Thanks.I sold the last of my Oct 2024s on Apr 30 of this year. I used the proceeds to buy some 2040s at 2.36%. Then between May 28 and Jul 9 I sold 2025s to buy various longer maturities. My last swap was a sale of some Jan 2025s on Jul 9 to buy Jan 2032s at 1.98%. Since then I've been in a holding pattern watching TIPS yields generally decline.Question for the finance nerds:
Does it make sense to sell Oct. 2024 TIPS now to buy 2040 TIPS with the proceeds (they are yielding slightly over 2% now), rather than waiting until maturity, since it seems unlikely that there was much inflation in July and it seems unlikely that there will be much in August? If the fed lowers rates in September the yields on the 2040s could decline by October.
That said, there is the bid/ask spread.....
What would you do?
What would Kevin do?
My gut feeling is that it doesn't matter (crap shoot).
I personally wouldn't worry about the small bid/ask spreads in making these decisions.
That is what I think, too.
Maybe I will do the trade before maturity. Maybe not. I'm probably more likely to do so if I see yields spike, though if they do I will be paying more for them, and if they tank I will be paying less for them, so that probably doesn't matter either.
Statistics: Posted by protagonist — Fri Aug 09, 2024 3:20 pm — Replies 3581 — Views 869628