The 10 year treasury yield is at 3.62% – off 18 basis points. Seems like a safety trade–with Credit Suisse common shares now trading at $3.96/share as investors are worried about an implosion you have to wonder what else is going on behind the scenes. Who else is in trouble? Whatever is happening it may be putting significant rate hikes at risk for the Fed–maybe they raise just 25 or 50 basis points in a month – maybe not at all. Who really knows?
I would expect a bear market rally in equities and that is what we are seeing–markets don’t go down in a straight line so no giant surprise.
It is a good time to rearrange the deck chairs in your portfolio–i.e. if you are overweight somewhere (and don’t want to be) may be a time to lighten up and redeploy into another security. I’m not talking about selling for the sake of selling–I’m talking about simply moving around a bit–there are certainly good, safe bargains to be had right now or in the next few days.
The last two weeks in particular I’ve noticed giant amounts of Credit Suisse bond inventory being available. Their mid/late 2024 floats (only 2 years) are trading at near 7% yields.
I don’t have a subscription, but was there anything useful in the Marketwatch article on Preferred stocks?
I tried some Western Digital 4.75% maturing 2/2026
Baa3/BB+
6.82% ytm
Like everything else, the bonds have been volatile so do your due diligence if interested.
I would like to start buying a bit more but not on a day like this. While I have some lowball bids in on a couple of names I have a feeling this is just a small bounce of people using their divs/interest to go shopping, the 10 year yield going down as you mentioned, the bounce in the stock market, and etc..
It does not take much to move the prices in many of the names we dabble in. More buyers out and about today for sure.
Hi Tim, Big reversal day for sure. Just a guess, but the heavy and indiscriminate selling that was swamping the buy side last week may have been at least partially related to ETF end-of-quarter trades. Our buy orders were being hit 4/5 a day last week whereas today (1st day of new quarter) much of the last tranche has been sold back to the market at gains up to .92/share (5%+) in just those few days.
Staying in our lane – knowing nothing about what rates “will” do from day-to-day no matter how much we believe in what they “should” do. New buy orders are in place for the next round of negative sentiment.
The safest and most secure bond investment in the world is the US Treasury. Yet this market has wild moves every single day. Some days wild up and some days wild down. This market is sending everybody a BIG RED WARNING flag – something is broken. Could be wrong but will continue to maintain oversized cash (money market position) at 2.7%
Speaking of redeploying, bought a WMB bond today maturing 1-2025, YTM 5.1%. BBB rated over 5% for a little over 2 years looks pretty good to me.
Hi Timdman,
That sounds like an interesting bond, do you happen to have the CUSIP number? If so, much appreciated.
96950FAQ7 for the WMB bond, been shooting for investment grade over 5% with short maturity.