Check back in tomorrow morning for the weekly SP 500 earnings data, i.e. Saturday morning, November 3rd, 2018.<\/p>\n
One aspect to the October drop in stocks, is that there was no flight to Treasuries. The 10-year Treasury yield jumped from 3.05% on 9\/28 to 3.15% by 10\/31 and the 30-year Treasury jumped from 3.13% to 3.30% by 10\/31, despite the hammering to Tech, Growth and the US stock market across the board.<\/p>\n
On Bob Brinker’s Fixed-Income Advisory newsletter, Bob tracks 54 – 55 odd open-end no-load mutual funds of various asset classes and duration, and of the 55 funds, just 15 of the funds had had positive year-to-date returns as of 10\/31, and 11 of those (probably to no surprise) were found in the short-term taxable and tax-exempt asset classes.<\/p>\n
(By the way, this is no way, shape or form a judgment of Bob Brinker’s service. Bob simply lists these funds as a courtesy to readers. Bob’s model fixed-income portfolios are detailed separately and readers like me pay for that service, so the model portfolios wont be commented upon. I’m sure if I looked at the universe of Morningstar data for high-grade (investment grade), taxable, or tax-exempt bond funds for the same period, there would be many more funds, and likely with a similar relationship of positive to negative returns. )<\/p>\n
Clients “top 10” holdings and returns were run Wednesday night, October 31, 2018. showing how the major positions performed in October ’18 and then again year-to-date:<\/p>\n
Within clients top 10 holdings the 2 Schwab money market funds – the SWVXX (taxable) and the SWTXX (tax-exempt) were up 1.42% and 91 bp’s year-to-date, respectively. The final fixed-income related holding in the top 10 – 12 positions was the TBF or unlevered, inverse Treasury ETF that returned +3% in October ’18 and +11% year-to-date.<\/p>\n
As of 10\/31 and per the Morningstar data:<\/p>\n
This group didn’t include TIPS, or high-grade bond fund ETF’s or mortgage-backed securities, etc. etc. but these will be added over time.<\/p>\n
Summary \/ conclusion: <\/strong><\/em>The 10-year Treasury yield peaked at 3.23% on October 5th, 2018, so if the yield on the 10-year trades above that level it will have broken a multi-decade downtrend. The 200-month moving average for the 10-year Treasury yield contract at the CBOE, or the TNX-X, currently resides at 3.229%.<\/p>\n That’s a key level.<\/p>\n The losses on bond mutual funds aren’t that bad so far, but according to Charlie Bilello at Pension Partners, the US bond markets are working on their worst 2 years since 1980 – 1981 ?<\/p>\n Previous blog posts on the US bond markets, bond bear markets<\/a>\u00a0can be found here<\/a> and here.\u00a0<\/a><\/p>\n It feels like I’m repeating myself and writing the same things, but losses on bond funds just arent that bad so far.<\/p>\n A break of that 3.229% – 3.23% yield on the 10-year Treasury though, and bond mutual fund statements might get interesting.<\/p>\n Let’s face it, the US bond markets today are less about “winning” (in a relative return sense) and much more about “not losing”.<\/p>\n Thanks for reading.<\/p>\n <\/p>\n <\/p>\n <\/p>\n <\/p>\n","protected":false},"excerpt":{"rendered":" Check back in tomorrow morning for the weekly SP 500 earnings data, i.e. Saturday morning, November 3rd, 2018. One aspect…<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[190,12,125,50],"tags":[],"class_list":["post-8358","post","type-post","status-publish","format-standard","hentry","category-10-year-treasury-yield","category-bond-funds","category-bond-market-liquidity","category-bond-markets"],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/8358","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8358"}],"version-history":[{"count":8,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/8358\/revisions"}],"predecessor-version":[{"id":8366,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=\/wp\/v2\/posts\/8358\/revisions\/8366"}],"wp:attachment":[{"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8358"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8358"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fundamentalis.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8358"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}