Treasuries

[boatnam2]

So lets say you have some secondary stuff in the 5+ rates and rates did drop way back down, thinking they would go up in value before maturity.

 

[2Driver]

So let’s t all depends say you have some secondary stuff in the 5+ rates and rates did drop way back down, thinking they would go up in value before maturity.

Yeah, but I think it depends all on the delta of your rate, the going rate and more so the maturity.

Basically the price, over or under par, of what you are holding will be based on the going rate to where both bonds yields maturity match. All other things being equal ie rating, bond type etc… The ole ceteris paribus.

There is easy math for that but I don’t have it. I’m sure you could find it on the web like the tax yield calculator works.

 

[2Driver]

Article on the 5 year

JPMorgan Team Ditches Bullish Treasuries View on US Data Beats

JPMorgan Chase & Co. has ditched a bullish tactical view on Treasuries after a series of US economic data releases came in stronger than expected.

www.bloomberg.com

 

[c_land]

BOJ raised their 10Y target again

 

[c_land]

BOJ raised their 10Y target again

View attachment 1257823

So far so good … .

https://twitter.com/i/web/status/1684780433115119622

 

[bentprops]

Check out BOXX, this acts like a treasury but much easier to get.

 

[2Driver]

Well US debt got downgraded by Fitch ratings today from AAA to AA+. Sad but about time.

Maybe a pop in yields tomorrow?

 

[DrunkenSailor]

Fitch pointed to the debt ceiling process as the main driver. We are one of the only counties that has one. I am glad we do. Sounds like Fitch is trying to play politics.

 

[c_land]

Fitch pointed to the debt ceiling process as the main driver. We are one of the only counties that has one. I am glad we do. Sounds like Fitch is trying to play politics.

Probably a non-event, but anything that makes Janet Yellen look bad I’m on board.

 

[2Driver]

LOL how apropos.
Fitch states one of the reason for the downgrade is a failure in governance and the Dems prove it with Dem Richard Neal blurting out, “it’s all the republicans fault”.

If these numbers and behaviors with debt were with a public company it would be rated triple B

 

[Orange Juice]

Another buying opportunity, while others are looking the other way.

 

[regor]

... this morning we got a more granular preview of how we get there, when the Treasury published its quarter refunding statement, in which the US boosted the size of its quarterly sale of longer-term debt for the first time in over 2 1/2 years, testing buyers' appetites amid an increase in government borrowing needs so alarming it helped spur Fitch Ratings to cut the US sovereign rating from AAA (and judging by the surge in yields this morning, the appetite may be lacking).

The Treasury said it will sell $103 billion of longer-term securities at its so-called quarterly refunding auctions next week, which span 3-, 10- and 30-year Treasuries, and will refund approximately $84 billion of maturing Treasury notes and bonds, raising about $19 billion in new cash. That’s a big jump from a $96 billion in gross issuance last quarter, and larger than most dealers had expected.

Specifically, for next week’s refunding auctions, they break down as follows:

• $42 billion of 3-year notes on Aug. 8, up from $40 billion at the May refunding and at the last auction in July
• $38 billion of 10-year notes on Aug. 9, compared with $35 billion last quarter
• $23 billion of 30-year bonds on Aug. 10, versus $21 billion in May

Issuance plans for TIPS, were held steady except for the 5-year maturity, where October’s new-issue auction will go up by $1 billion. Floating-rate note auction sizes were increased by $2 billion.

The table below presents, in billions of dollars, the actual auction sizes for the May to July 2023 quarter and the anticipated auction sizes for the August to October 2023 quarter:

 

[c_land]

View attachment 1259890

... this morning we got a more granular preview of how we get there, when the Treasury published its quarter refunding statement, in which the US boosted the size of its quarterly sale of longer-term debt for the first time in over 2 1/2 years, testing buyers' appetites amid an increase in government borrowing needs so alarming it helped spur Fitch Ratings to cut the US sovereign rating from AAA (and judging by the surge in yields this morning, the appetite may be lacking).

The Treasury said it will sell $103 billion of longer-term securities at its so-called quarterly refunding auctions next week, which span 3-, 10- and 30-year Treasuries, and will refund approximately $84 billion of maturing Treasury notes and bonds, raising about $19 billion in new cash. That’s a big jump from a $96 billion in gross issuance last quarter, and larger than most dealers had expected.

Specifically, for next week’s refunding auctions, they break down as follows:

• $42 billion of 3-year notes on Aug. 8, up from $40 billion at the May refunding and at the last auction in July
• $38 billion of 10-year notes on Aug. 9, compared with $35 billion last quarter
• $23 billion of 30-year bonds on Aug. 10, versus $21 billion in May

Issuance plans for TIPS, were held steady except for the 5-year maturity, where October’s new-issue auction will go up by $1 billion. Floating-rate note auction sizes were increased by $2 billion.

The table below presents, in billions of dollars, the actual auction sizes for the May to July 2023 quarter and the anticipated auction sizes for the August to October 2023 quarter:

View attachment 1259891

 

[DrunkenSailor]

View attachment 1259979

I do not approve of this comparison.

