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Post by win1177 on Aug 3, 2023 17:09:28 GMT
The Ten Year Treasury has crossed above 4%, anybody looking at adding to longer term bonds here? We still are VERY equity “heavy” at 86%, and hold just a little over 4% in fixed income, rest is in money markets. But slowly adding to bonds here. To date, have been mainly adding to intermediate term bonds, muni funds in taxable accounts and intermediate higher quality funds in tax free/ deferred accounts. But now wondering whether we should go a little longer in maturity? These would mainly be for “ballast” for our very equity heavy portfolio.
Anybody considering longer term bonds here, especially since it looks like like Fed is closer to pausing rate increases?
Win
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Post by anitya on Aug 3, 2023 18:20:40 GMT
win1177 , "[N]ow wondering whether we should go a little longer in maturity? These would mainly be for “ballast” for our very equity heavy portfolio." I too used to think "ballast" is a real thing. It is just a concept with no real effect for a portfolio of your size and quality. On the other hand, if you want a guaranteed 4.25% for the next 10 years, that is real for sure. Similarly, if you are betting that interest rates will fall, and you can harvest a capital gain when that happens, sure you can take that trade. I would include your state pension (and SS when you get there) in the amount of long term bonds you want to own if are buying the bonds for their interest rate.
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Post by mnfish on Aug 3, 2023 18:33:44 GMT
I put in a couple of wish(?) orders for TLT @ $90 and SPLB @ $20. Some folks and Wells are recommending a barbell approach with long and short bonds and I own no long bonds.
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Post by howaya on Aug 3, 2023 18:44:23 GMT
The spreads along the corporate bond spectrum do not appear (for me at least) to reward one for going longer at this point in time. But Munis tend to have a slightly longer duration than, say, VCIT. If one were to buy something like VWALX with its current yield of 4.2% while expecting a tax rate of 24%, the effective yield is better than 5.5% in a taxable account. That is the longest term I have been willing to entertain lately.
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bruno
Lieutenant
Posts: 56
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Post by bruno on Aug 3, 2023 19:08:48 GMT
Not that long... I finally cashed in my HYDB and bought 3134GYXY3 a 5 yr. FEDERAL HOME LN MTG 6.050% that will probably get called and then will buy something else.
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Post by anitya on Aug 3, 2023 19:19:01 GMT
Not that long... I finally cashed in my HYDB and bought 3134GYXY3 a 5 yr. FEDERAL HOME LN MTG 6.050% that will probably get called and then will buy something else. How much transaction fees (in %age) did you pay and at which brokerage? Thanks.
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Post by anitya on Aug 3, 2023 19:33:36 GMT
This morning I was asking myself, "Why does Buffett keep telling us he is buying $10B of T Bills a week? Why is BRK not increasing duration?" If there is a catastrophe, Treasuries should go up in price and there should be enough liquidity for him to offload a bunch of Treasury bonds / Notes and pocket a nice gain. Then, I saw this thread. I think yogibearbull is keeping his duration short too. May be he will chime in. I have had Treasuries mature two weeks ago and today. I also have more maturing in a week and in a month. I am thinking of participating in the 1 yr auction. State tax exemption is important to me.
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Post by howaya on Aug 3, 2023 20:15:04 GMT
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Post by Chahta on Aug 3, 2023 21:39:41 GMT
With rates above 4% now there could be some very nice CGs on the horizon in TLT or EDV.
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bruno
Lieutenant
Posts: 56
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Post by bruno on Aug 3, 2023 23:38:21 GMT
Not that long... I finally cashed in my HYDB and bought 3134GYXY3 a 5 yr. FEDERAL HOME LN MTG 6.050% that will probably get called and then will buy something else. How much transaction fees (in %age) did you pay and at which brokerage? Thanks. I got it at Fido. Not sure what your are asking but it pays a 6.050 coupon and I believe it was thru a 3rd party so that cost was $69.5k for 70 bills. I am new to this also but it looks the income will come from the coupon payments. Make whole is 100 so no real income there. For me its hard to find non callable thats paying anything.
