Yesterday we got 1st time unemployment claims which came in at 219,000 which is relatively tame compared to a forecast of 224,000 BUT continuing claims came in at 1.91 million which is up from last week which was at 1.87 million. As I have mentioned I watch the employment numbers very closely–they are the ‘canary in the coal mine’ relative to the overall economy. It is tough to see the economy falling off a cliff if everyone that wants a job has a job.
Interest rates right now seem to be ‘stuck’–right at 4.60% (more or less). What is going to push rates higher–or lower? GDPNow from the Atlanta Fed is showing 3.1% as of 12/24/2024–if this is close it will be no help for lowering rates. Employment is not looking to be of much help for lower rates. The scariest thing from my perspective is we have no real idea on what government spending will be down the road (actually we all have opinions for sure)–are the bond vigilantes going to take over and ‘force’ discipline on the government? I don’t know the answer, but I am certain that there are some money folks out there that are licking their chops at the possibilities for making a killing in the debt market if something goes wrong.
Speaking of Bond Vigilantes here is a Pimco article from 12/9/2024.
Tim; I thought I would try one final time, maybe the 3rd time will be the charm. Iam looking at your BHFAP as I type this its down to $21.66 which gives you a YIELD of 7.61%. By my standards that pretty darn good. I spent some time on their website and looked at all the ratings which were quite good. Volume today is 87,279 so no problem there. My question is what are we missing??? This seems like a pretty solid company with a very good yield. Hope you will reply. THANK YOU.
Chuck,
Like many other fixed perpetual preferreds in the current rising long yields environment, BHFAP is in a fast-moving downtrend. When the 10-year yield hit 5% in Oct 2023, BHFAP made a low at 19.05, yield 8.66%. Current price action is similar.
Rocks2Stocks; THANK YOU. I’ve always been a bond buyer as I feel they offer much more security & “stability” than these crazy high flying preferreds. THANK YOU again.
r2s and Chuck , There is some correlation between price and yield on the cost you pay when the dividend / interest is fixed. Most stocks pay quarterly and bonds semi-annually. Stock prices move faster than bond prices. Over the past 9 months in general I have seen lower highs and lower lows on common stocks that pay dividends. This to me is a downtrend. There is a good chance we test lows or hit new ones. The same goes for bonds.
Not a perfect example, comparing a bond which has a maturity date and a perpetual.
Bright house financial
CUSIP 10922NAG8
https://www.finra.org/finra-data/fixed-income/bond?symbol=BHF4987731&bondType=CORP
On Oct 30th 2023 it hit a yield of 7.17% and a price of 92
Could this bond hit this again? maybe. Time will tell and patience.
CHARLES M; THANK YOU. Thats really great info. I clicked on the link and it appears their bond with a fairly Low Coupon (5.625%) has been trading between $101 & $102. It has a rating of BBB+ which tells me the preferred is most likely safe. I’ve been doing this long enough to know if they were having serious problems that bond with that low coupon would be trading way below par. All of us are in different boats and have totally different goals. For me I just continue to build a nice “income stream” that I can pass onto my wife and we both can continue to live well off of that stream. Thank You again Charles M. PS May I ask what state you live in?? I live in Omaha.
Chuck , Last I checked Omaha isn’t a state!
I am in Calif. The land of fruit and nuts. The weather is great except for the heavy rains we are having right now. I like visiting the big cities but we don’t do it as much as we used to. Unfortunately the city is moving into the country. I was outside the town limits when we moved here then the town annexed us. I had to fight to keep my sheep. We just had 1 set of twins drop on Thursday. I expect another set soon. Just a small hobby flock.
Have you ever considered how time changes the relationship between bond price and bond YTM on any bond with a maturity? In other words, there is a relative irrelevance (you like that odd word combo?) between quoting a price and yield as it was in 2023 to what it would be now. For example, if this bond is at 92 on this Monday its yield to maturity would be 7.467% instead of the 7.17% it was on 10/30/23. And if it was at 7.17% YTM on Monday, it’s price would be 93.20 instead of 92 as it was on 10/30/23. So which is relevant for your charting example – the yield as it was on 10/30/23 or the price? And of course the comparison becomes even more complicated when you discuss a bond that’s callable and was trading at premium on 10/30/23.
Have you ever considered how time moves faster as you get older?
If you believe the quantum effects of a multiverse are real, as apparently they are , I am going to tell you time actually does move faster as you get older and what you are sensing is real.
Now,. I’m about to slow time wayyyyyy down by doing something I hate:
riding my exercise bike. An hour on the bike takes at least 3 full days in my normal universe.
I too am trying to build/keep an income stream. I bought a 7 year 3.55% annuity back when rates were zero. I don’t get quotes on it, but I have to look at the market value of my bonds decline every day.
I have a nice income from buying only fixed income for the past 14 years
Hello Losingtrader; I enjoyed very much your post. Yes, time is flying way too fast for some of us. Iam now age 74 & cannot believe where did all those wonderful years go???? Speaking of “income streams” have you ever looked into some of the pipeline companies?? I have a very broadly diversified portfolio but about 5 years ago discovered them thru reading on S A. They have great yields and some of them are very strong financially. I own quite a bit of EPD & MPLX which need to be owned in a “personal account” outside of a IRA or any retirement account due to the dreaded K-1 & potential UBTI TAXATION. I really like them alot due to the yield and the great “depreciation” that I get. Just my 2 cents worth for you.
You, you young whippersnapper (no derogatory meaning intended despite what the word’s academic definition implies) are asking me if I know how time moves faster the older you get???????? Trust me…. I know……..sighhhhhhh
Thank you, Otis, for singing, and Mrs. Otis for co-writing this song – https://www.youtube.com/watch?v=Xaehc0iYP2I&ab_channel=OtisRedding-Topic