 

[mesquito_creek]

3 month CD at 5.458%… with a couple clicks of the mouse. Couldn’t be easier for simpleton retirees like myself. If it holds up I will probably liquidate my ishares treasurys and just buy CDs.

 

[2Driver]

I sitting in Schwab’s money market at 5.37%

Im waiting for the longer stuff to hit peak then lock in before rates pull back next year. A 3 year maturity is 4.7. Thats a nice lock in

 

[bentprops]

I sitting in Schwab’s money market at 5.37%

Im waiting for the longer stuff to hit peak then lock in before rates pull back next year. A 3 year maturity is 4.7. Thats a nice lock in

Problem with all money market accounts is they changed the rules in 2010, if the market is tanking like 2008 they dont have to release your funds.

 

[havasujeeper]

3 month CD at 5.458%… with a couple clicks of the mouse. Couldn’t be easier for simpleton retirees like myself. If it holds up I will probably liquidate my ishares treasurys and just buy CDs.

Where is this at?

 

[c_land]

I sitting in Schwab’s money market at 5.37%

Im waiting for the longer stuff to hit peak then lock in before rates pull back next year. A 3 year maturity is 4.7. Thats a nice lock in

What would be the impetuous for falling rates in your opinion? Recession?

I don’t buy into the conspiracy of the Fed suddenly changing policy just for Biden to get re-elected. That's fiscal dominance. Even if rates get cut, there has been much discussion lately about running parallel policy where rates come down, but QT continues for balance sheet reduction.

I see record treasury issuance with record deficits, record spending, and falling tax receipts. Pair that with an era of potentially structurally higher inflation.

For falling rates, I think we would need a moderate or worse recession with job loss.

OR Yellen to get her buyback program in place (in the works) to relieve the long end. She could continue issuing short term to suppress the long end. Either way she continues to act as central planner, but short duration rates stay elevated.

What did I miss?

 

[mesquito_creek]

Where is this at?

I did it through Schwab. Cd is at north pointe bank in MI

 

[2Driver]

What would be the impetuous for falling rates in your opinion? Recession?

I don’t buy into the conspiracy of the Fed suddenly changing policy just for Biden to get re-elected. That's fiscal dominance. Even if rates get cut, there has been much discussion lately about running parallel policy where rates come down, but QT continues for balance sheet reduction.

I see record treasury issuance with record deficits, record spending, and falling tax receipts. Pair that with an era of potentially structurally higher inflation.

For falling rates, I think we would need a moderate or worse recession with job loss.

OR Yellen to get her buyback program in place (in the works) to relieve the long end. She could continue issuing short term to suppress the long end. Either way she continues to act as central planner, but short duration rates stay elevated.

What did I miss?

I agree with all you say and that's why I'm still holding off for a bit from moving out of the MM account. Locking in short term for me just limits my options. I'm looking to pull the trigger for the 3–10-year timeline and quit chasing this for a few years. I'd like to see the coupons on 10 year hit 4.5- 5%. To your points above and the "higher longer" statements about the feds fund rate, I think longer term bonds may still inch upwards, then Ill lock in. I looked at CDs but can't justify depositing in any regional banks with what's going on, even if FDIC insured. Most of the big bank CDs are callable so you risk early maturity.

As far as the Fed funds rate going down; in a year if inflation is 2-2.5% then they won't keep the fed funds rate above that rate of inflation. The rate will move back to neutral with inflation. I suspect then the 2, 5,10 and 30's will move back down as well providing the economy is on a stable ground. I want to be locked in for several years before that takes place. I think its between now and 12 months. I'm bound to be right eventually.

 

[mesquito_creek]

Problem with all money market accounts is they changed the rules in 2010, if the market is tanking like 2008 they dont have to release your funds.

What would be the reason to want to liquidate a money market when the market tanks? I have been through several major market tanking events and all I have ever done is sit on my hands and wait to come out the back end in a few years with major improvements to my equity?

 

[bentprops]

What would be the reason to want to liquidate a money market when the market tanks? I have been through several major market tanking events and all I have ever done is sit on my hands and wait to come out the back end in a few years with major improvements to my equity?

When things go south "liquidity crisis" one may need it and it not be available. it would suck to miss a house payment or 10 knowing you have the funds but they won't release them. Its unfortunate but the game the elite are playing today is steal kill and destroy.

 

[hallett21]

Seems like a lot of banks are offering 4.5-5% interest on savings accounts right now. I think the trend is for new savings accounts over 25k.

Sure seems like that’s a better move because you always have access to the money. Granted you’re making a little less and don’t avoid federal income tax.

But if you’re parking 100k I’d take $1,000 less for immediate access.

 

[c_land]

https://twitter.com/i/web/status/1701230993313571314

 

[havasujeeper]

Seems like a lot of banks are offering 4.5-5% interest on savings accounts right now. I think the trend is for new savings accounts over 25k.

Sure seems like that’s a better move because you always have access to the money. Granted you’re making a little less and don’t avoid federal income tax.

