Whither bonds? .

Sorry, but I can’t resist …
Fido CFP FIL IRA … DUCKSOUP

I understand CFP to mean Certifiable Financial Planner (or Certified)
I understand IRA to mean Individual Retirement Account
Fido and FIL are, showing my ignorance, new to me. Well, Fido used to be a cellular provider in Canada, but I suspect that’s not your target. I presume FIL is not related to the French language or the Dinar

To prevent triggering any ignorant incapable snowflakers, Duck Soup (1933) - IMDb

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Reuters reporting:

There is activity in the bond market:

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Not Goose Soup?

Fido == Fidelity, or at least that’s how I’ve always understood it. FIL = Father In Law? That’s my best guess.

We have a long history on this site of using initials and aliases. Perhaps the most famous is “Ken’s site” which only the wackos that hang out here would know what that refers to.

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right on both.

back to my original question. Usually bonds are a good counter to stocks, why my FIL bought individual ones and not funds (so we don’t have forced cash outs) So are we safe if we hold TM

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From across the pond, but the warning applies more broadly.

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That depends on term length, and how high inflation gets. If the term is more than five years, I would look to sell in the next 6 to 18 months or hold for more than five years. My preference would be to sell during the upcoming recession … preferably toward the middle or last year of Uncle Joe’s term.

ETA: I presume you meant “safe” as not too unprofitable. If you meant “safe” as not losing principle, then you’re safe … out to 15 years.

Disclaimer: I’m not a prophet, soothsayer, financial know-it-all, or anyone of worth. I’m a husband and father. My opinion is worth exactly what it is to my wife, children, and what you paid for it. :smile:

Only in nominal terms, purchasing power can fall a lot due to inflation and that’s not compensated with bonds except in the price/yield you pay at your purchase.

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why 15? Yes I meant “safe” as not losing principle, getting interest to combat inflation

yes, either that or in cash since they’re retired in their 80’s and out of stocks

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hmm. Real estate prices usually lag mortgage demand… Maybe I should wait out my new home purchase in PHX. New builders are still raising prices…

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Imagine how much the country has changed in the last 20 year? From the Bush creation of a gargantuan federal agency, to Obama’s many things, to Biden’s inflation increasing policies, spending, and future student loan giveaway.

As free speech is being curtailed to limit opposing viewpoints, I don’t know what this country, and the soundness of it’s debt, will look like in 15 years. If we go back to the long bond rates in the early 80’s (14+%), I would not be lining up for them today.

long bond rates in the early 80’s (14 %?? Really, i thought it was just short term… If that ever returns I’m buying and getting out of stock roulette…

In in the interim is there a good ETF to bet on bond rates going up long term?

With corresponding mortgage rates in the upper teens. :frowning:

Sure. Just keep in mind that most of these have been bid up in anticipation of the current inflation.

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The May inflation report was issued on June 10, into an environment of already-rising real and nominal interest rates. It set off a wave of uncertainty in the Treasury market.

Nominal Treasurys. On June 9, the 5-year Treasury note was yielding 3.07%. It surged to 3.61% on June 14, before closing at 3.34% on Friday.

Treasury Inflation-Protected Securities. Real yields on TIPS were even more volatile, with the 5-year TIPS yielding -0.1% on June 9, rising to 0.73% on June 14 before falling to 0.54% at Friday’s close.

Although real yields are likely to continue climbing I consider a real yield of 0.51% on a 4-year, 10-month TIPS to be attractive. That is a 51-basis point advantage over the U.S. Series I Savings Bond. This auction is worth a serious look.

We have discussed the difference between these and Ibonds. I think you should buy your $10,000 annual allotment of Ibonds but beyond that these are attractive. They have the same inflation adjustment as IBonds

If possible, you should hold them in tax deferred accounts like an IRA.

More printing means more price inflation, but no printing also means more price inflation

This uncertainty has led China to dump US Treasuries to the lowest level in 12 years, and Japan, once a stalwart pillar of US investment, is cutting their holdings as well. Arguments can be made that this is part of molding currency markets to artificially increase or decrease exchange rates, but regardless of the reason, the decline in US treasuries along with the ongoing decline in the US dollar as the world reserve currency leads to one thing: More inflation.

Overseas dollar holdings are in the tens of trillions. Estimates suggest that around 60% to 75% of all dollars are held in overseas coffers for use in international trade. Failing US bonds indicate a trend towards a decline in dollar usage. The end result would eventually be the reverse flow of dollars back into the US, causing even more inflation than we already have.

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Chart of how interest rates have played out in bond market prices. Treasuries of increasing maturity for 2022.

Good illustration of the impact of bond duration.

What does it even mean when the government owns half of all its own bonds? This is Japan.

The share of government bonds held by the Bank of Japan has topped 50%, hitting a record high as the central bank has accelerated its government debt purchases to hold down long-term interest rates.

The central bank’s JGB holdings were in the 10% range when Gov. Haruhiko Kuroda started the massive monetary easing program in 2013. Its holdings have swelled as the policy meant to bring Japan out of deflation has dragged on.

According to estimates by the Japan Center for Economic Research, the BOJ will need to increase its JGB holdings by 120 trillion yen from the current level of over 500 trillion yen to keep long-term interest rates at or below 0.25%.

Bond fans: Be on notice!

TREASURIES-U.S. Treasury yields plunge as market prices in lower inflation

https://www.nasdaq.com/articles/treasuries-u.s.-treasury-yields-plunge-as-market-prices-lower-inflation

And if treasury yields are falling, what do you think that presages for CD APYs?