So I am trying to branch out of my T-bill ladder i spent the last few weeks constructing and am trying to get higher returns. My understanding of bonds is that the interest rate hikes have pushed bond yields up because no one wants to buy a $10,000 bond that pays 1% interest and matures in three years when treasuries are paying 5.3% right now. The market has tanked the value of the bond to price in the interest rate risk and credit risk.
Short term corporate ETFs have taken a beating as vigorous as the rest of the bond market, down 10-20%. Vanguard's VCSH is down 10% in two years for example. My thinking is that since JP has signaled that interest rates are going to stay elevated for a few years, short term corporate ETFs will roll over their previous 3% bonds into higher 6-7% bonds unless a company in question chooses to burn cash to pay off maturing debt and risk taking a beating on their stock price (see AT&T).
This should push the value of short term corporate bond ETFs up in addition to raising the amount of "dividend" they pay out monthly. Double the return, double the fun.
Or I am just talking myself into becoming a bagholder.
Submitted October 31, 2023 at 11:32PM by derlutheraner https://ift.tt/8ajWHtU