But if you’re parking 100k I’d take $1,000 less for immediate access.

This is exactly my thought process. Not to mention, there are no broker fees to give away.

 

[mesquito_creek]

When the iShares bonds were hot at 9.6% I bought the max allowed, I.E. 10K for me and 10K on the wife for 20K. As the rates dropped over 15 months I just liquidated this week the 20K at an effective yield of 6.6% or $1640 interest. Waiting any longer would have continued downward % yield. It not earth shattering but at 6.6 return backed by the US Treasury is the best in my recent memory. I will move it into laddered CD now at fixed rates in the mid 5% and see if I was lucky in that the Tbill percentages are heading south. None of this is meant to be anything more than fixed rate income investing at the simplest of terms.

 

[coolchange]

When the iShares bonds were hot at 9.6% I bought the max allowed, I.E. 10K for me and 10K on the wife for 20K. As the rates dropped over 15 months I just liquidated this week the 20K at an effective yield of 6.6% or $1640 interest. Waiting any longer would have continued downward % yield. It not earth shattering but at 6.6 return backed by the US Treasury is the best in my recent memory. I will move it into laddered CD now at fixed rates in the mid 5% and see if I was lucky in that the Tbill percentages are heading south. None of this is meant to be anything more than fixed rate income investing at the simplest of terms.

I have to wait til Jan

 

[c_land]

Big moves have been happening lately in bond land.

Yield curve has steepened significantly. 10-Year has approached 4.8%.

The deficit and out of control spending is starting to matter in a post-QE era.

 

[HTMike]

2024 is going to be the year of the great rug pull.

 

[coolchange]

2024 is going to be the year of the great rug pull.

On bonds? Market? They keep saying that but I’m holding my hat.

 

[boatnam2]

2024 is going to be the year of the great rug pull.

Perfect! All my t-bills will be done and i will jump in with both feet in Market.

 

[2Driver]

Ever think that the country is beyond the tipping point with being able to manage the debt and buying too many treasuries isn't a safe bet anymore?

 

[boatnam2]

Ever think that the country is beyond the tipping point with being able to manage the debt and buying too many treasuries isn't a safe bet anymore?

Crossed my mind a few times, hate to be part of the "this can never happen" crowd!

 

[Orange Juice]

Ever think that the country is beyond the tipping point with being able to manage the debt and buying too many treasuries isn't a safe bet anymore?

I'm more concerned the masses will have a difficult time with math, and not make adjustments to their budget accordingly.

My first car payment was $75 Mo. 42 years later, it's $1215 (3 year/0%). I hate payments, but with 4%+ t-bills, I'm rolling over the principal in monthly t-bills. If it all works out, I'll need another car in 2025, and I’ll be able to get another 0% deal, trading in my car worth more than I paid for it.

 

[JDKRXW]

2024 is going to be the year of the great rug pull.

Think it's going to take until then?? I mean October is when crazy things often happen.

 

[EmpirE231]

Ever think that the country is beyond the tipping point with being able to manage the debt and buying too many treasuries isn't a safe bet anymore?

a few times over the years, but somehow... some way... it keeps going, like magic.

 

[ChumpChange]

On bonds? Market? They keep saying that but I’m holding my hat.

On RDP!!!

 

[framer1]

Ever think that the country is beyond the tipping point with being able to manage the debt and buying too many treasuries isn't a safe bet anymore?if AIf

If America collapse, it is pretty much over anyways....

 

[regor]

Weimerica

 

[c_land]

5% this AM on the 30 Year

 

[2Driver]

5% this AM on the 30 Year

And a whole bunch of supply to come.

 

[c_land]

And a whole bunch of supply to come.

And it’s coming quick.

https://twitter.com/i/web/status/1709954965198733597

 

[WYRD]

So what's the hedge for this?

 

[2Driver]

I have my guy at Schwab ready to buy some 3 years on the 10th. I’m holding dry powder for the Fed meeting and possible government shutdown in November.
Have to profit from this country’s dumpster fire somehow.

 

[HTMike]

What is smart money doing right now ?

 

[Orange Juice]

30 year bond is trading at 5%+ today.

Mortgage rate at 8%.

 

[DrunkenSailor]

The gap between 2 and 10s has been shrinking rapidly and currently is just -.27. This was a point inverted a month ago. The inversion may finally be over. Good news for short term rates bad news for long term debt as the yield on the 10 year is at 4.93 vs the 2 years 5.2.

 

[regor]

Meanwhile, bond investors are being asked to buy increasing quantities of Treasury notes and bonds. The US budget deficit has grown, in part because of rising interest costs. At the same time, the Fed isn’t replacing all of the Treasuries on its balance sheet as they mature. Dealers estimate that the outstanding debt will increase by $1.5 trillion to $2 trillion in 2024, vs about $1 trillion this year.

Keep printing, we need moor war!!!

 

[c_land]

QRA is released this week. Does auntie Yellen skew issuance towards bills or continue the path that she and TBAC chose at the end of July that has sent long yields soaring?

QRA is probably more impactful to rates than the FOMC meeting since the tightening cycle started.