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Post by yogibearbull on Aug 4, 2023 0:04:06 GMT
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Post by yogibearbull on Aug 4, 2023 0:42:54 GMT
A quick review of roll decisions for T now and roll vs 2T now based on 8/3/23 yields.
6m vs 1y: Breakeven = 2 x 5.37 - 5.52 = 5.22%. So, if think that 6m in 6 months will be higher than 5.22%, buy 6m now and roll in 6 months; else buy 1y now.
5y vs 10y: Breakeven 2 x 4.20 - 4.30 = 4.1%. So, if think that 5y in 5 years will be higher than 4.1%, buy 5y now and roll in 5 years; else buy 10y now.
etc
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Post by anitya on Aug 4, 2023 2:10:25 GMT
yogibearbull , As you know, all those have an issue date of August 10. If I have Treasuries (bought in secondary market) maturing on August 10, I think I can use the proceeds to buy the August 10 issue, without incurring margin interest at Fidelity. Right? I am not enrolled for auto roll but can I enroll now the maturing Treasury to auto roll? I forgot the rules around that. treasurydirect.gov/auctions/upcoming/July 2023 CPI data are scheduled to be released on August 10, 2023, at 8:30 A.M. Eastern Time but the auction results will be locked in by then. FWIW, Moody's says, " Repeating a 0.2% monthly increase in July would result in an acceleration in headline inflation’s annual rate, from 3% in June to 3.2%."
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Post by yogibearbull on Aug 4, 2023 10:32:40 GMT
Monday/Tuesday Auction buys settle on Thursday, 8/10/23, and may be paid for with Treasuries maturing on 8/10/23 (either Auction or secondary market purchases).
Fido will send margin alerts in between but you can ignore those. Schwab and Vanguard don't send such alerts.
Auto-roll is offered only at the time of purchase.
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Post by Capital on Aug 4, 2023 11:15:44 GMT
I'm still buying mostly 3-month T-Bills. Wedneday I rolled a maturing position in my Rollover IRA into 11/28/2023 maturities at a yield of 5.4286%.
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Post by yakers on Aug 4, 2023 14:38:18 GMT
Not adding 10 years out, wife & I are age 70+ and although there is some generational reflections (short of actual planning) our portfolio is heavily balanced funds so I don't try to time the fixed income so much. Balalnce funds, some shares and MMs are generall enough, sold off my 0%ibonds and no longer do treasuries. I'm shue there is .5% in there somewhere if I managed more actively.
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Post by anitya on Aug 4, 2023 18:09:17 GMT
Not adding 10 years out, wife & I are age 70+ and although there is some generational reflections (short of actual planning) our portfolio is heavily balanced funds so I don't try to time the fixed income so much. Balalnce funds, some shares and MMs are generall enough, sold off my 0%ibonds and no longer do treasuries. I'm shue there is .5% in there somewhere if I managed more actively. Is motivation for withdrawing IBonds simplifying portfolio or some other tactical investment decision? Everybody, May be it is time to evaluate whether IBonds are a good hold at 2% inflation, unless the fixed rate is more than 1%.
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Post by yakers on Aug 5, 2023 14:27:01 GMT
The ibonds were 0% so saw no reason to hold them, currently those funds were sent to a VG MM, these were the last of my ibonds, sold some earlier to buy a car so it was just the source of 'cash' for that purchase. Simplifying was also part of the decision on where to draw funds from. Newer ibonds pay >0% so may be worth holding.
Simplifying & tactical are woven together for me as whenever $ is to be spent (RMDs/QCDs, big travel trips, $ to children) the portfolio get reanalyzed; where do $ come from/ what do I want to hold.
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Post by anitya on Aug 8, 2023 19:50:09 GMT
Semi Duplicate post - as this thread may be a more appropriate location to be helpful to others (and me in the future).
Fidelity shows my order for the 1 yr Treasury auction got filled at 94.883, which comes to a yield of 5.117% [Edit: 5.39%]. There are at least 5 issues available now in the secondary market that mature between 8/15 - 8/30/24 that have YTM no less than 5.3%.
