Interest Rates are Popping

Well even with the supposed flight to safety in treasury’s rates are popping pretty hard. We were as low as 1.72% on Monday and now with the hot CPI number tomorrow we have gone as high as 2.02% and now at 2.01%–seeing lots of red today.

I noticed some talk from some folks about dipping into investment grade issues–actually I took my 1st bite of Brighthouse Financial 6.75% perpetual (BHFAO) this morning (BHFAO).

If one goes to this spreadsheet – Master List with Credit Rating – 2022 you can ‘toggle’ on the bottom of the page for investment grade–it will be sorted by any issues with at least a S&P or Moodys investment grade.

14 thoughts on “Interest Rates are Popping”

  1. I’m hearing more negative market predictions, from long only managers, than I can remember since 2008.

    1. I read all the predictions by the respected experts. Particularly if accompanied by alarming headlines. I look more for reasons rather than actionable buy/sell conclusions. “It is not events that disturb people, it is their judgments concerning them.” — Epictetus, ~100 AD

      Some suggest that uncertain investors use a poker playing technique: see the future as an array of possible events each with a different probability rather than a single point of prediction.

      “What good poker players and good decision-makers have in common is their comfort with the world being an uncertain and unpredictable place. They understand that they can almost never know exactly how something will turn out. They embrace that uncertainty and, instead of focusing on being sure, they try to figure out how unsure they are, making their best guess at the chances that different outcomes will occur.” — Annie Duke, professional poker player.

      (For a real-life field application, look for the new “Probabilistic Snow Forecasts” for your area if you are in the Snowbelt.)

  2. The bond markets are acting like rates are not going significantly higher in the near future even with inflation raging. I have a lot of cash and pinned to par issues waiting for higher yields. I’m starting to wonder whether the Ukraine situation has the Fed between a rock and a hard place. I wouldn’t be surprised to see a few .25 point raises, but no significant raises as the Fed fears recession more than inflation. JM2C

    1. Randy

      I think the Ukraine war is also bringing a lot of money currently invested for income with emerging market economies back to the US. I see this keeping the 10 year rate a little lower for longer.

      I’m expecting Powel to raise by a 1/4 point and wait a month or two.

      1. Not necessarily. We’ve just shown the world we can freeze their assets in dollars or maybe even confiscate them. Could have negative consequences with non-allied countries investing here.

        1. would not get fixated on this fact as the world likes to make money through trade while holding gold or commodities only creates a drag on your countries economy.

          1. Not my point, there are other alternatives. I don’t claim to understand gold’s geopolitical value though I do trade it like anything else, sell high buy low.

  3. Those who like BHFAO may also like BHFAP with a bit lower 6.6% coupon, callable a bit earlier and also trading lower in low $25s.

    I did add to my BHFAP just as it went ex-dividend, near lows as I wanted to add to my ‘callable closer’ and hence better downside protection basket and cheaper

  4. Spire Inc has a BBB/Ba1. Which is a split IG is marked No when it comes to the IG column. Brighthouse is BBB-/Ba1. Yet marked IG YES. I assume the sheet just needs minor corrections? Morgan Stanley is also not IG.

    Is there something I am misunderstanding? Just curious is all.

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