Yesterday was a very good day for income investors–about time we had one to help recoup some of the losses from the past number of months.
Of course the rally was nice for portfolio balances, but it would have been better if I held 100% baby bonds and preferreds, which were up 1-3%, but given less than 50% of my portfolios are in those segments my portfolio was up 1/2%. But those getting the best gains are starting from a much lower level as their portfolios have been hammered hard in the last year.
So have we seen the last hike and have we seen a peak in interest rates for the next 6 months or so? Maybe—firmly a maybe. No one can answer this question with certainty, but it seems to me in the shorter term (less than 6 months or a year) one needs to do a little buying, which is what I will be doing today. I say a little because my dry powder is minimal at this moment. I will write a blurb later today when I figure out what to buy.
My Uhaul Investors Club holdings are getting a much better return nowadays. Recall, for those familiar with the club, that the coupons available 3 years ago were down in the 1.5% to 2.5% area–now 4.5% to 5%. Finally most of my 1.5% holdings are maturing and I have rolled them up to triple the coupon for 3 years. Actually still a substandard coupon, but I like having money spread around and this is a pretty minor portion of our holdings
This morning the 10 year treasury is at 4.71% and holding—if I was one looking for a safe 5 or 5.5% I would probably get some CDs now. I checked the rates on CDs last night and the best was holding around 5.75%–but I suspect this will fade away today or tomorrow. I have plenty of these already and will likely not be rolling over this money into new CDs–but who knows–we’ll see.
Equities are up a bit 1/3 to 1/2% at 6 a.m. (central)–we’ll see if the party continues today–we all know that directions can change in a nanosecond. Economic news is minimal today–we have the weekly jobless claims and this is always interesting – 214,000 initial claims are expected–I am always looking for higher numbers indicating a softening job market–we’ll see what happens.
MMFs today…
VUSXX ~ 5.32%
VMRXX ~ 5.31%
VMFXX ~ 5.30%
SWVXX ~ 5.24%
SNSXX ~ 5.08%
SNOXX ~ 5.07%
FZFXX ~ 4.99%
SPAXX ~ 4.99%
I’m rather amazed- having sold a bunch and sitting at almost 55% cash equivalents, in the 4 trading days since the 27th, I’m up 4.43% on the remaining beaten down stocks. Actually- almost forgot that there’s my RMD cash in an acct earning 5.26%, and cash from a couple iBonds that I cashed- sweet.
Four very nicely up days in a row. Managed to finish buying CDs yesterday- yields lower on offers today.
Party on… until JP and Yellen realize they don’t have enough change in the sofa cushions.
Sample of rates for call protected, monthly pay CDs for those interested in that niche.
12 months, 5.4%, Bank Ozk
18 months, 5.5%, Wells Fargo, (sold out)
18 months, 5.45%, Brookline
24 months, 5.4%, Wells Fargo
36 months, 5.15%, Wells Fargo (sold out)
36 months, 5.15%, UBS
Rates for Treasury Bills/Notes
6 month, 5.56%
12 months, 5.423%
(18 month midpoint, 5.19%)
24 months, 4.96%
36 months, 4.77%
There seem to be a fair number of non-callable 12-18-24-36 month CDs with various rates and payment schedules still available. DYODD
This morning Fido showed a new issue DSNAV9791 Finwise Bank monthly pay 5.75% CD due 11/10/26 with first call = 5/10/24. That seemed pretty interesting so I put in for some not knowing Finwise at all… Now I can’t even bring up the full description nor do I know if I have an order execution, but if you pull up the CUSIP and attempt to place an order, it looks as though Fido accepts it…. Settlement is 11/10.
Now there’s a 5.85% five-year CD on Fido. First call date 5/13/24. From First Federal, CUSIP DSNB27978.
Hmmm – decisions, decisions
I had a treasury mature and need to reinvest it. Was going to lock up 5.5% for 18 months in a Wells Fargo non callable CD. Now seeing this 5.85% callable five year CD – I am having flashbacks to Clint “Do you feel lucky punk”
The five year from First Federal is callable after 6 months then every 6 months after that. So how lucky do I feel it will survive one call date
Decisions, decisions . . .
Let us know what you decide! 🙂
Or, why not get both?
Actually James, I decided to split the proceeds between the two and do just that – get both
So I will lock in half the money on the 18 month 5.5% non callable from Wells Fargo and the other half on the 5 year 5.85% callable every 6 months from First Federal – and hope I it stays outstanding at least a year
Once you place the order you will usually get the CD although the order will not execute immediately. There’s generally a lag time of a day or two on Fido before a CD order get executed. The order will show as “open” until then. With a week to settlement, there might be a little wait. FWIW, I had only one bank cancel its offering during the open period.
I used to stick to non-callable issues, but longer callables with higher rates and shorter call dates can be a good fit.
2wr
I also put in a FIDO order for the Finwise 5.75%
It shows up in my Activity as Open, settles 11/10 as you said
I just about finished selling all my PSA preferreds today that very recently I bought near 6.5% yields now that some of them are trading with yields below 6%.
Remember the quote from “Wall Street” when Marv the broker was staring at the old Quotron machines when everything his clients owned was going up:
“Sometimes I do love this so…..”
I did some swaps yesterday morning and one of the issues I picked up was PSA-O which I just unloaded for a 98 cent gain. Sweet. This week has been a long time coming.
Not a prediction but I wouldn’t be surprised by another down move after this fast run up.
Rates on treasuries going down from more “they’re gonna pivot” magic thinking. Nothing gonna stop granny Yellen from borrowing, printing and spending 2 trillion a year that she ain’t got.
Stocks up, yields down, same as before. It works until it don’t.
Eladio–you are right on the mark with that comment.
First of all, why do you call her granny? Is that some kind of insult? Powell is only 7 years younger, do you call him grandpa?
Second, what does she have to do with government spending? She doesn’t control the budget.
Good point, calling her granny is an insult – to grandmothers. I propose we call her Commie instead. Her whole career, in academia, at the San Francisco Fed, as Fed chair and now as treasury secretary has been one long attempt to centrally plan an economy though massive monetary inflation and spending. Far more accurate and fitting to call here a Commie than granny.