Waiting and Watching

Looking for volatility to come into the market in 20 minutes when the Fed meeting minutes for June are released.

Markets are likely looking to see the concern–or lack of concern–on the part of the Fed relative to the softening economy. Are they willing to back off to a 50 basis point hike at the next meeting or are the firm ‘no matter what’ at a 75 basis point increase?

In the end no single piece of news changes what I am trying to accomplish relative to investing–just sitting back and watching.

15 thoughts on “Waiting and Watching”

  1. Tim…Powell,, does not have any idea what he’s doing ..he dropped the rate to 0-25% over heated Economy ,Now , raising rates…to a recession , slow down.
    the Dow from 30,000 to 34,000 back to 30,000. Georges

  2. December 2022 Treasuries were 2.53%. today With MM at zero it seems like a no brainer for some

    1. My money market fund has a 7-day yield of 1.42% (VMFXX), which is just below the Fed Funds rate of 1.50-1.75%

      If (admitedly a big if) the Fed moves another 75 basis points in a few weeks, I would expect VMFXX to be around 2.25% yield fairly quickly.

      I do not see that as zero.

      1. SWVXX at Schwab is paying 1.32% this morning (Vanguard always seemed to pay more than Schwab). 1 month Bank CD’s 1.5%. 3-month bank CDs at 1.76%. Agree with another 75 basis points by the FED and we should see higher rates quickly.

        Options exist for short-term money (cash) at 0%

    2. I like some of the municipal tax free bond rates in here and started to nibble. This is not a recommendation and only to show what I bought in one of my income trusts, please do your own deep due diligence and be intelligent about your risk level:
      Pueblo County Colorado S&P rated A, this bond is for jail usage just IPO’d with. I accrued interest and won’t settle until 7/19/22
      4.25% due 7/1/38 priced @$99.997 YTW 4.238%, YTC 4.241%, YTM 4.238%
      Be well my friends, Azure

        1. Hi Franklin, the CUSIP is 744829FF4, please let me know if you have any other questions as I’d be glad to help you in any way I can. BTW, this trade was done at Vanguard. Have a great weekend, Azure

  3. I hear ya. Oil coming down certainly provides cover to soften their stance, but agree they are more in a “wait and see approach.” Increase 75 bps for now and say they will watch it going forward.

    Too bad most prefs are perpetual. I think the best risk adjusted return in the current environment is 5 year B type bonds yielding 6%+.

    There is a reason we love fixed income.. long term investors generally only have to worry about default.

    1. Maine, if it interests you BBB subordinated debt KTN which matures 1/1/2027 got down to 27.40 and under that today. I got in at 27.40. That is 5.75% for a less than 4.5 year note. It had some big seller out today. Dont know if he is done yet or not.

      1. I was looking forward to writing a snarky remark about how bonds offer better relative value but hard to argue with 5.75% for that time period and credit. Plus, there is some convexity to if as it’s decent odds someone will inevitably bid it up.

        Lotsa good stuff out there..
        Here is 8% yield for 3 year Crestwood debt.

        https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C699441&symbol=CMLP4464542

        Or this 3 year Starwood bond yielding 7%

        https://finra-markets.morningstar.com/BondCenter/BondDetail.jsp?ticker=C770911&symbol=STWD4571193

        1. I was noticing that CEQP bond myself, actually had it punched up on the screen this morning. But I just couldnt do it, because I have a lot of CEQP- I own. I wont rule it out though. But I definitely agree there are some decent bond issues out there including those.

        2. Maine, that convexity occured already. This is why I prefer these types of issues if the pricing comes to you… As it did the opposite on Friday, two days later spiking on heavy volume. I dithered around and waited but sold late at $28.04 which was not near the high of the day. Today volume drove it right back down and I replenished the shares at 27.64-66 range firing 100 share market orders into it until the ask went up.

            1. It comes and goes in waves, havent done it much with KTN but have with KTH for many years. The key for me is to buy at a price I can live with and just be ready if it moves to ones price point. Volume dumps either way also help the process. A lot of issues have been zig zagging opposite of the general preferred market lately.

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