Huh? 1 month old? I don't think the relationship is as linear you say: "when the Fed signals....". That is too simple. |
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Post by mozart522 on May 1, 2022 13:31:45 GMT
Chahta, " I don't think the relationship is as linear you say: "when the Fed signals....". That is too simple." No need to use all that fancy engineer lingo:) You only quoted a small part of what I said about the turnaround signal: "bonds will turn around at some point. I think that will happen only when the FED signals a potential end to hikes, or data shows inflation falling hard, and that it is sustainable. Tanking commodities will also possibly be an indicator." So at least 3 indicators not just the FED. As for stale, he was suggesting a possible time to buy and he showed the downturn at -7% since August. BND is now down about twice that. On March 22, the price was 79.10. It is now 76.24 or 3.6% lower in a month or 50% more. I agree with what he is saying, There will be a lot of money made in bonds in the future but too many unknowns for me currently and nothing but lower prices almost every day. But even my MM gave me steakhouse money this month.
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Post by Chahta on May 1, 2022 15:02:06 GMT
By linear I mean that all other bond rates are not directly in reaction to the Fed's rate. We know they generally move with the Fed's direction but what lenders charge and what auction buyers pay is not exactly as the Fed dictates. To me it is far more complicated than a simple relationship. My best guess is that other rate increases have been overdone. I think this is what the article is saying.
This is not the end all be all of bond articles but just a perspective different from folks here.
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Post by mozart522 on May 1, 2022 16:41:42 GMT
Chahta, Completely agree. It takes a while for longer bonds to move, and they may be oversold now. My point is not about guessing what will go up or down when it is about we are going to see a nice opportunity in bonds at some point. At these yields, and higher, they will be a winner until the FED drops rates again, and then they will be a price winner. The big question is when to get in, particularly on the intermediate and long ends. EDV always seems to do very well when we have a recession.
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