I only bought 1/2 of what I wanted to buy. May be in the next week or so, I can buy the other half at that same or higher YTM.
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Post by yogibearbull on Aug 8, 2023 19:54:07 GMT
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Post by anitya on Aug 8, 2023 20:18:01 GMT
Thanks. how I have forgotten basic math (or loss of analytical / cognitive skills)! Hopefully, no five year old reads my post you responded to. 5.117 (ROI (interest) in a year)/94.883 (amount I paid)= 5.39%, yes, excellent YTM.
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Post by anitya on Aug 8, 2023 21:58:16 GMT
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Post by yogibearbull on Aug 8, 2023 22:18:56 GMT
anitya, coupon is shown as "Interest" at 4 3/8%.
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Post by anitya on Aug 12, 2023 6:49:10 GMT
The tentative Treasury auction schedule available at the Fidelity Yields table page currently shows potential auction dates through January 29. 2024. The pdf auction schedule document can be downloaded from that Fidelity page. Specifically, on the Yields table page, on the right hand margin, below the Fidelity telephone number, there is a scroll down menu of various resources. In the first page of that clickable list of resources is the tentative Treasury auction schedule document. The next 2 yr auction is on Monday, August 28 (settles on 31st) and next 52 wk Bill auction is on Tuesday, September 5 (settles on the 7th).
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Post by yogibearbull on Aug 12, 2023 10:35:04 GMT
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Post by anitya on Aug 14, 2023 6:15:19 GMT
Thanks, yogibearbull. I just could not locate that schedule at Treasurydirect and so went thru the laborious Fidelity resource. You would think TreasuryDirect could duplicate that schedule or link to it in their auctions page.
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Post by yogibearbull on Aug 14, 2023 11:50:21 GMT
Search "Treasury Auction *****" anitya , well, things are all over as for most government things. In fact, "Treasury Auction" leads to the page on the Department of Treasury for broad auctions of properties by the Treasury, the stuff way beyond T-Bills/Notes/Bonds. Most, but not all, of the relevant stuff is at the Treasury Direct site. Finally, I found have what works for search - add some qualifier (Treasury Auction *****). So, 1. "Treasury Auction Rate" finds the rate page (for T-Bills, T-Bills/Notes/Bonds, TIPS) 2. "Treasury Auction Schedule" finds the .pdf for the Schedule that is updated periodically, 3. "Treasury Auction Upcoming" finds the page for upcoming Auctions (it also has a tab for recent Auction Results), 4. "Treasury Auction Result" finds pages with more info on Auctions than I need, including downloadable data files showing previous Auction history. I sometimes get lost on this page and just rely on #3 for the final result .pdf page. I have also bookmarked these pages for times when the coffee doesn't kick in, but most of the time, I use direct search with "Treasury Auction *****". I am aware of the user-unfriendliness of the Treasury sites because I have friends who call me almost monthly to find (from me!) when the next Auction(s) are. I have shown them the links for pages but they say that they cannot find the stuff themselves. Some of it becomes more difficult on phone.
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Post by anitya on Aug 14, 2023 18:25:29 GMT
yogibearbull, What is your current fav short term or ultra short term (A and above rated) bond fund / ETF, including Treasury fund / ETF?
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Post by yogibearbull on Aug 14, 2023 23:53:35 GMT
I use ICSH, but JPST, etc are fine too.
26-wk Auction today was at 5.526%.
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Post by anitya on Aug 15, 2023 19:32:30 GMT
I use ICSH, but JPST, etc are fine too. 26-wk Auction today was at 5.526%. I should have been more clear about my ask - I was thinking of these ETFs in lieu of MM funds. Any specific reason I should favor those two over any of the duration equivalent Treasury ETFs. There appears to be short and ultra short Treasury ETFs with good AUMs (liquidity) and half the ER as MM funds' ER. (I used ICSH and JPST sometime ago and when short term rates went up I liquidated them to move to MM for the benefit of stable NAV.)
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